Walmart has nearly doubled the size of its U.S. ad unit, called Walmart Connect, over the past two years, executives said on a call discussing the retailer’s second-quarter results for fiscal 2024.
Walmart Connect’s ad sales grew 36% year-over-year in Q2, while Walmart’s global ad business, which includes India-based Flipkart, was up 36% YoY and advertising from its Sam’s Club brand was up 33% YoY. Walmart calculates its advertising figures either in net sales or as a reduction to the cost of sales based on the nature of the arrangement with the advertiser.
Company leadership attributed the gains to healthy demand for sponsored products ads, a bread-and-butter format in the retail media category where Walmart Connect competes. They also nodded to increased traction for in-store marketing channels. Walmart Connect earlier this summer began testing more ways to monetize assets in its sprawling footprint of more than 4,700 U.S. brick-and-mortar locations, including through sampling stations, QR codes on shopping carts and ads running on the company-owned Walmart Radio Network.
The number of advertisers using Walmart’s ad network was up 60% in Q2. Walmart emphasized strengths in its “flywheel” of products, claiming they give brands a better window into tracking the customer journey to purchase and in-store sales attribution. That closed-loop positioning has generally been one of the big pitches around retail media networks, which have soared in popularity as marketers contend with the deprecation of third-party cookies, a bedrock of online ad targeting.
Walmart advertisers, on average, see a 30% improvement in return on digital ad spend, executives claimed. The big-box retailer in May enlisted the help of a roster of third-party partners on a program that helps marketers improve their advertising creative to drive resonance with consumers.
The earnings on the whole impressed investors, and Walmart raised its full-year forecast. Revenue derived from e-commerce, which complements Walmart’s ad bets, jumped 24% YoY on strengths in pickup and delivery. A sunny report contrasted with that of chief rival Target, which was embroiled in controversy over Pride Month promotions during the Q2 period.
Walmart Connect’s continued momentum offers another sign that retail media remains a growth juggernaut despite mounting advertiser frustrations with the fragmentary nature of the space and a wishy-washy market for digital advertising more broadly. Amazon, the largest retail media player, saw ad sales up 22% year-over-year in Q2 to $10.7 billion.