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The importance of knowing your real target in your business

Facebook knows what users like, Google knows what they want, but Walmart really knows what it is that people buy. That’s gold dust and the retailers are not taking advantage of it.

Walmart, Target, Kroger, Carrefour and other large retailers have the ability to collect thousands of customer data that major brands, such as Coca-Cola, Pepsi or Unilever, may want to take advantage of to surgically direct their ads.

The analysis

This is what they are analyzing to exploit in a more systematic way in Walmart and other chains, starting from a marked interest to look for ways to obtain profitability before the advance of Amazon.

“Walmart is a giant in almost every respect: it has 4,755 stores, 1.5 million employees and US $ 380 billion in revenue, only in the United States, but part of the largest retailer in the world is still small”, they say.

Walmart receives about 300 million buyers each month, and millions more on its websites.

However, these hearings, and the purchase data they generate, are not being conveniently used. At the same time, large companies that manufacture food or other products need the information to optimize the arrival of their advertising.

The argument is simple: Facebook could know what their customers like and Google could know what they want, but only retailers really know what they buy. That is key.

Inflection point

This possibility comes at a critical time for conventional retailers who are being aggressively attacked by companies like Amazon, discount chains and digital startups.

Walmart and other retailers have responded to this advance by investing billions to improve their own websites and develop home delivery services, but all that generates expenses and revenue is neglected. That’s where the data and advertising business could be a great opportunity.

There are already advances in some stores. For example, according to Bloomberg, Kroger wants to generate US $ 400 million in additional profits by 2020 and part of that revenue will come from a new marketing unit dedicated to generating special web ads for Unilever and General Mills.

Walmart, for example, hired several executives from NBC Universal and CBS in 2018 to help boost its advertising business.

The potential is enormous

Last year, ad sales in the United States reached a record $ 208 billion, according to researcher Magna, and for the first time, 50 percent of that spending was online.

Facebook and Google combined gobble up more than half of those digital dollars, while Amazon gets only 5.5 percent.

This is an opportunity for retailers, who already have long-standing relationships with the big consumer brands that pay millions for their main spaces in physical stores.

Now or never

However, Carrefour, Walmart, Ikea and H & M, among others, will have to move quickly: it’s that Amazon’s advertising business doubled its size last year, and 97 percent of the brands that have bet on that channel consider it valuable, according to a survey by Feedvisor.

Many consumer products companies are analyzing their marketing expenses and think that the retail ecosystem could be a good place to invest it.

Amazon is not alone. Alibaba, the Chinese e-commerce giant, already generates more than 60 percent of its advertising revenue and last year acquired a stake in a digital advertising company.

In short: in the new scenario, retailers have to earn money beyond simply selling products.

Also published on Medium.

Published inStartups

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