Amazon has moved into the No. 3 spot in online advertising, behind Google and Facebook, and other retailers and brands are realizing the opportunity to advertise to shoppers via retail websites. Recent moves by big retailers like Walmart and Target suggest they’re aiming to increase their ad revenue.

Joshua Kreitzer, CEO, Channel Bakers

Joshua Kreitzer, CEO, Channel Bakers

With the rise of Amazon as the No. 3 advertising platform it has become clear that retail sites have the potential to be the next frontier of the ad industry. In fact, according to new data and analysis, Amazon’s platform is growing faster than either Google or Facebook were at the same stage. With retailers like Walmart, Target, and Best Buy now making the leap from retailer to advertising platform, are any of these companies poised to take the No. 4 spot away from Snapchat?

Over the last few years, Amazon has irrevocably changed how brands think about advertising, and traditional retailers are recognizing the opportunity. Ecommerce sites are no longer just a place to sell products, but also a place to build a brand through advertising on a platform, similarly to how brands have been using Google and Facebook for years. Walmart firing long-time partner, Triad, to bring its website ad sales and the related analytics work back in-house is a clear indication that the retailer is looking to open its platform, the first step of this shift. It is likely other retailers are quietly following suit.

Changing strategies around brands’ ad budgets are also a strong indicator of this retailer-turned-ad-platform evolution. For years, retailers received their ad dollars from a brand’s channel team and larger media advertising budgets were allocated for television ads, with separate budgets for digital platforms like Facebook and Google.

Walmart will need to develop a strategy to better explain the value of Walmart’s advertising platform to big brands.

However, brands are now slowly shifting some of these bigger budget buys to retail sites as they recognize the value of online platforms as a key component of their overall brand strategy. As media teams are starting to realize this value, this also presents a huge opportunity for ad agencies and retailers to educate brands on these benefits.

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Major payoff

While this new distribution of ad dollars signals a shift in the right direction, there is still a hurdle to get brands to think of these platforms beyond just a sales channel, but also a place to build reputation and brand awareness. However, brands that are doing this right are seeing a major payoff: Just look at phone accessory company Anker. Before 2017, Anker devices were almost exclusively sold on Amazon’s Marketplace, but with the brand-building power of the platform, the company now has a thriving multichannel ecommerce business.

When it comes to ad dollars spent on online platforms like Amazon, retailers are also in a unique position to amplify the impact due to their wealth of data on consumer behavior. For example, Walmart’s video content platform, VUDU, allows it to better identify a customer and their purchase habits, by tracking them from an OTT [over-the-top] campaign to what is bought in store. This access to vast data on shoppers and their shopping behavior allows a brand to better target potential customers going forward.

Walmart’s hurdle

Taking this into account, along with the fact that there’s a fresh overall approach to thinking about how ad spend is shifting, Walmart is certainly in a position to become the next major player in the ad space.

However, they have one major hurdle…the perception of the Walmart store shopper vs. the Walmart.com shopper.

Through enlisting partners that are experts in this space, Walmart will need to develop a strategy to better explain the value of Walmart’s advertising platform to big brands. Triad, and now Walmart’s WPA, have not yet done a good job at communicating to advertisers the potential to grow a brand on their platform. While CPG brands may already be testing Walmart’s ad platform, presenting their platform’s value will be critical when trying to get ad dollars from categories like Consumer Electronics.

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As the advertising world continues to change with the ways in which people search, research, and purchase, retailers are primed to take advantage of the opportunity at hand and open major new revenue streams. With the right strategy, Walmart could step into the No. 4 spot. And, while it will be interesting to see what the power player has in store, Walmart better move quickly—just last week, Target announced a shake-up in its own ad structure. The time is now.

Channel Bakers is an advertising agency that specializes in helping brands market on Amazon and other online marketplaces.

 

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