Up Against The Wal’
Walmart is loving its ad business more every day.
Net sales were flat in Q1 at $29.8 billion, yet Walmart’s profit margin continues to rise despite the triple headwinds of tariffs, manufacturing issues and shipping/return costs. How? Thanks to high-margin growth in membership subscriptions and, yep, ad revenue.
For the first time, Walmart’s US and international ecommerce businesses were net profitable over the course of a quarter, CEO Doug McMillon told investors on Thursday.
And it’s a virtuous cycle, emphasized CFO John Rainey. For instance, the cost of doing home deliveries improves alongside the “density” of Walmart’s ecommerce network.
Walmart now ships large quantities of packages to a specific area or particular streets, rather than sending small batches of items or making one-off deliveries. And those sales are driven disproportionately by advertising.
Still, Walmart’s entire ads business last year was only $4.4 billion, as compared to department store sales of more than $178 billion. What’s important to note, though, is that advertising and membership revenue now accounts for 25% of Walmart’s profit, McMillon said.
Change Agent
Neo better show up soon, because agents are coming to destroy everything.
But “Matrix” jokes aside, big businesses are hurling themselves into the agentic AI future (or present?).
Microsoft, for example, just this week announced plans to shutter Microsoft Invest, the one-time AppNexus DSP, and replace it by early next year with an ad tech extension of Microsoft’s generative AI chatbot Copilot.
Personal shopping agents, however, are the real prize.
“It will be different,” Walmart US CTO Hari Vasudev tells The Wall Street Journal in reference to chatbots taking over shopping duties from consumers. “Advertising will have to evolve.”
Walmart plans to launch one such AI search bot. Meanwhile, Mastercard-owned data analytics business Dynamic Yield introduced Experience Search on Thursday, a personalized shopping product based on generative AI prompts.
But one has to wonder whether businesses are too confident and invested in shopper agent theories that are as yet far from proven. The Journal cites ordering groceries, for instance, and Walmart’s Vasudev gives this shopper prompt example: “I want to plan a unicorn-themed party for my daughter.”
Here’s a question: What happens if LLM operators with shopping agents end up hallucinating during someone’s grocery order?
You(biquitous)Tube
As a platform for both short-form video on mobile and now longer-form content like video podcasts, YouTube finds itself competing with the likes of TikTok and Meta – as well as with streaming services like Netflix and Amazon Prime.
At this year’s upfronts, YouTube tried to win over brands by capitalizing on its identity as a home for creator content, Ad Age reports.
At Brandcast, which is YouTube’s name for its annual showcase during upfronts, it put the spotlight on talent and ad placements alike.
MrBeast was there and so was “Hot Ones” host Sean Evans together with YouTube execs ballyhooing new ad placements that allow brands to buy against big cultural moments. YouTube also hyped its expanding partnership with the NFL, which now includes streaming an early-season game for free.
But, as Ad Age points out, creators were really the star of the show at Brandcast. Sean Downey, Google’s president of Americas and global partners, put it this way: “YouTube is where creators truly call home.”
But Wait! There’s More
Speaking of YouTube and video podcasting, the platform started releasing a weekly chart of its top 100 podcasts. [The Verge]
DoubleVerify sues Adalytics for defamation over its March report on pre-bid bot detection. [filing]
Roblox launched new Commerce APIs for creators to sell physical products via a Shopify integration – as in, sales that aren’t subject to Google’s and Apple’s respective app store fees. [TechCrunch]
Advertisers strike back at Elon Musk’s ad boycott lawsuit, saying X disrupted its own business and “alienated” customers. [Business Insider]
Hackers gained access to the personal data of Coinbase users by bribing a few of the company’s overseas support agents. [CoinDesk]
Microsoft will end support for Bing Search APIs on August 11, ending app developer access to Bing search data. It recommends a new generative AI search integration instead. [Wired]
Journalists and media executives share how they’re using and experimenting with generative AI. [Columbia Journalism Review]
You’re Hired!
Former McAfee and WP engine marketer Sachin Puri is the new CEO of web hosting provider Bluehost. [release]
