Retail media networks are all the rage. At a time when retailers are looking to reinvent themselves and diversify revenue, media networks let them monetize physical space in and around their stores. This is valuable ad inventory given its proximity to the cash register, and its exposure to high-intent shoppers.
Another benefit of retail media networks is that they offer ways for retailers to develop deeper relationships (read: spending) with their brand partners. They not only sell those brands’ products on their shelves but help them amplify sales through in-store promotions – a mutually-beneficial outcome.
Altogether, it helps retailers establish new revenue streams and diversify the revenue mix, as noted. In addition to selling brands’ products – with all the arbitrage that goes with it – they can now tap into those brands’ marketing budgets. From an ad sales perspective, it’s like fishing in a barrel with dynamite.
But beyond ad partnerships that simply extend from the existing brand-retailer relationship, what about other brands? Is there an opportunity to tap into ad dollars from the brands and SMBs that don’t sell their wares on a given retailer’s shelves? These “non-endemic” brands are where Walmart sees opportunity.
Sweetening the Pot
With that backdrop, Walmart has revealed that its U.S. advertising division, Walmart Connect, is expanding access to retail media placement to non-endemic brands and marketplace sellers. The former is the cohort outlined above while the latter includes smaller merchants that sell on Walmart.com.
Starting this month, both groups can bid for display ads throughout Walmart stores using the company’s self-service ad platform. Think of it like Google AdWords for physical retail. And like AdWords, this move positions Walmart to tap into a long tail of advertisers that it may not reach today (more on that in a bit).
To buttress this move, Walmart is making in-store modifications like more digital displays and demo stations. The latter is a longstanding form of retail merchandising that now plugs into the broader retail media narrative, including things like free sample stations and awareness-boosting product demos.
Walmart is also importantly offering advertisers more creative support. In addition to serving as an ad distribution vehicle, its Creative Builder platform helps brands develop creative assets for their campaigns. This could be particularly relevant for the non-endemic brands that are new to retail media.
Lastly, it’s worth noting that all the above comes shortly after Walmart acquired television brand manufacturer Vizio. As we examined at the time, this elevates Walmart’s retail media play by sweetening the pot for brand marketers with streaming video advertising in addition to in-store display options.
Large But Limiting
Backing up, who are non-endemic advertisers and what type of opportunities do they present? They’re essentially all the advertiser categories that fall outside of consumer packaged goods that can go on retail store shelves. We’re talking restaurants, automotive, financial services, home services, etc..
When you look at it that way, this move makes sense in that it broadens Walmart’s addressable market of advertisers far beyond the large, but relatively limiting, CPG category. Walmart is also effectively expanding its addressable market in another way: democratizing retail media to local SMBs.
For example, retail media display advertising can be contextually relevant – not to mention geographically relevant in terms of nearby store placement – to Walmart products. This could involve things like local contractors or landscapers that advertise in and around Walmart’s hardware section.
In that way, this move is conceptually adjacent to something we wrote about yesterday: Hibu’s move to bring Amazon contextual ads to SMBs. Either way, it’s clear that Walmart is doubling down on retail media, which grew 30 percent year-over-year in 2023 and now represents $3.4 billion in revenue.
Editor’s note: come check out the retail media deep dive we’ll do at L24 in Dallas in just two weeks.
