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The Trade Desk to Backstop Walmart's Evolving Advertising Business

By Danny Vena, Jason Hall, and Brian Withers - Feb 16, 2021 at 8:30AM

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The world's largest retailer announced a "first-of-its-kind" partnership with the adtech leader.

The Trade Desk (TTD -0.27%) was one of the undisputed winners of 2020, as its stock price more than tripled over the course of the year. The company is adding to its credentials, partnering with Walmart (WMT 2.85%) to reinvent its advertising business. The world's largest retailer will leverage its real estate and The Trade Desk's programmatic expertise to breathe new life into its marketing efforts.

On this clip from Motley Fool Live, recorded on Jan 29, "The Wrap" host Jason Hall and contributors Danny Vena and Brian Withers discuss how Walmart is retooling its marketing approach.

Jason Hall: All right, thanks for that. Danny, I really like what you're bringing to the table here to talk about today. It's really easy for people to sleep on this with Walmart and The Trade Desk are doing.

Danny Vena: I saw this when it came across my email yesterday and I really wanted to spend a little bit of time on it and I wasn't able to prepare for it before yesterday's episode. But I think this is really important news.

Walmart has decided that it's going to reinvent its marketing platform, its marketing operation. It's changing the name, the marketing platform is now going to be called Walmart Connect.

This is going to be a huge way that Walmart is taking a page from the Amazon (NASDAQ: AMZN) playbook. What they've done is, first of all, they have announced a first of its kind partnership with the Trade Desk. The Trade Desk is the largest platform of its kind. What Walmart is going to do is in relaunching its media business, this partnership means that instead of building its own demand-side platform to power this new business model that they're using, they have chosen to exclusively partner with the Trade Desk.

Now, the Trade Desk users, excuse me, partners with all of the largest ad agencies. Now, they're partnering directly with the Trade Desk or directly with Walmart. I think there's a couple of things that are happening here. Walmart's taking kind of a three-pronged approach to this advertising.

First, it's going to use Walmart Connect and it's unveiling omnichannel capabilities that are going to let advertisers reach out directly to Walmart customers that shop in its physical stores. What it's going to do is it's going to offer media activations on its in-store TV walls and on the self-checkout screens, amounting to about 170,000 digital screens in its 4,500 stores. Now imagine, you're a customer in a Walmart store and you're shopping for something and you look at the TV screen and they're trying to reach you right there.

The second part of this three-pronged strategy is that Walmart Connect is going to use the company's digital properties., pickup and delivery, the Walmart app. They're going to use that to offer some holistic advertising campaigns. This is going to include search, it's going to include display media. They're going to take ads from the consumer product goods companies that they carry in their store and they're going to run those ads on and on the Walmart app. If that sounds familiar, it should because that's exactly what Amazon does on its e-commerce platform right now.

What this means is that the Trade Desk is going to have the exclusive self-service access to all of the Walmart sales and shopping data for this targeted advertising.

To me, that's the most exciting piece of news for Trade Desk investors because think about this. Walmart has 4,500 stores around the country. I think something like 90% of the population is within 20 miles of a Walmart store and a lot of them shop there. What this means now is that Trade Desk now has the advertising data, the targeted advertising data, for Walmart shoppers.

This is big news for Walmart because Walmart is taking its ad-tech business to the next level, and it's big news for Trade Desk shareholders because now the Trade Desk is in partnership with one of the largest retailers in the world. Yeah, this is big news.

Brian Withers: I just loved the story. Thanks for bringing it to The Wrap. It's interesting to watch Walmart being a tech-first with this partnership and really shows you the power of the large retail brand partnering with some of these new and upcoming tech companies. It's a win for both of them. I'm not a Walmart shareholder, they're a huge, huge company and I don't know that this deal will move the needle for Walmart stock, but I think over the long term, if they continue to do smart moves like this and partnerships, they're going to stay in the retail game for a long time.

Jason Hall: It's gigantic. [laughs] I think it really is, because to me it unlocks some of the things about Amazon that's so great, the optionality of generating revenues, and now Walmart is going to be able to do the same thing in a different way, and I think it's fantastic.

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The Trade Desk Stock Quote
The Trade Desk
$52.50 (-0.27%) $0.14
Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
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