Walmart’s announcement last week that it is getting into the
digital advertising business could have major implications for the marketplace
and for the company’s arch competitor, Amazon.
At the same time, it reflects a growing trend of “legacy”
brands that are not naturally associated with digital beginning to realize the
power that their huge customer base gives them.
That may be why Walmart is not only looking at getting into
digital advertising but is exploring other crossover businesses such as
creating its own video streaming platform, Vudu.
Essentially, Walmart’s foray into digital advertising will
see its online properties become a network on which hundreds of thousands of
other firms can advertise – similar to the way that Amazon works now.
Walmart has made the decision that its online assets, including
its shopping sites and Vudu are a rich ecosystem that it can monetize by
opening up to advertisers. The company’s
core business gives it a rich trove of consumer data, allowing it to offer
bespoke, targeted on-demand and native advertising to its new advertising
customers. Those clients can pay for ads to sell products across the entire
system, or target just a specific part of it.
The potential upside for Walmart is huge. More than 300
million shoppers visit its stores every month and millions visit its different
shopping brands websites each month. For the most part, Walmart has not really
made the most of all the data that this provides.
But that is changing dramatically with this new initiative.
A new internal structure will help promote the new push. For instance, Walmart is now
consolidating teams into a single group for ad sales and operations. That
includes bringing its digital ad business under its banner and ending its
relationship with marketing giant WPP.
So, in launching its digital marketing business with such a
public display, Walmart has thrown down the gauntlet to its great rival Amazon.
But, more than that, the company may well have shown other old economy brands
how they can unlock a ton of value from their day to day online business
activities.
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