1. Advertising Experience vs. On-Site Experience
Starting on March 1, 2021, Walmart streamlined the way search ads are bought across Walmart.com and Pickup & Delivery. Advertisers no longer need to choose whether their ads serve on Walmart.com or on PD. Search ads will automatically serve in the most relevant placements across the entire platform. This means that Pickup & Delivery inventory is available through Walmart self-serve and through the Walmart Advertising Partners program.
Although the experience for advertisers has changed, the on-site experience for shoppers remains unchanged on desktop, mobile, and the Walmart app. Shoppers still have to choose whether they want to shop Pickup & Delivery or Walmart.com. Once there, the shopper is locked into the assortment for that platform. If a shopper wants to navigate to the other platform (e.g. from PD to Walmart.com), they would have to conscientiously toggle to that platform. For a deeper dive on the Pickup & Delivery experience, check out our recent post.
We have been told that this will eventually change, in which there will be a singular shopping experience across both platforms. For example, a shopper searching for toilet paper will see all products on the search results page and then decide which fulfillment method they desire. Once decided, they will enter a ‘tunnel’ in which only products available via that fulfillment method will be shown.
2. Early Trends
We looked at numerous advertisers in the CPG space to determine the impact of mixing in PD ad placements to their existing .com advertising. We looked at 2021 Year-to-Date data, in which we separated the pre-merger time period (1/1/2021-2/28/2021) and the post-merger time period (3/1/2021-3/9/2021).
These are the early trends that we have seen as the ad inventory has merged (note that this includes normalizing sales attribution for both time periods in order to provide a meaningful comparison).
- Clicks – As the PD placements have mixed in, average daily click volume for the advertisers in this cohort has increased by 100%. This means for many CPG brands, there was a similar level of traffic and ad engagement on PD as what they saw on .Com.
- Cost – The total CPC decreased by -22% in the post-merger time period. This means that the PD platform had a deflationary pressure on total costs for our advertisers.
- Spend – Average daily ad spend has increased by +55%.
- Conversion Rate – Overall conversion rate has increased by +14.5 pts, suggesting that the PD shoppers have a higher intent to purchase. We have seen similar trends on other grocery and local delivery platforms, where shoppers tend to do less window-shopping and research and instead are there to actually shop.
- ASP – Mixing in PD assortment has reduced overall Average Sales Price by -15%. We have seen that overall price points tend to be lower on PD assortment.
- ROAS – the drivers of ROAS are CPC, Conversion Rate, and ASP. Even though ASP decreased, the tailwinds of a lower CPC and higher Conversion Rate have boosted ROAS for these CPG brands by +25% in the post-merger time period.
3. Current Limitations
This merger of the .com and PD ad platforms is mostly relevant for CPG brands as they will have a broader assortment across Pickup & Delivery (PD) and Walmart.com. Currently, there is one key limitation: Advertisers cannot activate platform-differentiated bidding strategies for products that are available on both Pickup & Delivery and Walmart.com. In other words, if you have the same assortment on both Pickup & Delivery (PD) and Walmart.com, you cannot choose to bid more aggressively (or more conservatively) on only one of the platforms – any bid changes would apply to both platforms. A reason you might want differentiated bidding strategies is if you identify a difference in CPCs between the platforms. In such a case, you would want to capture the lower costs by bidding less aggressively on that platform. Some client categories have historically seen variations in CPCs across Walmart.com vs P&D, so it should not come as a surprise if overall account performance shifts. These limitations apply to budget as well; if one portion of Walmart’s site is more important to your business goals, you are unable to allocate a certain portion of your budget to each portion of Walmart site. If you do not have SKUs that are eligible for Pickup & Delivery, your products will not show on PD (and vice versa.)
It is also worthy to note that both Walmart.com and Pickup & Delivery are still under the first price auction model, i.e. advertisers pay what they bid. Strategic and calculated changes should be made when in a first price auction to avoid inflating costs, so monitor changes in performance closely and focus on the levers you do have via Walmart Connect.
4. Campaign Strategy Recommendations
While you cannot differentiate bids between the platforms on products that are present on both, advertisers do have some levers they can pull to optimize their advertising efficacy given the current constraints. To set this up, you can categorize your brand’s entire Walmart eComm assortment into 3 segments:
- PD-only products
- .Com-only products
- Products that are shared across both platforms
In order to mitigate the bid-differentiation limitations mentioned earlier, we recommend setting up 3 sets of campaigns to maximize the level of control over your item-level bidding. Our recommendation is to set up unique campaigns for your PD-only assortment, your .com-only assortment, and the assortment that is shared across both platforms. Doing so has three key benefits:
- It will enable you to measure performance differences on your PD and .Com SKUs.
- Once you have measured the differences, it will enable you to take advantage of CPC price differences when bidding for your platform-differentiated products.
- Invest to drive strategic mix – Is your PD assortment more profitable? If so, structuring your campaigns into three distinct segments will enable you to have more control over driving spend into the desired platform.
This is not a perfect solution since most advertisers will have a sizable number of SKUs that are shared, but it will at least enable you to get some early learnings and shift your strategy as needed.
For advertisers with one set of SKUs that are eligible across both Walmart.com & Pickup & Delivery, leveraging Placement reporting & optimizations is going to be the key to adjusting your campaigns across the two platforms. Walmart is giving advertisers the chance to bid up on a couple of different placements that differ from .Com to P&D.
Bid Modifiers will allow you to increase your bids on these placements up to 900% to increase the volume that your ads show in these ad slots. Monitor your campaigns’ performance in these placements for a few weeks with the new sales attribution and optimize where your campaigns perform best. An outline of how these placements line up to the two Walmart platforms & campaign types is below.
- Home Page: Pickup & Delivery Auto Campaigns only (this will impact Features Items & Personalized Carousels)
- Stock Up: Pickup & Delivery Auto Campaigns only
- Search In-Grid: Includes Pickup & Delivery Auto & Manual Campaigns, and Walmart.com Auto & Manual Campaigns (this is the area where you are unable to differentiate between the platforms)
- Buy Box: Walmart.com Auto Campaigns only
5. Sales Attribution Changes
Changes – Effective March 1, ROAS is Click only (includes Direct clicks, Brand clicks, and related clicks). All historical campaigns (live, paused, ended) will have click only ROAS data backfilled.
Impact on Optimizations – You will likely want to revisit your current thresholds for making optimizations, as sales attribution metrics have changed. For example, if you’ve previously defined success as a $2.00 ROAS for certain campaigns, you might see that this is too high to achieve your desired level of spend. Our recommendation is to collect data for 2-3 weeks and then readjust your success KPIs accordingly. If you are currently leveraging rule-based optimizations, you will also want to revisit your thresholds to ensure that they are working correctly.
Communicating to stakeholders – If you’ve been previously using the default Walmart attribution which includes views AND clicks, you will likely see a decrease in your overall ROAS. This is just a superficial change and does not mean that your advertising is less efficient. It is important to communicate this change to internal stakeholders that have been accustomed to seeing a certain level of ROAS so that any reporting that goes out after the March 1 transition does not startle them.