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Differences between optimizing your ad strategy on Walmart vs Amazon

This is a guest post from Melissa Burdick. Melissa is the President and Co-Founder of Pacvue, the enterprise eCommerce advertising platform that helps brands, sellers, and agencies to lower costs, grow share of voice, and increase sales. A 10-year Amazon veteran, Melissa helped launch the Amazon CPG/Health and Beauty retail business, building a business from the ground up with an evolving strategy to sell profitably online.

In terms of total monthly traffic, Walmart and Amazon are two of the largest online retailers in the world. It’s no wonder that many brands turn to Sponsored Product advertising on both platforms to capture more market share and increase sales.

However, actually optimizing your advertising strategy to hit these goals, while still being mindful of cost and maintaining profitability, can seem daunting. While there are some similarities between the two eCommerce giants, the truth is that what worked well for you on Amazon advertising might not be the right strategy for Walmart Sponsored Products.

Here are some common approaches to start optimizing your ads on Walmart versus Amazon.

Balance ROAS and SOV Together 

If you’re currently advertising on eCommerce marketplaces, or any digital channels for that matter, two metrics that you’re probably familiar with are Return on Ad Spend (ROAS) and Share of Voice (SOV):  

  • Return on Ad Spend: how many dollars of revenue you generate for every dollar you spend on advertising. Ad Sales / Ad Spend 
  • Share of Voice: the percentage of visibility your brand holds versus your competitors for a given keyword or category 

Since both Amazon and Walmart advertising operate on a CPC (cost-per-click) basis, there’s always a tension between these two metrics. In general, the higher your CPC bid, the higher your Share of Voice but the lower your ROAS.

Optimizing your CPC bids to find the right balance between the two is crucial for success with eCommerce advertising.

Here’s where the first major difference between Walmart and Amazon advertising becomes apparent.

Walmart uses a first-bid auction, meaning the winning bidder pays their full CPC bid (the first price). In contrast, Amazon uses a second-bid auction, where the winning bidder only pays the cost of the second-highest bid plus one cent (the second price + $0.01).

In the example below, Advertiser C would pay $4.00 on Walmart but only $3.01 on Amazon.

What this means in practice is that, in order to capture both high Share of Voice and a high ROAS, you need a slightly different approach between the two marketplaces.  

On Amazon, you have more liberty to bid high, knowing that you won’t necessarily pay your full bid. Keep in mind, though, that Amazon has more competition and is, in general, more expensive on a per-click basis. As such, you may want to follow this pet food brand’s strategy, bidding on less expensive, longtail keywords to drive more sales and strategically bidding high on a few competitive keywords where your brand can win Share of Voice. 

For Walmart, automatically bidding high is not necessarily the right strategy, even if you are winning Share of Voice, as you may be wasting budget and missing out on the opportunity to improve your ROAS. Instead, you may want to use bid scaling: start low and scale bids up by 15-20% every few days until you hit your target Share of Voice.  

This approach is especially useful right now, as there is less competition on Walmart and brands are generally seeing a higher Return on Ad Spend than on Amazon.  

Drill Down into Device Type 

One advantage of advertising on Walmart is the data that Walmart provides around device performance, such as desktop, mobile app, and mobile web. Walmart allows you to place bid modifiers on these different device placements, so, for example, you could increase bids by 20% on desktop if you know that your product detail pages have a higher conversion rate there compared to mobile.  

This is important because, even though mobile represents the largest share of traffic in eCommerce, 56% of eCommerce revenue still comes from desktop, according to a study by Wolfgang Digital

You may even uncover that certain products are more mobile-friendly than others. The same study found that higher-priced items still convert at a higher rate on desktop. However, with the rise in mobile traffic, placing increased mobile bids for lower-priced items may be an effective strategy to capture more Share of Voice in your category.  

Don’t Ignore Secondary Products 

Many brands have a small number of hero products for which they are best known and, not surprisingly, tend to be the top sellers on eCommerce marketplaces. However, you may also have a strategic business need to increase sales of your secondary products, whether it’s because these products are more profitable for your business, increase customer loyalty, or allow you to penetrate new markets.  

On Amazon, Sponsored Brand ads are a great way to build awareness with new eCommerce shoppers given Amazon’s large volume of traffic, and including secondary products in these ad units can boost their awareness as well. This is also a good strategy if you are running out of stock on your hero products or facing profitability issues. Continue to bid on your top-performing keywords but drive shoppers to your brand page and help them discover the rest of your product line. 

However, Walmart advertising provides some unique challenges – and opportunities. When running manual campaigns on Walmart, a product must rank in the top 128 organic search results in order to show up in a Sponsored Product ad placement for that given keyword. While this likely will not be problem for your hero products, that gives you limited options for your secondary products. For products outside the top 128, you can use Walmart’s automatic campaigns to build awareness, drive sales, and ultimately increase organic ranking.  

The benefit is that, with a limited number of spots available, you can effectively capture long-term Share of Voice benefits just by making incremental gains in organic ranking.  

Takeaways 

Between Amazon and Walmart advertising, the fundamentals are the same:

  • Control your CPC bids to grow Share of Voice while limiting cost, so you can increase Return on Ad Sales.
  • Use bid modifiers to mirror shoppers’ buying behavior.
  • Be mindful when promoting both hero and secondary products.

Optimizing Walmart Sponsored Products might take a little more time at first. You may want to use bid shading to find the right CPC price, and you need to work on growing your organic result listings as part of your long-term advertising strategy. However, with advertising competition low right now on the marketplace, this is the best time to find a strategy that works for you.

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