Ad insiders say retailers like Walmart, CVS, and Instacart are starting to chip away at Amazon's advertising stronghold in the pandemic


The coronavirus pandemic has led to dramatic shifts in shopping behavior as people avoided going to physical stores and began buying more online.

That's been a boon for Amazon and delivery platforms like Instacart, which launched a self-serve ad platform in May. But traditional retailers like Walmart, CVS, and Kroger have also intensified the competition for advertising with their own ad sales platforms.

While Amazon still rules e-commerce, the pandemic marks the beginning of a long-term change that could threaten its dominance of digital retail advertising.

John Lods, CEO of digital media-buying agency Arm Candy, said his clients have been frustrated with Amazon's fees and hold on e-commerce and are eager to try advertising almost anywhere else.

Amazon did not respond to a request for comment. Representatives for Walmart, CVS, Kroger, and Instacart declined to comment.

Big brands are spending more of their ad budgets on e-commerce sites beyond Amazon

Big brands like Hershey and Petco said as they've been moving more of their ad budgets to e-commerce, they're spending on platforms beyond Amazon to see how well they perform and diversify their revenue streams.

Petco works with Instacart and Shipt, said Darren MacDonald, chief digital and innovation officer there, while Hershey has moved some money from Amazon to Kroger, Walmart, and Target, said Doug Straton, chief digital officer at Hershey.

And Straton said the longer the pandemic continues, the more entrenched the shift to e-commerce will be.

"Where e-commerce is now as a percentage of the overall business is where we thought it would be, maybe, in two to three years — and that kind of happened overnight," Straton said.

Midsize advertisers that fund the top platforms are also attracted to places like Target and CVS

But it's the millions of small and midsize advertisers that power the major digital platforms and that have been quickest to try out these alternatives to Amazon, because they can move faster than the CPG giants, ad execs said.

"Smaller players can take advantage of new shopping behaviors," Lods said. "Big brands, however, have to approve budgets almost years in advance."

John Smith, head of digital marketing at cell phone accessory maker BGZ Brands, said his company was able to quickly move ad dollars to Target and paid social when Amazon restricted the shipment of nonessential items early in the pandemic.

He also said BGZ is particularly interested in CVS' site because people often bought his company's products there before the pandemic.

Amazon and traditional advertising stand to lose the most

Amazon remains the undisputed e-commerce leader, with its market share estimated to hit 38.7% in 2020.

But Walmart's e-commerce market share is growing rapidly. And some agency executives think price and loyalty may lead some shoppers — and, consequently, advertisers — to choose it and other retailers over Amazon.

"Look at the price on an Apple laptop from Amazon and Walmart; Walmart is going to win nine out of 10 times," said Sam Huston, chief strategy officer at agency 3Q Digital.

Advertisers want more for their money too, and Instacart has been particularly effective in delivering on ad spend, said Craig Atkinson, chief client officer at media-buying agency Tinuiti.

Atkinson called the e-commerce explosion "another nail in the coffin" of non-digital advertising and said dozens of his clients, which include Seventh Generation and The Honest Co, are experimenting with the new platforms.

Only one client has made a significant shift away from Amazon so far. But, he added: "We've just scratched the surface" of the move toward e-commerce.