Is Walmart Looking for Everyday Low Prices, or More?

This week saw another scoop for intrepid reporter Catherine Perloff at The Information. She reports that there could be some daylight separating Walmart and its ad tech BFF, The Trade Desk. Specifically that Walmart recently renegotiated their partnership to be non-exclusive, blaming costs as a driver. This feels a little like your spouse asking for an open marriage before relocating to Miami, so let’s walk through the ramifications and maybe do some prognosticating about the impact.

When Walmart announced its deal with The Trade Desk back in 2021, it was a very big deal. As the second largest ecommerce retailer (after Amazon), Walmart would command one of the largest programmatic budgets in the entire advertising world, while also bringing a huge and valuable cache of consumer identity and intent data. Walmart Connect has since seen consistent and strong results, most recently reporting 31% YoY growth, faster than most ad peers.

My understanding of the parameters of the current deal is:

This was a big deal for TTD because the competition for DSPs is often determined by two things: unique data and unique supply. TTD doesn’t have either of those things, while their three top competitors all do:

TTD bolstered this deal with what seemed like a very similar one with Walgreens, and likely there were others that escaped my notice.

The article from The Information claims that the renegotiation was at least partially due to Walmart wanting lower prices. This tracks, given that the whole reason Walmart exists as one of the largest companies in the world is their relentless pursuit of lower prices. But what if there’s more to this?

Theory 1: It is just about getting lower prices. This is easy to understand. Walmart’s next move is to figure out who their alternative DSPs are, and try to come up with a viable solution that either lowers their prices, or more likely gives them the leverage to beat TTD down on prices. 

Let’s assume that Amazon DSP isn’t an option, LOL. I have a hard time believing that DV360 would be a viable option either. (Just thinking about the contract paperwork is giving me a headache.) That really just leaves Yahoo, or a surprising dark horse like StackAdapt, Beeswax, or the like. My guess would be Yahoo. Probably it would take some significant time before this would have an impact; I’m thinking 2026.

Theory 2: This is a strategic move. Maybe not immediately, but the winds in Bentonville are blowing toward a world where they own the technology, the same way they chose to buy the TV manufacturer Vizio. Step 1 is multi-homing the DSP; step 2 is buying or building their own.

If you’re playing M&A guessing games, there are not many options for Walmart to buy. I assume they would want a scaled DSP that’s proven and sells to agencies. A fixer-upper might be OK, but I would think they wouldn’t choose someone too small or too managed service-y. For me, there are only two options that make sense: Yahoo DSP and Criteo. Criteo has the obvious advantage of also bringing scale in the API-driven retail media space.

I’m picturing someone at the Yahoo DSP practicing their new cursive signature with the last name “Walton,” but maybe I’m getting ahead of myself. Let’s lay it out.

Pros of buying a DSP:

Cons of buying a DSP:

As I’ve said before, and will repeat again, I’m no financial analyst. I’ll just make some simple comparisons.

Walmart’s market cap is ~$805 billion, with under $10 billion in cash and about $67 billion in debt. This is a very big business, but not as flush as the tech giants. As of this writing, The Trade Desk’s market cap is about $25 billion, which would make this a pretty big bite of the apple for Walmart. In contrast, the Vizio acquisition total was just $2.3 billion.

In contrast, Yahoo DSP or Criteo would both be acquired for a couple of billion – chump change!

Watch this space.