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Q&A with Stephan Nunez: Walmart, Retail Media, and DSP

July 26, 2022

CommerceIQ sat down with our own Stephan Nunez, Manager of Programmatic Advertising on the Customer Success team to discuss retail media management, Walmart, and DSP.

CommerceIQ: Thank you for joining Stephan! Tell us about yourself. What’s your background and how did you find yourself in this role?

Stephan Nunez: My background is in digital advertising with a focus on programmatic advertising. Throughout my career so far, I’ve worked at larger media agencies in addition to smaller tech companies. In my current role, I help brands identify and achieve their holistic digital media goals across different retailers like Amazon and Walmart.

CommerceIQ: Let’s dive into your role at CommerceIQ. What does your day-to-day look like? What do you discuss with brands? What problems are you helping them solve?

Stephan Nunez: It’s really a holistic approach across search and display advertising for how they can best deploy their investment dollars across different retailers. I help them strategize which audiences to pursue via which channels to help maximize their ROI. I am relentless about analyzing their results to help them optimize their media campaigns. That means shifting dollars from one channel to another, testing new audiences, and testing new channels, especially as new products become available. We also work closely together on developing high-level strategies, which is informed by day-to-day analytics and performance. We are always seeking to improve.

CommerceIQ: As a brand, deciding who gets your next dollar of investment is crucial. Naturally, Amazon gets the lion’s share for most categories within ecommerce retail media. But Walmart Connect is a new player that’s growing quickly. How is it distinguishing itself from Amazon?

Stephan Nunez: Walmart is super exciting right now. They are pouring a lot of investment into growing retail media. I think one thing that really sets them apart from Amazon is their store presence. 90% of the US population lives within 10 miles of a Walmart location. Amazon simply cannot yet match that physical presence. Brands selling on Walmart need to consider how retail media and their ecommerce budget can help drive sales, not only online, but also in-store.

CommerceIQ: Walmart is fundamentally an omnichannel retailer and Click & Collect does a lot of business for them, especially within grocery. How should brands approach Click & Collect with retail media? How should they employ search ads and DSP differently to drive Click & Collect engagement?

Stephan Nunez: One of the comparative benefits of Walmart vs. Amazon is that the Walmart shopper can shop online, but then can pick up their order within the hour at a local store if they choose to do so. This means that advertisers need to focus their attention on the exact product mix available to shoppers at each store.

When we think of products typically sold online, we think of larger pack sizes or variety packs. This is not the case for Click & Collect. These products may be single-unit items with lower price points. This is true in food, toiletries, and other categories. Engaging retail media and Click & Collect requires a completely different mindset than traditional retail media. Sophisticated advertisers are focusing on product differentiation by platform based on what shoppers need in the moment and on what keywords shoppers actively search.

CommerceIQ: How would you optimize search ads differently for Click & Collect versus DSP for a consumables brand?

Stephan Nunez: For DSP, brands should focus more on lower-funnel customers that are closer to the point of purchase as opposed to just brand awareness. This necessarily involves a series of tactical choices in your media campaigns about which audiences you target and where.

From a search standpoint, the focus should really be on maximizing that balance between branded and generic terms. If I need toilet paper for instance, and I’m searching online to make a purchase via Click & Collect, I might not be looking for a specific brand. Instead, I might be looking for the lowest price point or best deal at that moment. Focusing search terms at a broad level that emphasizes price over brand tactically benefits sophisticated advertisers.

Remember that DSP is about so much more than brand awareness from an audience perspective. It’s also excellent at driving loyalty. Pursuing an audience pool that has previously purchased your brand and reaching them with messaging on the savings they can achieve if they sign up for a subscription – that’s the advantage of DSP, especially when it is employed offsite away from Walmart.com.

Walmart is partnered with the Trade Desk which allows advertisers to leverage Walmart’s first-party audience on the open exchange inventory. There’s a large inventory pool offsite with plenty of channels to engage in audio, video, and other high-impact advertising. DSP allows for significant creativity in how brands pursue customers at different points in the funnel.

CommerceIQ: Walmart recently moved from a first price to a second price auction within its retail media network. Why was this change done now? How should brands approach their Walmart strategy differently?

