With roughly $172.38 billion in U.S. grocery sales last year, Walmart is the nation’s largest grocer. The retail giant also dominates paid search in the category, a new report suggests.
Walmart, No. 3 in the Internet Retailer 2017 Top 500, spent $850,000 on U.S. Google desktop text ad spending on 124 non-branded grocery store and grocery delivery keywords from June 2016 to May 2017, up from just $51,000 the previous year, according to a new report from search marketing data provider AdGooroo. And Jet.com, which Wal-Mart Stores Inc. acquired in September, spent another $82,000 during the 12-month period, up from $3,000 the previous year.
During that time frame, the average cost per click across the 124 keywords rose 24.9% to $2.96 from $2.37.
Walmart’s large spending increase, which began last June, reflects the retailer’s robust e-commerce push that started in full when the retailer named Jet founder Marc Lore the president and CEO of Walmart eCommerce U.S. Since Lore assumed that role, the retailer has embarked on a number of omnichannel initiatives tied to groceries and consumables. Those efforts include online grocery pickup, which lets a shopper order groceries online and pick them in a store, and Easy Reorder, which enables an online shopper to quickly reorder items he has frequently purchased online or offline.
“Walmart dominates grocery,” says Eric Marcy, AdGooroo president. “This increased spending reflects the fact that they’ve gotten serious on the digital front. Walmart is well-positioned to leverage its physical presence to drive online consumers to buy online or offline.”
Walmart’s spending was nearly double of the next-biggest spender, Aldi, which spent $441,000.
Meanwhile, Amazon.com Inc. (No. 1), which plans to spend $13.7 billion to buy Whole Foods Market Inc., spent just $133,000, up from $72,000. Whole Foods, which ranked 18th in paid search ad spending, spent $51,000, down from $57,000.
[infogram id=”top_online_grocers_paid_search_spending” prefix=”YIP” format=”interactive” title=”Top Online Grocers paid search spending”]
Amazon’s rather limited spending on grocery-related paid search terms is a marked cry from its general approach to paid search. Last year, for instance, it spent an average of $41.2 million a month on paid search ads, roughly four times the next-biggest spender among online retailers, Target Corp. (No. 20), which spent $10.3 million, according to AdGooroo data featured in Internet Retailer’s The Best Search Marketers in E-commerce report.
However, Amazon’s low ranking may reflect AdGooroo’s research strategy, which examined non-branded keywords. Amazon’s two most-robust grocery offerings, grocery delivery service AmazonFresh and pantry staple service Amazon Pantry, are only available to members of its Prime loyalty program. As a result, it is likely far more aggressive for keywords that include “Amazon” in the search, Marcy says.
“Amazon is a company with the ability and the willingness to be at the top of the leader board,” he says. And he expects that if its deal to buy Whole Foods closes, Amazon will rapidly increase its grocery-related keyword spending. “It’s just a matter of time before its spending rises,” he adds.
Walmart’s aggressive spending helped it take the lead among all advertisers in click-share among the keywords AdGooroo evaluated. The retailer captured 19.1% of total clicks on the 124 category keywords over the 12-month period. Aldi was second with 11.6%. Amazon was ninth, with 2.8% of clicks, and Whole Foods was 19th with 1.2%.
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