Walmart's programmatic platform will offer new video ads and second-price auction

Walmart is experimenting with video ads on its site as one of the new updates to the demand side platform it launched last year to automate the delivery of online ads on Walmart.com. Meanwhile, Walmart also is changing how it sells ads in online auctions, implementing a second-price model, which is a more transparent way to award the ad space, and something brands have requested.

Rich Lehrfeld, senior VP and general manager of Walmart Connect, announced the new features in a blog post today. Lehrfeld touched on the new video ads that would start popping up on Walmart.com before the second half of the year; he also announced new measurement capabilities so marketers could analyze the effectiveness of their campaigns, and the expansion of the automated ad platform to more brands.

“We are making it faster, easier, and more efficient for brands to launch and manage display campaigns on Walmart.com all on their own,” Lehrfeld said in the blog post. “We recently rolled out Display Self-Serve to our first phase of advertisers, giving them more speed, flexibility and control with their display campaigns.”

Walmart is building out its retail advertising network, an online ad ecosystem that melds its data on 150 million shoppers with targeted ads, on and off its website. Last year, Walmart launched a demand side platform with The Trade Desk. In February, Walmart announced its ad revenue for the first time, which hit $2.1 billion in the fourth quarter of 2021, as the retail giant is competing in the growing retail media space. Amazon is considered one of the more sophisticated retail media and internet ad platforms, and a number of rivals are following suit.

“There is a lot of buzz on retail media, as you know,” Lehrfeld said in a recent phone interview, in which he outlined the updates to the platform. “It’s disrupting the ad industry.”

Walmart ads have attracted many consumer product brands, and other marketers that are strong sellers in Walmart stores. Walmart also released a case study about Bic razors, showing how the brand used the demand side ad platform to target recent customers and “likely” customers.

Walmart is still a nascent ad service without all the automation and auction dynamics that appeal to online advertisers. But Walmart just introduced second-price auctions, which awards online ad inventory based on the second-highest bid in auctions. That means if a brand bids $10 for 1,000 impressions online, but the second-highest bid was $5, the brand that bid higher would essentially pay $5.01. The auction is considered fairer because the winner understands more about the other bids based on the winning price—the advertiser isn't in the dark about whether they overbid. Second-price is also more economical.

Advertisers have wanted more transparency from Walmart as the ad platform evolves, according to a number of ad executives, who spoke on the condition of anonymity. “We’re seeing significant budgets shift to Walmart,” said one ad agency executive with expertise in retail media. “But there is still skepticism and a desire to test it out.”

Walmart is making upgrades to the platform to be more friendly to ad agencies and programmatic ad buyers—the kinds of advertisers that use automated ad services, these advertisers said. Walmart offers the ability for brands and ad agencies to bring their data to target customers with ads, similar to Amazon and others, but it is still developing additional data services. Lehrfeld said that Walmart is working on “clean room” technology, for instance, which is a data service that many internet ad platforms offer, where brands can analyze encrypted data. The data is more private, but still offers insights to brands, so they can build target audience segments and measure the results of campaigns.

Walmart is developing “new ways for marketers to engage with customers throughout their shopping,” Lehrfeld told Ad Age. Video is one of the new ways it wants to show brands on its own website. Currently, Walmart delivers video ads off its site through demand side platform it runs with The Trade Desk, which also reach connect TV, but Walmart wants to run video on its property.

Meanwhile, Walmart also wants to connect internet ad campaigns to in-store activations, giving more online advertisers the ability to run in-store sample promotions or to appear in out-of-home ads on screens in the stores.

Walmart also announced that Jungle Scout, a shopper sales and analytics platform, would become a marketing partner. Jungle Scout already works with Amazon’s ad platform.

Lehrfeld said Walmart wants to give advertisers the ability to “find the right expert that they choose to help scale and automate search campaigns.”

Lehrfeld said that Walmart’s updates were all part of its strategy to attract more brand budgets, with more upper-funnel goals that drive awareness for their products, while also building more automation for performance goals, which lead to direct sales.

“We’ll continue roll out the DSP for more advertisers,” Lehrfeld said, “helping brands reach customers across all digital.”