How data-powered advertising drives business for retailers

Major retailers such as Walmart, Amazon.com and others are using data on shoppers’ purchases and sell digital ads on their own websites and in stores — including pop-up banners and search-bar keywords — to marketers eager to pitch their products.
Walmart Connect
The retailers want to tap their insights on consumer behavior to attract ad dollars from packaged goods manufacturers like Procter & Gamble and Kraft Heinz at a time when companies face new challenges in targeting marketing to people online, Reuters reported.

Walmart said that sales at its advertising business increased nearly 240 percent in the third quarter on a two-year basis. The ads help suppliers and marketplace providers sell more while creating a new profit opportunity for us, Walmart CEO Doug McMillon said. Walmart’s income from advertising is growing in the United States, Mexico and its Flipkart.com unit in India.

U.S. grocery chain Albertsons launched its own media network, Albertsons Media Collective. In October, Kroger’s Kroger Precision Marketing – borne from the acquisition of a data analytics firm in 2015 – launched a private advertising marketplace that will give brands a tool to help them buy digital ad space more efficiently.

Apple in April rolled out privacy changes that prevent advertisers from tracking iPhone users without their consent. Alphabet’s Google in 2023 will stop Chrome web browser cookies, which save information about users’ browsing habits, helping advertisers determine product interest.

Retailers hope to entice manufacturers to buy ads on their websites and shopping apps.
Retail advertising
Amazon.com is the only retailer that has come close to challenging Facebook and Google’s dominance. Amazon.com claims that its yearly U.S. advertising revenue has surpassed $15 billion.

For comparison, Walmart was on track to earn nearly $1 billion in advertising sales in 2020. That compares to Facebook and Google’s 2020 U.S. ad sales of roughly $40 billion each, according to eMarketer.

Walmart wants to expand its advertising business after more than a decade of stuttering progress. In August, Walmart upgraded its platform to allow brands a demand-side platform that will help them buy digital ad space more efficiently.

Nearly all of the top 10 retailers by worldwide sales including Target and Home Depot have launched advertising businesses, and more are expected to follow, said Eric Franchi, a partner at MathCapital, which invests in marketing and media startups.

Target said its media business, Roundel, is an important part of its business and a driver of growth.

Brands spent 66 percent more on retail media during the 2020 holidays than they did a year earlier, according to Skai, a data company that works with brands that buy ads from Amazon, Walmart and Target.