Daily Management Review

A Successful TikTok Bid Could Quickly Push Up Walmart’s Ad Revenue


A Successful TikTok Bid Could Quickly Push Up Walmart’s Ad Revenue
If the attempt of the United States based global retailer Walmart Inc to acquire the Chinese owned popular short-form video app TikTok is successful, it could make the retailer into an online advertising leader almost overnight, according to analysts.
The largest retailer of the world could quickly compete with e-commerce giant Amazon.com Inc, Facebook Inc and Alphabet Inc's Google in terms of social media presence and reaching out to huge number of prospective consumers across virtual and physical sales channels it its efforts to acquire app, in partnership with another American tech giant Microsoft goes through.
The Chinese owner of the app, ByteDance, has been ordered by the Trump administration to selloff the US business of TikTok to an American company within 90 days of issuing an executive order on August 14 by Trump. The US administration is concerned that the app and the Chinese company could share the personal data of millions of American users of the app with Chinese authorities thereby endangering the national security of the US.
For the first time last year, large consumer goods companies and advertising firms have been pitched its ad business by Walmart. Walmart was "confident" of meeting expectations of TikTok’s US users as well s satisfy concerns of US regulators, the company said.
According to report, ByteDance is expected to strike a deal for the sale off of TikTok by September 15.
"Walmart is going to see a very quick rise in ad spend" if its bid succeeds, said Scott Smigler, president of e-commerce marketing agency Exclusive Concepts.
"From a brand standpoint, it's a no brainer because of the reach Walmart has and the huge shift we're seeing right now from offline to online (spending). ... For all of our brands and retailers that are eligible, we're going to want them on Walmart for sure."
With an unprecedented spike in online demand witnessed by big-box retailers at the peak of the coronavirus lockdowns still remaining even with the easing out of restrictions, Walmart posted its biggest-ever quarterly growth in online sales last week.
Revenue from sponsored ads for products sold on its website is not published separately by Walmart. Online ads have much higher margins compared to product sales and there is a continuous growth in ad revenue for the retailer with increased investments by it on its online sle medium.
Hence for Walmart, finding out new ways to win market share over from its closest online rival Amazon.com has assumed more importance for it than ever before. This has also become important because of the increasing trend among consumers to increasingly shop online.
For the most recently completed quarter, $4.2 billion in advertising and other revenue was reported by Amazon which was almost double of what it had generated in the same period in the two previous years.
Aggressive strategies to woo big advertisers to their websites to drive sales through pop-up banners and search-bar keywords have been followed by major retailers all over the world including the likes of Target Corp and grocers such as Tesco Plc.