Last week our team attended an event hosted by Walmart Media Group to hear all about their advertising business.
The audience was mostly brands, and specifically the retail teams within companies like Coca-Cola, P&G and Unilever. To describe the event as a hard-hitting sales pitch is an understatement; the speakers drilled into the audience the imperative of upping their ad spend on Walmart. “We want and expect you to deploy brand media spend at least proportional to your sales,” they told the audience. By that math, there is no budget left for broadcast media such as TV or radio, and all brand budget should be spent with the retailers. Hmm, ok.
Just like Amazon is trying to change advertiser perceptions beyond just a home for brands to sell on the platform, Walmart recognizes they are known for being LOW PRICE, but they want to also be viewed as a company that is as innovative and convenient as Amazon. And it was also an interesting contrast and admission that Walmart’s target customer is bargain-hunting families who are strapped for time, versus Amazon’s more affluent profile.
Here are some of the key themes from the day:
1. Physical and Digital
There was a big focus on the impressive physical footprint of Walmart’s stores. Many times they repeated that “85% of retail purchases happen in-store,” but that 65% of shoppers use digital services to plan their purchases, find coupons, read reviews and so on. They underscored their dedication to digital innovation and talked about “Walmart IRL,” which is their Innovation Retail Lab, a store in Long Island, NY that they use to test and learn new technologies.
For instance, they have an app that sends push notifications to their associates when something is low stock, which they can determine using live updates via a smart camera. One clear advantage Walmart has over Amazon is the in-store branding opportunities: whether endcaps, signage, samples or video walls in their TV section.
2. Low prices + quick delivery
Similar to Amazon, Walmart is known for low prices. Unlike Amazon, they aren’t really known for their convenience and quick delivery, although they have matched almost all of the services Amazon provides. They have 2-day delivery and plan to match Amazon’s 1-day soon. With so much warehousing space, we believe they may be one of the only companies that could actually compete with Amazon for 1-day delivery to the entire US. (Another stat: 90% of U.S. households live within 10 minutes of a Walmart, and 40% of the U.S. has the option for grocery delivery from Walmart).
The company is clearly investing heavily into grocery. According to the presenters, their data shows that after someone orders grocery delivery from Walmart 3 times, they are a customer for life. We think their core “low price” value actually works here, especially since people still see Whole Foods as an expensive grocery option. For people who already shop at Walmart, the pickup and delivery services are a no-brainer.
In terms of ad targeting innovation, they showed videos of the Walmart app and how it switches into “store mode” to serve more relevant ads, and even showed an example where people can order from a voice assistant, though they never elaborated on how that works.
Walmart put a big emphasis on how they can “close the loop” with advertising data, because they can track purchase intent and completion not only online, but in-store. They also had a long and entertaining presentation about EKO, a technology they have invested heavily in to create interactive ads. One example was a holiday toy lab, where kids could “play” with toys and then add them to a wish list that gets emailed to their parents. The tech provides live data feedback, so the ads can be tailored as someone is watching a video (ie: a Coke ad can be inserted on a billboard in a music video for one customer, where another person watching the video could see a smartwater ad, or it could even change halfway through the video, since these ads appear and respond in live time as the viewer watches). Do these actually work as described? Hard to tell. But one thing is for sure, they’re not going to be cheap!
The case study we found most interesting was a new brand that they launched with P&G, called Hello Joy. It is a women’s razor with a cheeky millennial design and brand vibe that launched last year. It was a joint effort between Walmart and P&G, and apparently very successful. This struck me as a big differentiator for Walmart – whereas a lot of brands are afraid that Amazon’s private label will compete with their products (especially generic ones like disposable razors), Walmart is partnering with brands to create new products. A win-win.
Like Amazon, they are also using influencers to help boost their fashion. Ellen Degeneres has a huge line of clothes and home goods, and they activated a squad of mommy instagrammers for their fashion line. Walmart has always done this, but we did find ourselves wondering whether the core edict of being “low price” is in conflict with the idea of being a “fashion destination.” Can a company be both? I suppose time will tell.
It’s clear that Walmart are serious about expanding their advertising revenues. The day after the public event they scheduled sessions with all key suppliers, to no doubt continue working on their quest for significantly more ad budget. Indeed, to keep products on Walmart’s physical or virtual shelves may require some serious shifting of budgets from other channels, and agency teams should be prepared.