Walmart Inc. said Thursday that it will acquire the technology and assets of Silicon Valley-based Polymorph Labs, adding to its expanding ad business, Walmart Media Group.
Details of the deal, including the value of the transaction, were not disclosed. The deal is expected to close later in the spring.
has been “quietly” building its advertising division, which is based on online and in-store sales data, according to a blog post from Stefanie Jay, vice president and general manager of Walmart Media Group. Walmart’s data comes from the “nearly 160 million visitors to our stores and websites every week.”
“Simply put, we can help brands understand if someone saw their ad on Walmart’s platform or across the internet, and then purchased the product in-store or online,” Jay wrote.
Walmart is “not disclosing the size or growth trajectory” of the company’s ad business, according to a spokesperson.
Rival Amazon.com Inc.
reported $3.39 billion in sales under the “other” category in its most recent earnings report for the fourth quarter. That figure, which is up 95% from the previous year, “primarily includes sales of advertising services,” according to the earnings release.
“We see an inflection point in Amazon’s profits over the next three years, driven by improving retail margin expansion, coupled with the mix shift to higher margin AWS and advertising segments that combined could top $100 billion by 2022 (25% of sales) versus $10 billion in 2015,” wrote KeyBanc Capital Markets analysts led by Edward Yruma in a March 14 upgrade of Amazon stock.
KeyBanc rates Amazon shares overweight with a $2,100 price target.
“Advertising profitability is likely to eclipse even an improved retail business,” KeyBanc said.
Amazon has been able to leverage its 100 million-plus Prime members into this thriving part of the business.
Walmart says the Polymorph acquisition helps the retail giant build enhanced targeting and measuring tools for both purchasing and delivering ads, among other benefits. Polymorph’s product developers and engineers will become part of Walmart Media Group in the San Bruno, Calif., Sunnyvale, Calif., and Bangalore, India, offices.
Walmart stock has climbed 8.2% for 2019 so far while the SPDR S&P Retail ETF
is up 10.6% and the Dow Jones Industrial Average
is up 12.1% for the period.