Walmart's Brilliant Move: Bringing Ads to AI Shopping | Fast Five Shorts

Walmart is exploring bringing ads to Sparky, its new AI shopping agent.

According to the Wall Street Journal, the world's largest retailer has quietly been exploring new ad formats with some advertisers, according to people familiar with the matter.

One ad type, dubbed quote sponsored prompt end quote is a new type of ad that has been tested in Sparky, which the company added to its mobile app in June.

The new ad format uses Sparky conversations quote for brand engagement and personalized product recommendations, end quote.

According to a Walmart sales presentation seen by the Wall Street Journal, users were served a sponsor prompt on Walmart.com and when they clicked the prompt, Sparky responded with an answer.

A click to buy ad for the product appeared below Sparky's response, according to people familiar with the matter.

Chris, are you pro or con?

Walmart's test to bring ads to its AI shopping engine Sparky 100% Pro I.

Don'T think I could be more pro on anything actually.

And it goes back to what you said before because, and I said this last week too, the line I would be watching in my Monday morning meetings would be what traffic and volume is coming from the chatgpt like platforms.

Because my hunch is it's pretty small and if anyone out there at the retailers can disprove that wants to send me a private message, please let me know.

But my hunch is it's probably not very big.

So I think like I've said before, this is exactly where retailers should be focusing their efforts, creating a great generative AI search experience on their own sites because we know generative AI searches convert higher already.

So advertisers are going to love this concept from Walmart and it also on Walmart's side, it's decidedly incremental margin for Walmart to an ad business that is already growing at a rate.

This is crazy.

The Walmart ad business is already growing at a rate of almost 100% per year according to a chart that was given in that article you just quoted.

So.

So to me, this is a smart move for three reasons.

One, you convert the traffic you have coming to your site at a better rate.

Number two, you get more ad dollars because of that.

And three, the other thing you got to remember is watch the traffic flow from the GPT like platforms to decide if and when, if and when you actually need to connect with them.

Because I think that's the big $64,000 question for me.

Yeah, I agree.

I mean this is kind of a no brainer to me.

I think we're going to see, just based on the burn rate of all of the agentic platforms right now, like we're going to have to see somebody support the, the tools that we're giving.

We're being offered for free right now as consumers.

So I think you have that coming into play.

Then you also have like you're saying, Chris, people that are used to asking questions now in a certain way for essential products even, and they are going to want to have a similar experience when they come to your website.

So I think it's, it's again, all, all the focus needs to be on how are you making your products as discoverable, as pro as possible and then how are you in the moment in a way that we've really never been able to do as retailers and brands before?

How are you further incentivizing them?

They've got confidence in their purchase now.

You're giving them an offer at the right place in the right time to actually pull the trigger on that.

And it said in this article too that, you know, Walmart's still early on in this.

So I think you're right.

We're going to continue to see more and more.

An increase in the amount of revenue that Walmart's able to bring in.

But right now consumers using the Rufus Chatbot on Amazon are converting 60% more.

And that's a great indication of what the possibility is for other retailers when you can capture them with the right deal at the right place at the right time.

So I think this is 100% something that I'd be looking at as Walmart.

It feels additive.

It doesn't feel intrusive like, like some of the other ads that I think we've been served up in, in previous years through traditional retail media.

So I love it.

Yeah.

The other point I would add in closing is like, you know, if Walmart and Amazon both now are basically the everything store based on their marketplaces and they have the ability to create these experiences on their site via their own agentic, you know, AI experiences.

Why do we even need ChatGPT and Google for commerce?

Like that's the question I'd be asking, you know, why can't we bring, why can't we bring the customers directly into the fold?

Because, because Amazon previously was able to do that with just general product search.

So why can't they continue to do that?

I don't know.

That's, that's where I'm like, I don't, if, if I'm the retailers, I have more power here than I think we're realizing and that's, that's my point.

I would just say, I think the only difference is, is that you are using ChatGPT, you're using some of these other search platforms, Agentix search platforms more often.

Like it's part of your everyday life.

It's not just for commerce.

So I do kind of think that that's where the difference is, is that I think we're dealing with something that's not just relevant to us when we're looking to, you know, do the seek and destroy, I need this thing mission.

It's, you know, you're asking it questions about, you know, what you should feed your kid and then where, you know, where the best gifts are.

And then you're going and saying, I need, I need great toilet paper that's better for the environment.

Where can I get that?

And so I think that that's, that changes the dynamic a little bit based on just how we were looking previously at, you know, Walmart and Amazon going to search for your products, get it delivered as soon as possible.

I don't know because like if you go back to history, like it was Google, Google was the search place for that and Amazon carved out a bit of it.

So like there's that dichotomy that already existed historically.

So yes, it might change a little bit.

But I think the, I just think the retailers have more power here than they, than they, than, than we're probably leading to believe.

So.