Many of us in the local space are familiar with PaperG. Victor Wong launched the San Francisco-based adtech company in 2007 and remains CEO. But today, PaperG now trades under the name Thunder Industries. And this week, Walmart announced it has acquired Thunder Industries for an undisclosed amount.
PaperG automatically builds custom ads for cross-platform/devices and targets the ads appropriately. This lowers costs and barriers for small and midsize budget campaigns.
Building an Ad Business
This acquisition is part of a larger effort by Walmart to become much more than just a retailer. The acquisition rests under the umbrella of Walmart Connect, the company’s recently renamed media operation.
“Thunder’s technology and team will reduce the time between the idea for an ad and the ad going live for suppliers,” said Janey Whiteside, Walmart’s Chief Customer Officer, in a company blog post. “The Thunder technology will be integrated with our display self-serve platform to help brands automate their creative. Thunder will also increase ad effectiveness over time with creative versioning, testing and optimization – unlocking advertiser-specific insights for higher return on ad spend.”
Thunder’s technology will help advance Walmart’s ambitions to become a true DIY ad platform for brands and small businesses alike.
“Over the last two years, we’ve been on a journey to help advertisers run their campaigns more efficiently using self-serve and automation capabilities,” Whiteside said. “With the launch of Walmart Advertising Partners Program, Self-Serve Sponsored Product Interface and our Performance Reporting Dashboards, we’re proud of the progress we’ve made on this journey. Today is another big step forward, and we’re thrilled to have the talented team at Thunder join Walmart.”
This acquisition, and Walmart’s media efforts more broadly, seems to be aimed squarely at Amazon. A lesser-known aspect of Amazon’s revenue is its ad business. The eCommerce company expects to generate $13 billion this year from selling ads on its platform. That seems like a lot of money. But it’s a rounding errors in the context of the $386.1 billion took in in 2020.
Yet taken together with other moves this year, Walmart is looking to make itself a player in online advertising. And it wants to become an ally of small businesses as they make the offline to online transition.
Teaming Up with TikTok and Shopify
One case in point is Walmart’s partnership with TikTok. As my colleague, Neal Polachek wrote back in September last year.
Another clear path for Walmart is to take a page from Amazon’s playbook and build an advertising business around the TikTok experience. Quietly and methodically, Amazon has built a $15 to $20 billion advertising business. While building a similar-sized business at Walmart would only add a few points of growth to Walmart’s topline, those ad dollars would come at a more attractive profit margin.
In December, we wrote about Walmart’s involvement in the first-ever TikTok live stream event in the United States. Here is what we wrote at the time.
Walmart and TikTok have a massive opportunity to partner to drive commerce in the U.S. Walmart stands to gain from TikTok’s massive audience (and younger demographic). And of course, from the streams of consumer insights flowing through the TikTok platform.
Also notable was Walmart’s deal with Shopify, which my Localogy colleague Mike Boland wrote about back in June of last year.
The latest news from Shopify is its new collaboration with Walmart. The deal will bring Shopify and its online merchants into Walmart’s Marketplace. This will start with 1,200 merchants this year, presumably growing over time as Shopify has more than 1 million businesses on its platform.
As for who those lucky 1,200 merchants will be, Walmart says it’s prioritizing SMBs whose products complement (read: don’t compete with) its own, and those with strong customer reviews. Once approved, they can upload products to the Walmart Marketplace directly from within their Shopify dashboard.
One path to beating Amazon is to become more valuable to small businesses better than the eCommerce leader is. At least in part, this seems to be the game Walmart is playing.
Walmart isn’t just building advertising and eCommerce platforms. It also is taking a page from Alibaba and building a financial services platform. The company has partnered with Ribbit Capital (an investor in the controversial trading app Robinhood) to create a new fintech startup. This is how Walmart describes the new venture.
“The venture will bring together Walmart’s retail knowledge and scale with Ribbit’s fintech expertise to deliver tech-driven financial experiences tailored to Walmart’s customers and associates.”
We imagine this will take the form of an app that Walmart’s community can use as a non-traditional banking tool. For borrowing and likely micro-investing. There are so many such apps out there today doing bits and pieces of this. From Robinhood to Dave to Acorns and many others.
Walmart is already involved in financial services. At its Walmart Money Centers, it offers customers check cashing, tax preparation services, and international money transfers. Kind of Walmart meets Western Union. Its fintech startup, as described, takes it much deeper into the modern race to become a true cloud-based banking and investing alternative.
We imagine all of these moving parts — adtech, eCommerce, and fintech — will inevitably converge. So these moves make Walmart a definite company to watch in 2021. Too bad we left it off our annual watch list.