Walmart is the largest retailer in the US. While Amazon wins in pure online sales, Walmart's physical footprint dwarfs its eCommerce rival. Now with the release of Walmart's Sponsored Products, brands and advertisers are faced with the question of how to balance these two major paid search platforms.
You may be tempted to replicate your Amazon ad campaigns for the Walmart platform, but that would be your first mistake. Sponsored Products work quite a bit differently on Walmart vs. Amazon, so before you formulate your campaigns, consider the following key differences and how they might impact your bids, budgets and overall strategy.
1. Ad Placements
Key difference: Amazon is stuffed with ads.
Over time, Amazon has offered up more and more ad placements, to the point that organic results now control a minority of first page real estate for the most common search terms on Amazon.com. Take, for example, a recent search for the term 'protein bar':
The pro-Amazon argument is that more ad real estate means more opportunity to get your products in front of shoppers. Amazon's share of US digital ad spend is rapidly approaching that of Google and Facebook and without a wide variety of placements emerging brands could easily be squeezed out by the big budget multinationals.
The pro-Walmart argument is that Amazon is becoming pay-to-play. Generally speaking, the purpose of paid search is to drive organic performance: the increased visibility of ads bumps up brand awareness, traffic and conversion in order to fuel long-term search rank and grow your customer base. But with organic placements dwindling on Amazon's first page, brands need to keep spending more just to stay in the game.
Walmart is consciously offering an alternative. T. For advertisers this is quality over quantity, keeping the focus of ad spend on fueling organic search ranking and increasing the reach of ads by reducing ad fatigue for shoppers.
2. First Price vs. Second Price Auction
Key difference: Walmart levels the CPC playing field.
Another conscious differentiator on Walmart's part is to opt for a first price auction. Amazon ads are sold on a cost-per-click (CPC) basis: advertisers bid on their target keywords and set the maximum they are willing to pay per click, but the final CPC price is not set by the winning bidder but by the second-highest bid plus one cent (the second price + $0.01).
Walmart's auction system works similarly, but the winning bidder pays their full CPC bid (the first price) rather than the lower second price.
On the surface, this would seem to suggest that Walmart's ad placements will tend to cost you more, but in practice this actually helps to level the playing field. In a second price auction, advertisers can game the system by bidding extremely high, confident that they won't have to pay the full price while blocking anyone else from winning the placement. This allows multinationals with huge budgets to lock smaller brands out of certain key terms.
Key difference: CPCs are higher on Amazon, for now.
And that brings us to the actual prices. Amazon is the #3 destination for digital ad spend in the US (and counting) and all that competition over keywords drives up CPC prices. Walmart's ad platform, meanwhile, is a newer marketplace with lower competition over ad real estate. Therefore, smaller budgets can go further on Walmart.com and brands will have an easier time winning the most popular search terms, achieving a positive ROAS and driving organic lift.
Key difference: Amazon attracts much more online traffic.
Amazon generates five times more web traffic than Walmart. Though ad competition is fierce, there's no question that winning paid placements on Amazon will get you more impressions. Not only is Amazon.com the largest online retailer in the US, it's also the place where most shoppers begin a product searches, meaning visibility on Amazon can drive product awareness across all channels.
And yet, Walmart still beats it. Walmart.com sees only 20% of Amazon's traffic, but reaches 95% of US households – improving your standing with the country's largest retailer is never a bad thing. Because Walmart is omni-channel, digital ad spend can influence consumers through the full funnel and allow you to measure the impact of your ads directly, online and in-store.
Key difference: Walmart promises better data for advertisers.
Amazon is infamous for providing advertisers with incomplete data. While it's true that the eCommerce giant has gradually exposed more data over time, the gaps and limitations have posed challenges for brands looking to better understand consumer behavior and improve their marketing strategies.
So when Walmart promises 'More transparent reporting' in its Sponsored Products, it's pretty obvious who they're referring to. Already, Walmart provides data insights on ad placement performance such as desktop or mobile. That level of insight is currently lacking in Amazon Advertising. Even if their ads reach fewer shoppers, the investment is worth it if it means gaining a more complete and comprehensive understanding of the impact of digital advertising.