Is there anyone who doesn't have an ad business?

Walmart's purchase of smart TV maker Vizio for $2.3 billion to expand its Walmart Connect advertising business highlights how chief marketing officers have more options than ever. Amazon has a booming advertising business and has become No. 3 behind Google and Facebook. Uber sees advertising as a big growth business. So does Lyft.

For publishers, media companies and traditional ad players, the marketing landscape doesn't look so great. For everyone else--especially companies with first-party data and relationships with customers--advertising is great.

Seth Dallaire, executive vice president and chief revenue officer, Walmart U.S., said: "We believe Vizio's customer-centric operating system provides great viewing experiences at attractive price points. We also believe it enables a profitable advertising business that is rapidly scaling. Our media business, Walmart Connect, is helping brands create meaningful connections with the millions of customers who shop with us each week."

Vizio also brings more than 500 direct advertiser relationships to Walmart's ad business, which had annual revenue of $3.4 billion, up 28% from a year ago.

The Constellation Ambient Experience Summit (AXS)

Walmart isn't the only advertising giant in the making. Amazon CEO Andy Jassy said the company's ad business was up 26% in the fourth quarter to $14.65 billion. "Our advertising growth remains strong, up 26% year-over-year, which is primarily driven by our sponsored ads. We've recently added Sponsored TV to this offering in the U.S. a self-service solution for brands to create streaming TV campaigns with no minimum spend, putting this advertising within reach of any business," said Jassy.

And then there's Uber, which is leveraging its data platform to create a flywheel that'll drive advertising. "The power of our advertising platform stems from what Uber users tell us every time they use our apps where they want to go and what they want to get. And as a result, we've got the unique ability to bring together both location based and shopping data with closed loop attribution across our mobility and delivery channels for both performance and brand campaigns," said Iber CEO Dara Khosrowshahi.

How we got here

If you look at those aforementioned three companies advertising moves, they have common assets. Walmart, Amazon and Uber have scale, first party data and strong relationships with their customers.

Simply put, first party data is everything. Google's move to depreciate cookies, which enabled tracking across the web, only makes first party data more important.

Constellation Research analyst Liz Miller recently walked through the long-awaited end of cookies by the third quarter of 2024. Miller said big brands and advertisers have been evaluating alternatives to cookies.

She said:

"I think a lot of marketers have gotten really smart about those first party data requirements, building those direct relationships and building those consent-based relationships. We're having more open value exchange conversations as we should be. This is really about the best practices about how we want to engage. This is really about how we're choosing to personalize how we're choosing to collect data, how we're choosing to engage that through a digital channel."

Miller also had the following recommendations for the post-cookie world:

  • Audit site for all third-party cookies and trackers. Understand what is being collected and used.
  • Use Google's auditing tools as well as manual searching to fully identify third party cookies.
  • Ask third party providers about their plans for cookies and privacy sandbox.
  • Move away from or phase out advertising-related cookies. Transition to consent-based data collection.
  • If site functionality breaks from cookie deprecation, apply for exemption by April 1, 2024.
  • Implement alternatives for measurement, targeting and personalization without third party cookies.

A volatile time for CMOs

Jeffrey Green, CEO of The Trade Desk, recently served up perspectives on the global advertising market and said it shifts just like the economy or any other market.

"The current shifts will help companies with authenticated users and traffic, which also sit next to large amount of advertiser demand. These macro changes hurt those, especially content owners and publishers who don't have authentication," said Green, who added that 2024 will be a year of volatility and big winners and losers.

Green cited Unified ID 2.0, a cookieless identity platform, as an alternative as well as retail ad channels. He cited HP as a reference customer that used first-party data that consumers consented to when making a purchase combined with UID2 used for campaigns on Disney+ and Hulu, and its data platform to segment groups and measure specific product campaigns with accuracy.

The Trade Desk CEO argued that the ad industry is being rewired. "For nearly all of 2023, there was uncertainty, particularly around economic growth rates and recessionary fears. In that environment, CMOs become much more reliant on their CFOs, and CFOs needed to make sure that every dollar spent was in service of growth. Which means CMOs had to focus more than ever on where they could achieve efficacy and deliver strong and provable return on ad spent," said Green.

Given that economic backdrop it's not surprising, streaming, audio and retail media fared well because they had authentication and precision measurement.

Green said it's no surprise that retail platforms and Uber are faring well. The game is to connect experience, identity, advertising to real-world actions. "Retail media has become one of the fastest growing areas of our business, and we expect this to continue in 2024. Retail partnerships and retail media are revolutionizing the way many advertisers think about connecting advertising to actual consumer actions," said Green. 

Constellation Research's take

Miller said there's upside ahead despite the volatility. She said:

"There is an incredible upside to the deprecation of the Cookie that in the throws of the past several years of bemoaning the Cookiepocalypse some seem to have overlooked: It appropriately right sizes advertising back into being a TOOL in the CMO's far more expansive toolkit. Advertising has never been the whole pie for marketing no matter how often people want to use the terms interchangeably! Walmart's pick up of a presentation layer opens opportunity as a content provider and advertising network. In an age of headless content delivery and AI powered ad engagement capabilities, this deal could kick start a whole new level of contextual content delivery, be that advertising or programmed content."