HomeEconomyRetail Giants Walmart and Amazon Witness Hike in Ad Spending as TV Advertising Fades

Retail Giants Walmart and Amazon Witness Hike in Ad Spending as TV Advertising Fades

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With the shift in consumer behavior and the burgeoning e-commerce sector, advertisers are investing more in digital platforms like Amazon and Walmart, reallocating budgets traditionally dedicated to television promotion. This significant alteration in advertisers’ strategies is propelled by data-driven insights, the ability to target specific demographics, and the impact of COVID-19, which expedited the digital transformation process.

One major factor driving this digital ad spending shift is the commanding dominance of consumer traffic on internet platforms. Research suggests that contemporary consumers spend more than seven hours per day on digital media, compared to approximately four hours on television. The gigantic online marketplace behemoths, Amazon and Walmart, attract billions of visitors each day, promising advertisers a vast audience footprint that television can scarcely rival.

Unlike traditional TV advertising, which adopts a broad-brush strategy, Amazon and Walmart offer advertisers data-driven targeting capabilities. On these platforms, advertisers can leverage shoppers’ purchase history, browsing activity, and other behavioral data to tailor targeted advertisements. This level of precision enables brands to promote their products with increased relevance, which in turn significantly boosts the likelihood of consumer engagement and subsequent conversions.

In efforts to emulate this personalised advertising capability, many TV broadcasters are gradually shifting towards connected TV (CTV) or over-the-top (OTT) platforms that enable targeted advertising. However, in this evolving landscape, the retail giants are still in the lead. Amazon and Walmart have had years of experience bolstering their recommendation algorithms and tweaking their ad targeting systems, creating a highly competitive edge that TV broadcasters are striving to catch up on.

Walmart and Amazon go beyond offering just a platform for marketers. They also sell products and services, meaning that customers do not only see ads, but they are already in the right place to make a purchase in an instant, thereby closing the gap between seeing an ad and making a purchase. Whereas TV advertising often depends on the viewers’ memory recall or subsequent actions to achieve conversions, advertising on online marketplaces facilitates immediate purchases and consequently quicker returns on advertising investments.

The unforeseen onset of the COVID-19 pandemic also played a significant role in driving up ad spending at online retailers. As physical store operations were compelled to restrict activity, consumers flocked to online shopping for both essential and non-essential items. This surge in online shopping created a golden opportunity for advertisers, prompting them to increase their investments in Amazon and Walmart’s digital advertising platforms.

In terms of generating shopper attention, the giants have not stopped at just ads. Walmart, for instance, launched its self-serve ad platform, Walmart Advertising Partners, to compete directly with Amazon’s robust advertising business. Meanwhile, Amazon has broadened its advertising repertoire with video streaming, attributing exponential growth in its ad revenues.

While it’s clear that TV advertising is not going to disappear, the shifting dynamics in consumer behavior and technological advancements indicate that digital advertising, particularly through major retail platforms such as Amazon and Walmart, is set to continue its upward trajectory. Advertisers are becoming vastly more pragmatic and strategic, employing data-driven insights and altering their initiatives to complement the ever-evolving consumption patterns and preferences of today’s consumers.

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