Retailers Like Walmart, Kroger, And Target Are Jumping Into Online Data And Ads

Matty-Sways

Mega-retailer Walmart has a huge customer base that is ordering online and giving Walmart the opportunity to sell ads.

When the pandemic hit and retailers like Walmart, Kroger and Target began to see large amounts of traffic online the companies began salivating over the windfall of consumer data that became available and the possibility of online advertising as a future profit maker. Target in its most recent quarter saw digital sales triple, Kroger and Walmart U.S. saw surges of 127% and 97%, respectively. Statistics suggesting much of the shift to online shopping could prove permanent (curbside pickups are quite popular).

Advertisers are finding that it is easier to quantify returns on ad dollars spent on sites like Walmart vs podcasts, YouTube, social media influencers and the like. For reference in its third quarter, Amazon’s “other” revenue (primarily advertising), grew roughly 51% from a year earlier to $5.4 billion, a much faster pace than the rest of the business.

In 2015, the “other” category, which included advertising and co-branded credit cards, pulled in roughly $1.7 billion. Since then, the segment’s revenue has grown almost 70% a year on average, snowballing to $14 billion in 2019.

Estimates say Walmart will command 7% of total U.S. e-commerce ad spending by 2022, a share worth roughly $2 billion. Walmart is expected to reach $364 billion in the U.S. this year. When a retailer of volume like Walmart can add an “intelligence-based, asset-light and high margin” business its a huge deal.

Although it is difficult to parse out the costs involved in scaling up an advertising and consumer-insights business, Evercore analyst Michael Montani notes that such an operation is That makes it a welcome addition to traditionally low margin, volume-driven retail.

Kroger has indicated that revenue for its advertising and consumer-insights platform is set to more than double this year. ,Kroger projected that alternative profit streams, including advertising and gift cards, could bring in up to $150 million of incremental operating profit this fiscal year.

By 2023, ad spending on e-commerce channels is projected to double from this year’s levels, according to eMarketer.

Read more here

Comments

Economics, Finance and Investing

FEATURED
COMMUNITY