Stephan Nunez: This shift embodies the growth and maturity occurring within Walmart’s media network. Second price auction is closer to an industry standard across retail media. The shift implies that more and more advertisers are really embracing their platform. Walmart is quickly learning and adapting to best practices in digital advertising.

However, it makes sense that Walmart’s retail media network launched with a first-price auction system. First-price auctions are great at maximizing spend on a new platform with just a handful of advertisers. A second-price auction may not even be possible if there aren’t multiple bids being placed yet. When you have a larger pool of advertisers, bidding becomes more competitive and a second price auction drives more efficiencies. As an advertiser, a second-price auction means I’m paying fair value for getting ads in front of my customers.

CommerceIQ: What role should digital shelf analytics play within retail media? How should it impact brand strategy?

Stephan Nunez: Digital shelf analytics is hugely important. Remember that Walmart’s in-store presence is a key consideration when optimizing retail media. Using digital shelf analytics to identify local inventory volumes, for instance, can help advertisers dictate where they want to deploy their advertising dollars.

A key difference between search and DSP advertising is that DSP allows retargeting at a geographical level. This is simply not possible with search ads. Sophisticated advertisers will employ DSP at the zip code level, focused on local trends and inventory availability. Brands can direct ad spend away from zip codes that are low on inventory for specific products, or they can direct ad spend toward locations where there is more inventory. This visibility and interconnectedness reduces waste in advertising spend. These types of efficiencies are the sorts of advantages that DSP can have over search when leveraged properly.

CommerceIQ: What are best practices for brands when engaging with Walmart Connect?

Stephan Nunez: First off, Walmart DSP advertising is fairly new. It only launched in the latter half of last year. But I would say that brands need to recognize the possible efficiencies of advertising offsite. Offsite advertising means targeting a much larger inventory pool from a CPM (Cost per thousand impressions) perspective, causing brands to have a much lower CPM. From another perspective, consider that Walmart.com has limited onsite space for ad inventory and so it is very competitive. There are only so many places where branded ads can obtain placement. Compare that to the larger web where brands can deploy more capital for audio, video, or other creative ads simply because there’s more space and freedom to do so.

Offsite DSP thus provides a significant opportunity to engage Walmart shoppers for a low cost, simply because of the vast amount of online real estate where brands can reach them. Brands can do this without losing anything about the customer they are targeting. All the same targeting criteria can still be applied; it is just done more efficiently offsite. Best-in-class brands will have a clearly researched break point between what share of budget they invest onsite at Walmart.com vs. offsite. For many advertisers, this break is roughly a 60-40 split in favor of offsite advertising.

In addition, having dedicated teams that employ automations which execute media campaigns greatly increases the efficacy of different strategies. Tactical decisions are optimized more regularly and more efficiently when automations are introduced.

Brands can be effective at driving better performance when they correctly identify which tactics are low performance versus high, and how to make adjustments to continually move from the former to the latter. Adjusting media spend for inventory level, employing hourly bidding, and retargeting audiences are all excellent tactics made easier and more effective if their routine elements can be automated. In addition, the efficiency of these tactics will improve over time while saving the company time and resources.

CommerceIQ: This is all very helpful. To finish, it’s worth noting that the ecommerce industry has shifted its focus from growth to profitability. How should brands architect their Walmart retail media strategy to optimize for profitability as a key KPI?

Stephan Nunez: Profitability is a key talking point as inflation remains elevated and brands are worried that shoppers will pull back on discretionary spending. For ecommerce, advertisers need to focus on what drives sales. What products are the most relevant? Once that is known, brands need to drive profitability via technology and automation. As a human programmatic trader, there are only so many optimizations I can perform in a day. I need to rely on technology and software to do more with less.

The efficiencies of automation compound over time. A brand can save millions of dollars over six months by performing innumerable daily actions and adjustments that a person or team could never execute alone. Furthermore, these savings can be reinvested in the business to drive better performance over time as technology identifies those areas that drive the highest return on investment. I am excited as a programmatic trader since I get to oversee these tools. Having the right technology allows brands to move away from only thinking about tactical execution and allows them to focus on big picture strategy. Creating a solid strategy, combined with seamless execution, drives a strong return on investment.

CommerceIQ: That makes complete sense. Thank you for your time, Stephan!

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