Walmart Wants to Take Ad Dollars from Amazon, Facebook, Google

Online advertising has been incredibly lucrative for Facebook, Google, and perhaps surprisingly Amazon  (AMZN) – Get Amazon.com, Inc. Report. Meta’s (FB) – Get Meta Platforms Inc. Class A Report Facebook alone took in nearly $115 billion in advertising last year and $84,169 billion in 2020. 

Alphabet’s (GOOGL) – Get Alphabet Inc. Class A Report Google took in $209.49 billion last year in ad revenue and $146.92 billion in 2020. Amazon generated $31.2 billion in ad revenue revenue in 2021, with fourth-quarter sales rising 32%, according to the retailer’s fourth-quarter earnings statement. 

Brian Olsavsky, Amazon’s chief financial officer, noted on a fourth-quarter earnings call that the company had separated advertising services revenue from other revenues  

“Of course, advertising only works if we make it useful for Amazon customers,” he added, “and when we create great customer experiences, we deliver better outcomes for brands.” 

Now, Walmart wants a bigger piece of the ad pie, not just on its own site via taking money for featured product placements, but also as its customers travel around the internet.

How Is Walmart Growing Its Ad Business?

Walmart has advertised a number of new positions at its digital ad unit, Walmart Connect. (The company rebranded its digital advertising unit from the previous Walmart Media Group last year.) 

The retailer is “particularly focused on hiring Partner Managers and Search Performance Managers to help improve marketplace sellers with advertising,” according to an analyst report from KeyBanc, The report also noted that in the third quarter of last year, Walmart Connect “grew nearly 240% on a two-year stack.”

Last year, Walmart also partnered with The Trade Desk (TTD) – Get Trade Desk, Inc. Class A Report, which helps facilitate purchases of digital media on various media networks and sell-side platforms, to use what it knows about its customers, to sell them ads elsewhere on the internet. 

The goal is to engage with “Walmart customers on our digital properties, then retarget them across the web and on social media,” according to their website, which will include, as is usually the practice, search ads appearing in search results and on browse pages. The company hopes to work with both small businesses and global brands.

Partnering with The Trade Desk means that Walmart could be serving ads on some of the sites it’s also competing with.

How Big Is The Online Advertising Market In The U.S.? 

People were already increasingly living online, using it to shop, date, and watch TV, well before the pandemic, but all that time alone at home certainly increased people’s time on the internet.

The global market for Digital Advertising and Marketing was estimated at $350 billion in the year 2020, and the U.S. market was estimated at $155.3 billion last year by a report last year from Research And Markets. In total, the market is expected to reach a revised size of $786.2 billion by 2026, growing at a rate of 13.9%.

The online advertising world is largely dominated by the three big tech firms. Last year, Facebook’s advertising revenue was $114,934 billion, Google’s was $209,497 billion and Amazon’s was $31 billion.

Last year Walmart indicated that it wants to be a top ten advertising platform, and it’s possible they may see an opening. 

Facebook has been looking wobbly lately, as Apple’s  (AAPL) – Get Apple Inc. Report recently made changes to how its devices IOS’s track their customers. Now, if an iPhone user declines to be tracked when opening up an app, the app developer, in Facebook’s case, Meta Platforms, can no longer access the device’s Identifier for Advertisers.

Since Facebook relies heavily on targeted advertising, Apple’s change in privacy is expected to cost it $10 billion dollars this year alone, and that number might get worse for the company later. There’s also the fact that Meta founder Mark Zuckerberg has staked his company’s future on the Metaverse, a product that it isn’t clear anyone wants, leading to a $30 billion drop earlier this month.

So maybe there’s an opportunity here for Walmart to take some of Facebook’s market. Or maybe U.S. lawmakers might finally make due on their pledge to break up the big tech firms, which would certainly shift the dynamics of the online advertising industry dramatically, though analysts think if it doesn’t get done before the midterm elections the effort might be on the backburner again for a while.

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