20 September 2022
Walmart Connect wants to serve ads on TikTok, Snap and Roku
Walmart's retail media network is pushing beyond its own marketplace through Innovation Partners.
Walmart's retail media network is pushing beyond its own marketplace through Innovation Partners.
Buy an ad from Walmart, run it on TikTok.
That’s one path that will become possible through Walmart’s advertising business, thanks to a series of new video-centric tie-ups announced on Tuesday.
Walmart Connect rolled out a new program called Innovation Partners with some high-profile names in social media, live shopping and streaming like TikTok, Roku and Snap.
Through this initiative, brands will be able to use Walmart Connect to run ads on platforms beyond Walmart’s ecommerce marketplace and other owned channels. The idea is that brands can combine the first-party data Walmart receives through shopper transactions and measurement tools from Walmart Connect with the audience of these platforms to reach new buyers.
Walmart views the partnerships announced on Tuesday as “test and learn” opportunities for the holidays, and is already working with brands like J&J, P&G and Samsung.
“The newly expanded offering includes additional touchpoints and channels to reach customers wherever they are with new ad formats,” Seth Dallaire, Executive Vice President and Chief Revenue Officer, Walmart US, wrote in an announcement. “Together, we will work with each partner to more deeply connect advertisers with customers throughout key moments in the shopper journey in order to provide the best solutions for advertisers.”
Here’s a look at the partnerships with each platform:
A Walmart ad on TikTok. (Courtesy of Walmart Connect)
Walmart Connect said it has a “first-to-market” pilot with the short-form video app that will allow Walmart advertisers to run ads on TikTok. This combines TikTok’s ad format, which offers a sound-on, full-screen video ad that runs in a user’s feed, with targeting and measurement capabilities from Walmart.
A Walmart ad on Snapchat. (Courtesy of Walmart Connect)
Through this partnership, advertisers will be able to buy Snapchat ads and combine them with Walmart Connect’s geo-based measurement of omnichannel sales lift. It will be available for Snap Ads, Collection Ads and Snap AR.
A Walmart ad on Firework. (Courtesy of Walmart Connect)
Firework’s technology allows brands and retailers to embed shoppable livestreams on their own websites. Through this partnership, brands will be able to fund and run livestreams and short shoppable videos on Walmart.com/live. Through this partnership, Walmart said it is testing how brands can use Firework to create “premium, engaging, mobile-first video experiences.” Testing is underway with J&J and P&G.
A TalkShopLive livestream. (Courtesy of Walmart Connect)
Walmart’s early forays into livestreaming have come through an existing partnership with TalkShopLive, which offers an emebeddable video player that is built to run QVC-for-the-internet-style events. With Walmart Connect, it is working to help brands extend livestreams across Walmart.com/live, TalkShopLive’s platform, brand and publisher sites and other sites across the web. The test here lies in how brands can amplify their content, and scale. Already, J&J, P&G, and Samsung have used it to run livestreams.
A shoppable Walmart ad on Roku. (Courtesy of Walmart Connect)
Walmart and Roku recently made big news with a partnership that will bring shoppable ads to streaming TV, where viewers can make purchases directly from their screen using a remote, and then get products delivered that are fulfilled by Walmart. This partnership with Walmart Connect and Roku Advertising is the vehicle by which the ads themselves will be purchased, with Walmart Connect serving ads through the Roku platform, and providing measurement tools to brands.
This is just the latest development from Walmart Connect, which was revealed to be a $2 billion business for Walmart in its last fiscal year, and grew 30% in the most recent quarter that ended in July. In recent weeks, Walmart Connect has also:
Walmart is seeking to make advertising a key part of its digital business. As it grows an ecommerce channel that has more products and attracts more shoppers, advertising becomes more important to stand out, boosting Connect.
“The relationship between digital growth, marketplace growth, advertising is something that we’re trying to take advantage of,” CEO Doug McMillon said on the company's most recent earnings call.
This comes at a time when the first-party data-centered approaches of retail media networks, which allow retailers to introduce advertising to their stores, are becoming more attractive following Apple’s App Tracking Transparency updates that made attribution more difficult in iOS 14.5.
With Walmart Connect's latest partnerships, the nation's largest retailer is sending a signal that it wants to not only to run ads on its own properties, but also take steps to become a full-on adtech network that serves ads across the web. In doing so, the partnerships announced Tuesday show that it is making room for data-driven digital commerce tactics to enter the more entertainment-style social content that is currently proliferating.
