Ace Up Walmart’s Sleeve
Walmart, the only place you can get your haircuts, eye exams and tires all in one place, is now also selling you ads. Walmart’s advertising division, Walmart Media Group, is slowly growing into an advertising giant. In 2020, its advertising division is expected to bring in $1b in sales —double the previous year.
Advertising what? Brands pay Walmart to show ads to shoppers on its e-commerce site and retail stores — Walmart Media Group is in charge of building the technology that places the ads in the right place.
Catching up to who? Who else but Amazon, Walmart’s largest e-commerce competitor, who’s expected to make more than $13b in ad sales in 2020 — just under 5% of their total sales. This makes Amazon the largest e-commerce retailer AND the third-largest digital advertiser in the world… While Walmart is neither.
But Walmart’s advertising efforts are part of a bigger plan… Social commerce.
The blurring lines between commerce and social media
Fancy that piece of merch featured by your favorite TikToker? Social commerce lets you buy it directly on the social media app, without leaving the app. The industry is expected to grow at over 30% annually and TikTok is perfectly positioned to benefit from the growth.
Walmart also has its eyes on social commerce — In Sep. 2020, Walmart and Oracle made a joint proposal to invest in TikTok:
- What TikTok has to offer? TikTok could give Walmart a channel to reach younger shoppers and expand into the fast-growing social commerce space.
- What Walmart has to offer? Walmart could use its e-commerce expertise and infrastructure to give TikTok a boost in the e-commerce space.
Here’s where Walmart’s ad platform comes in — using the data collected through Walmart’s ad network, it can show targeted ads inside a TikTok video — just one example of how Walmart can combine its ad platform together with TikTok to drive sales.
For investors… Save money, live better, with or without Walmart
Walmart isn’t your fast-growth tech company… Although it wants to be. It’s looking for growth amongst its e-commerce business, which grew 97% in the second quarter and Walmart+, a membership service that competes directly with Amazon Prime.
While Walmart’s ad business makes up less than 1% of its total revenue, its growth could make it a significant portion of the business. An investment in TikTok could jumpstart its growth over the next several years.