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Walmart is trying to build a big ad business, but some agencies that control a big chunk of the $17 billion market worry they’re getting pushed out

View the original story here on Business Insider written by Lauren Johnson.

  • Walmart is ramping up its advertising business by partnering with a handful of adtech firms that help marketers buy and manage ads.
  • Some small e-commerce agencies say that Walmart is pushing advertisers to work directly with the adtech firms, cutting out ad agencies.
  • The agencies represent a big chunk of the $17.4 billion e-commerce ad market and argue that Walmart needs them because of their e-commerce expertise.
  • The agencies also said Walmart has limitations that could lead clients to move Walmart ad spend to Amazon.
  • “Whether a brand chooses to work with an agency or directly with one of the leading API platforms is ultimately their choice,” a Walmart spokeswoman said. “Working directly with an API partner gives advertisers and agencies direct access to campaign performance, greater transparency into their campaigns, and the ability to optimize at scale.”
  • Visit Business Insider’s homepage for more stories.

Walmart has big advertising ambitions — but its approach has strained its relationships with some small agencies who also say it could alienate some advertisers.

Walmart in January launched a self-serve ad platform and API that lets advertisers buy ads through four adtech firms: Teikametrics, Flywheel Digital, Pacvue, and Kenshoo.

Walmart wants to get more ad dollars from big and small advertisers alike that are selling more online. Walmart has aggressively hired for Walmart Media Group, its advertising arm.

But some specialist agencies that help marketers advertise on e-commerce marketplaces say Walmart is encouraging brands to work directly with its adtech partners and suggesting they don’t need the agencies to buy ads.

Some of those agencies have also complained that Walmart is slow to get campaigns up and running.

Business Insider spoke with experts at five e-commerce specialty agencies. Most built their businesses off of Amazon advertising and represent clients like big packaged goods brands. They represent a sizable chunk of the $17.4 billion that advertisers will spend on US e-commerce advertising this year, according to eMarketer.

None of the agencies said that they’ve lost business as a result of Walmart’s work with adtech companies but they worry it could happen. They also said that they might pull clients’ advertising from Walmart and spend it with competitors like Amazon due to Walmart’s data limitations.

“Whether a brand chooses to work with an agency or directly with one of the leading API platforms is ultimately their choice,” a Walmart spokeswoman said. “Working directly with an API partner gives advertisers and agencies direct access to campaign performance, greater transparency into their campaigns, and the ability to optimize at scale.”

Facebook, Google, and Amazon have also tried to work directly with the marketers themselves that control ad budgets. Amazon has a similar deal with adtech firms.

“Walmart hasn’t communicated with this level of sophistication with advertisers before,” said John Lods, CEO of specialist agency Arm Candy. 

These specialist agencies argue that since Walmart is earlier in building an advertising business, it can benefit from working with firms like theirs that have more expertise than big agency holding companies do.

“Agencies need to build their relationships with Walmart and prove out that [agencies’] models work,” said Sam Jennings, lead client strategist at e-commerce agency Marketplace Strategy.

Agencies say Walmart’s ad program may push them out

Walmart’s adtech partners manage ad campaigns across multiple platforms in exchange for a flat fee or a percentage of ad spend.

Jason Goldberg, chief commerce strategy officer at Publicis, said the adtech firms’ pitch is compelling to brands who want to reach a big audience this way.

Some also offer agency-like services, and some agencies say Walmart suggests they can do the same thing agencies can. Some agency sources worry that their businesses will get squeezed if Walmart tries to cut ties with agencies. 

“If you’re a brand talking with Walmart about investing in search, they are more likely to recommend a tech partner,” said Sam Jennings, lead client strategist at e-commerce agency Marketplace Strategy. “We’ve had a couple instances where Walmart is really pushing that on a brand to the point where they would recommend Kenshoo over and above a typical search agency.”

Nich Weinheimer, general manager of e-commerce at Kenshoo, said that Kenshoo doesn’t pull ad spend away from agencies and that the firm works with both advertisers and agencies.

“Agencies and brands around the globe already use our platform for e-commerce, search and social advertising — Kenshoo brought many of these advertisers to WMG,” he said. “[Advertisers] require automation and advanced tools to rapidly scale, make better decisions and streamline with automation.”

Amazon could be the winner of Walmart’s stumbles

In addition to worrying about getting pushed out, several agencies listed limitations of Walmart’s ad business. They said Walmart’s API lags Amazon in terms of the regular data and measurement it provides advertisers and that the API onboarding process is long.

“It’s definitely created a bottleneck in terms of speed to go to the platform because everybody has to be evaluated,” said Elizabeth Marsten, senior director of marketplace strategic services at Tinuiti.

Some of the agencies said these limitations may cause advertisers to pull their advertising and divert it to Amazon.

“We’re not able to run as dynamic of an ad strategy on Walmart as we are on Amazon because we don’t have that API access,” said Laura Meyer, founder and CEO of the Amazon-focused ad agency Envision Horizons.

The Walmart spokeswoman said that the onboarding process is typically less than five business days but can vary by adtech company. She said that Walmart is also considering adding more partners.

“We know that automation is the future of advertising and that brands are asking for more of this,” the spokesperson said. “Not only are we continuing to invest in the growth of current API partners, but we are also evaluating the expansion of this program in the future.”

Written by Team Arm Candy

A team with one purpose and one purpose only, to help you look good!

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