Walmart reveals ad profits and plans to become ‘a top 10 ad business’
Walmart has revealed the extent of its ad business for the first time amid a wider trend that’s seeing retailers unlock their insights and media space for brands, many of which they stock on their shelves.
Walmart CFO Brett Biggs ‘expects Walmart Connect to continue to scale over the next few years’
Earlier this year, Morgan Stanley analysts suggested “advertising is a hidden potential profit stream” for Walmart and estimated annual ad revenue at about $500m, with the potential to reach $4bn by 2025.
Following that, Walmart showed its hand. Its ad business, Walmart Connect, has reached $2.1bn revenue in the year leading to this quarter. Meanwhile, it more than doubled its advertiser client base, which was up by 130%.
Walmart stocks third-party sellers, all of which are free to bid for prominence on its media. Brett Biggs, chief finance officer of Walmart, admitted that the more sellers it houses, the greater the demand for advertising. He told analysts: “We expect Walmart Connect to continue to scale over the next few years. We have plans to become a top 10 ad business in the midterm.”
Walmart acknowledged that by better utilizing customer data and attracting advertisers, it can keep prices lower. As inflation looks set to bite and with consumer wallets tightening, these units could provide substantial advantages in any price-cutting war.
It’s a month of firsts, with Amazon also showing off the scale of its ad business for the first time. It hit $31bn revenue in 2021.
In the UK, supermarket Tesco has big ambitions for its media business. We went into the details and explained the wider market here.