How Facebook Gave Walmart A Mobile Ad Monopoly On Thanksgiving

RELATED QUOTES

SymbolPriceChange
FB61.36-1.67
WMT78.04+0.48

If you were wondering why you only saw ads for Walmart on Facebook's mobile app over the Black Friday weekend, here's the answer: Walmart pre-purchased a "road block" of 50 million Facebook mobile ads on the day after Thanksgiving, forcing other advertisers off a portion of the network for a period, according to the Wall Street Journal.

A "road block" is the ad industry term for when an advertiser purchases all available inventory so that none is available for competitors. They tend to be incredibly expensive. That's not quite what happened here. But by giving Walmart a guaranteed block of ads that no other retailer could get, it's the closest Facebook has ever come to it.

Normally, Facebook ads are served on a bidding system. Anyone who wants to pay the highest bid will get their ads served. But that didn't happen at Thanksgiving, the WSJ says:

Wal-Mart prepurchased the ads and edged out other retailers for space during the all-important kickoff to the holiday shopping season.

Facebook now is considering making the option available to other companies.

The reaction was massive:

[It] attracted more than 100,000 comments, the retailer's Facebook page also was littered with comments from users complaining about unwanted ads, among other things. Overall, Wal-Mart said it bought two billion ads on Facebook this holiday season, three times more than last year, but declined to say what it spent.

The move came after a Facebook charm offensive that included CEO Mark Zuckerberg himself:

[In] early 2010, ... venture capitalist Jim Breyer, who sits on the boards of Wal-Mart and Facebook, introduced Wal-Mart Chief Executive Mike Duke to [COO Sheryl] Sandberg at a meeting in Palo Alto, Calif.

Since then, the two executives have met extensively. In September 2010, Facebook assembled a dedicated team for Wal-Mart. Several members have each traveled more than 40 times to Wal-Mart's headquarters in the past two years. This past July, Facebook CEO Mark Zuckerberg flew to Bentonville along with several top executives to celebrate the retailer's 50th anniversary.

That's a far cry from last March, when Zuckerberg told investors, "we don’t build services to make money; we make money to build better services."



More From Business Insider
Search