Dive Brief:

• Walmart will directly pitch marketers on its burgeoning advertising business for the first time through a new corporate event, according to news first reported in Reuters. The gathering to debut in New York City next week is called 5260, a reference to a retail innovation hub near Walmart's birthplace of Bentonville, Arkansas.
• Walmart will focus on sponsored and display ad products that drive brand awareness and engagement at 5260, and has plans to introduce video ad formats later this year, executives told Reuters. The "core differentiator" for the retailing giant is that it can leverage first-party data, not only from online transactions — an area where Walmart fiercely competes with Amazon — but also from in-store purchases, according to Stefanie Jay, VP and GM of Walmart Media Group. Reuters spoke to consultants who believe the company's pitch next week is intended to specifically target the ad budgets currently flowing toward Google — dollars that Amazon has also been vying for as ad sales become a bigger engine of growth.
• While Walmart declined to name specific companies attending 5260 to Reuters, the publication heard from multiple anonymous sources that hundreds of the top U.S. advertisers and agencies will be in attendance, including Procter & Gamble (P&G), Unilever, Mattel and Coca-Cola.

Dive Insight:

Amazon has long been eyed by industry watchers as the likely third party to break down the digital advertising duopoly of Google and Facebook, but Walmart is looking more like a dark horse contender that could add serious competition to the space. In recent months, the company has steadily built out its in-house ad technology and sales teams, along with more heavily marketing media offerings like its Vudu streaming service, which made its debut at the IAB's Digital Content NewFronts earlier in May.

The 5260 event appears to be a cumulation of those efforts and something the world's top companies by media spend, including P&G and Unilever, are interested in attending, likely drawn by Walmart's expanding e-commerce business and command of more than 300 million in-store customer visits per month. More marketers are also demanding trusted media partners to work with as platforms like Facebook continue to grapple with image crises. P&G, for example, has pledged to only spend money with platforms that promote privacy and transparency, an initiative that's part of the company's growing focus on wresting more control of first-party data, which is a central part of Walmart's positioning for its ad business.   

Walmart's move to directly pitch marketers on spending more money on its platform also comes as Amazon's ad business, which has grown explosively in recent years, shows some signs of slowing down. The online retailing giant reported its "other" category that largely consists of ad sales rose 34% to $2.72 billion in Q1 2019 — not a poor showing, but a degree of growth that decelerated in comparison to recent quarters. Amazon at the moment seems to be looking to strengthen its ad tech offerings, and is reportedly close to acquiring the ad server of Sizmek, a once-hot ad tech player that is selling off its assets amid bankruptcy proceedings.

Amazon potentially buying Sizmek would closely mirror Walmart's purchase of the cloud-based ad serving platform Polymorph Labs for an undisclosed sum in April. The deal for Polymorph, which transferred the firm's founders, product developers and engineers to Walmart Media Group and Walmart Labs, intends to help Walmart better target ads at audiences based on their shopping behavior, along with integrating more self-serve advertising tools and campaign performance trackers. As noted by Reuters, Walmart is also bringing its website ad sales and related data analytics work in-house, reflecting a push Amazon has made in recent years to in-house its media sales division.

But the real loser as Amazon and Walmart double down on courting brands in categories like CPG could be Google. The search giant has posted slowing ad revenue growth for four consecutive quarters as the digital space reaches new levels of maturity. Reports have suggested that some packaged goods marketers are shifting significant portions of their search advertising budgets away from Google and toward Amazon, since the e-commerce giant can more closely link from the point of discovery to a sale.

As it faces the potential for Walmart to also siphon off more of those ad dollars, Google has started introducing more ad products that are focused on online shopping. At its annual Google Marketing Live event last week, the Alphabet-owned company unveiled a revamped Google Shopping experience that allows users to complete purchases across a greater number of its properties, including Google Search, Google Images and its video service, YouTube. The platform also teased two new advertising formats that feature shoppable capabilities, called Discovery ads and Gallery ads, that will roll out broadly to advertisers later this year.

Unlike many retailers with a large physical footprint, Walmart has performed well in recent quarters, with its digital business standing out. The company last week reported its best U.S. comparable sales figures in nine years, according to Retail Dive. E-commerce sales jumped 37% for Q1, bolstered by areas like online grocery.