The two largest online and real retailers are relying on a newly designed product for sales: advertising space.
Walmart (WMT) this week confirmed plans to expand the reach of its advertising business through a $2.3 billion acquisition of smart TV maker Vizio, deploying a range of screens to provide Walmart and advertisers with in-home tools provide “to engage with customers” (monitoring? ) and another interface to promote e-commerce.
The Vizio play fits Walmart's aggressive advertising build. Insider Intelligence predicts the retailer will increase its advertising revenue by nearly 40% this year. That's more than any other company.
Companies expected to significantly increase their ad sales in 2024 include others in the grocery and retail space that are pursuing the higher margins of digital ads—Instacart (CART), Target (TGT), and, you have guess it, Amazon (AMZN) – is moving its online platforms into a different system for managing user attention and money. It's a natural evolution for these companies, which over the years have also become powerful search engines, hosts of user-generated content (reviews! usernames!) and content publishers.
Walmart's move to gain more data and advertising power comes as Amazon grew its ad business 27% year over year, according to its most recent quarterly report.
The market's respect for Big Tech and its eagerness to transform legacy and digital operations into advertising portals was evident in other ways. Next week, Amazon, the third-largest player in the world of digital advertising behind Google (GOOG, GOOGL) and Meta (META), will join the elite members of the Dow Jones Industrial Average.
“This change reflects the evolving nature of the American economy and will increase the exposure of consumer retail and other business sectors to the DJIA,” said S&P Dow Jones Indices, which manages the 30-stock index. Or as S&P analyst Howard Silverblatt put it bluntly on Yahoo Finance Live: The index added Amazon because it “needs to stay relevant.”
Amazon is becoming an ad-tech giant while the country's largest retailer is busy transforming itself into a tech company. “Digital advertising is the future of Walmart,” Oliver Chen, senior research analyst at TD Cowen, told Yahoo Finance Live.
And while that may sound silly at first, it's another way for a company to gain an advantage through vertical integration: owning the store and the billboards. Or in this case, the screens that do both.
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