While the platforms have experimented with social commerce that embeds checkout directly on platforms, many of the approaches here center ads that direct to sites off-platform to finalize a purchase. Two of the tests ahead lie in determining whether these ads can seamlessly fit into existing viewing experiences on these platforms, and whether Walmart's tools prove to make them effective in targeting audiences and driving conversions.
While much learning remains, it appears brands and retailers are coming to an understanding that a strategy for winning in a world of video-forward social content is not built around a single ecommerce marketplace, but rather the ability to reach consumers where they watch.
The figure underscores the importance of the marketplace to Amazon's business.
When it comes to selling physical goods through online channels, the Amazon model is dominant.
The company’s commerce business has four distinct components: A marketplace with a constantly expanding assortment of goods driven by third-party sellers, an advertising network that helps sellers stand out, a fulfillment network that delivers items quickly and conveniently, and a membership program that builds loyalty, while connecting shoppers to the other parts of Amazon’s consumer ecosystem.
Each of these elements are mutually-reinforcing. At this point, it would be difficult to grow one without another. A third-party seller on the marketplace likely buys advertising to stand out in a sea of brands, and uses Fulfillment by Amazon to store and ship inventory in part because it’s the most convenient way to access Prime customers.
Yet these parts also exist as their own lines of business that have helped Amazon unlock new avenues for growth beyond the rote sale of goods. Services provided to third-party sellers, Amazon Ads, FBA and Prime all generate their own revenue, and most of these are growing rapidly.
Just how important are they to Amazon?
The company offered some details on one of these areas in a new report this week: Third-party sellers. These independent sellers that list, manage and ship their own products are distinct from first-party sellers, which effectively sell items to Amazon and leave the ecommerce company responsible for the sale to the consumer. As Amazon points out, most third-party sellers are small and medium-sized businesses. First-party sellers tend to be the larger name brands.
As it turns out, third party sellers are very important to Amazon. Key stats from the report:
Independent sellers account for 60% of sales in Amazon’s store.
U.S. sellers sold more than 4.1 billion products—an average of 7,800 every minute. These sellers averaged more than $230,000 in sales in Amazon’s store.
Brand owners in the U.S. grew sales over 20% year over year in Amazon’s store.
Amazon sellers are based in all 50 states.
Over 260 million products were exported globally by U.S.-based sellers.
The results in part underscore how much energy Amazon has put toward growing the marketplace, and the uptake in sellers that has arrived as a result.
“Amazon invests billions of dollars annually to provide entrepreneurs with a constantly improving set of valuable tools and resources to help them gain access to capital, quickly launch in our store, build their brands, and rapidly scale and reach more customers,” said Dharmesh Mehta, vice president of Worldwide Selling Partner Services at Amazon, in a statement. “Amazon is committed to the success of small businesses, and we are excited to continue innovating on their behalf and help them grow into thriving success stories.”
Make no mistake: There is also a massive benefit to Amazon’s business. In the first quarter of 2023, third-party seller services generated $30 billion, and grew 20%. Compare that to AWS, which is typically seen as Amazon’s big profit driver, and you’ll find that the cloud division generated about $21 billion while realizing 16% growth.
While third-party seller services aren’t always running ahead of AWS, the fact that they are growing in areas close to each other is a sign of how much opportunity lies in the marketplace for Amazon. Factor in that Amazon’s $9.5 billion (Q1) advertising business is also tied in part to the marketplace, and it’s clear that the impact extends beyond a single budget line.
Amazon’s success with third-party sellers is a big part of the reason why the marketplace model is being widely applied across commerce. Walmart is doubling down on growing third-party sellers on its marketplace as it follows an ecommerce playbook that has similar components of Amazon, and Macy’s opened its ecommerce business to third-party sellers last year. Shein recently brought its own marketplace to the U.S., and the fast fashion platform is using it as a means to expand the number of categories.
While Amazon will likely to continue to couch its communications about third-party sellers in the language of support for small businesses, it is a major reason that the company has been able to grow to the giant it has become, and remain there. With the growth of ecommerce and the rise of retail media, plenty of others in commerce will continue to apply the model, as well.
For a bit more info on Amazon, the company also shared the below rankings in the report on third-party sellers:
The most-shopped categories from third-party sellers:
The five states with the most third-party sellers: