What: Walmart Retail Media revenue has increased +9,6% in the last quarter, contributing to 7,5% to the earnings before interests and taxes.

Why it is important: While some suppliers remain unconvinced, Walmart sees this business as a lucrative source of additional revenues.

Walmart has identified a lucrative revenue stream in its advertising business, which reported a substantial 9.6% increase in operating income in the quarter ending April. This growth has been driven by an aggressive ad placement strategy across its physical and digital platforms. With a 7.5% contribution to Walmart's earnings before interest and taxes in 2023 and expected growth to 13% by 2026, the ad business, though smaller in volume compared to its retail operations, yields significantly higher margins.

Walmart’s advertising is divided into three key areas: targeted digital ads on its website and app, video advertising, and physical in-store ads. The digital segment has been enhanced by Seth Dallaire, who reformed the online ad auction system to outperform competitors like Amazon and Instacart. The video ad sector is expanding, including a strategic acquisition of Vizio and partnerships with media giants like Disney for personalized ad placements. The in-store advertising, leveraging Walmart’s vast physical retail space, offers the most potential growth, with plans to increase digital ad displays within stores.

Despite the high measurability and effectiveness of online ads, in-store advertising is seen as less effective by some advertisers. However, Walmart is improving the integration of online and offline ad impacts through sophisticated tracking technologies, suggesting a significant growth opportunity in bridging the gap between the two realms.

Walmart’s Retail Media business keeps growing