Walmart Connect Powers Advertising Growth With AI, Data & Streaming

Walmart’s 4,700 U.S. stores put it in a prominent postion to make the most of omnichannel advertising opportunities. (Provided)

Walmart has 10,500 stores worldwide and has recently challenged Amazon’s dominance in online sales.

But the world’s largest business, based in Bentonville, has also steadily but quietly become a big money-maker in advertising.

Last fiscal year, the retail giant reported global ad revenue of $4.4 billion, up 27% from 2023. Its dedicated U.S. omnichannel ad platform, Walmart Connect, reported a 24% revenue jump in the fourth quarter. And in a February earnings call, CEO Doug McMillon praised the advertising segment’s contribution to diversifying Walmart’s profit mix.

“Our global advertising business increased 29% [in the first quarter], led by 24% growth from Walmart Connect in the U.S.,” McMillon said. “We’re making good progress on expanding the number of U.S. marketplace sellers that also utilize Walmart Connect advertising with seller advertiser counts up about 50% versus last year.”

And Walmart’s advertising business is not just another profit center. It’s also central to the company’s overall digital strategy, according to University of Connecticut marketing professor Mary Caravella, an expert in omnichannel marketing.

“Omnichannel — online and offline marketing — is something that all companies aspire to, but Walmart is in a really unique position to actually execute it because of their broad offline reach. It has stores within 10 miles of 90% of the U.S. population, and it has made huge investments to compete with Amazon. They upped their game, particularly with Walmart Connect.”

That’s Walmart’s retail media network, Caravella said. It lets customers place ads on Walmart’s media platforms, as well as on screens in Walmart stores and other locations. “They can really meet customers everywhere, where they are, all the way through their buying journey.

“The other unique thing about retail media networks is that they use first-party cookies,” Caravella said. As opposed to third-party cookies that track users across the internet, following their digital footprints, first-party cookies are maintained by one particular advertiser.

“You opt into a relationship with an advertiser, and the first-party cookie tracks you within your own network,” Caravella explained. “So I opt in with Walmart and say it can show me Walmart advertising. And every time I go to Walmart, it remembers things like the last thing I had in my shopping cart, what my user name is so I don’t have to type it in again. And that’s all with my permission. Third-party cookies are privacy invasive. They basically break out data about you.”

When Google de-emphasized third-party cookies, it posed an advertising problem for consumer product brands like Procter & Gamble, Caravella said.

“You don’t go in and sign up to get emails from Tide,” she said. “That isn’t their business model. They work through retailers. So retailers have this gold mine of first-party relationships, because shoppers identify with them. And the first-party cookies keep up with what they buy and what’s in their shopping carts.”

Walmart’s Advertising Market: Suppliers and Nonsuppliers, Onsite and Offsite

Retail media network mechanics and benefits for advertisers, both onsite and offsite

(Source: Professor Mary Caravella, University of Connecticut)

Disney, Hulu, Vizio

In short, Walmart has a data advantage that lets it aim advertising at customers likely to buy its products from Walmart and its advertisers. Their first-party cookies also empower better tools to directly connect advertising to sales.

And Walmart has been leveraging those advantages.

Disney+ and Hulu teamed up with Walmart Connect a year ago to use Walmart’s data to send streaming viewers specific ads.

Walmart also developed an AI-powered “Creative Builder” tool to coach advertisers on how to build marketing content and get the most bang from it.

Julia Thornton of Walmart Connect told Arkansas Business that the company could not grant interviews during its “quiet period” leading up to Walmart’s second quarter earnings report on Wednesday, just after this paper’s print deadline.

But Rich Lehrfield, senior vice president and general manager of Walmart Connect, said in 2024 that Walmart was the nation’s largest omnichannel retailer. Amazon remains the world advertising champion with $56.2 billion in ad revenue last year, but its growth was 20% compared with Walmart’s 27%.

“As a close-loop omnichannel media business of America’s largest retailer, we are working to innovate and move faster than ever before to deliver distinct omni solutions and accelerate growth for advertisers of all sizes,” Lehrfield said.

Pilot partnerships with Roku and TikTok rolled out to advertisers last year, and Walmart acquired TV manufacturer Vizio in a deal that closed in December. The $2.3 billion deal brings “new and differentiated ways for advertisers to meaningfully connect with customers at scale,” Walmart said in a news release.

Vizio has its own advertising and data division, Platform+, which “accounts for all the company [Vizio’s] gross profit,” the release said. Walmart plans to sell ads on Vizio TVs on display in its stores, and could place ads on Vizio TVs that are already in households.

“Vizio’s … smart TV operating system, SmartCast, have amassed over 19 million active accounts, growing approximately 400% since 2018,” the companies said.

Walmart is “excited about the addition of Vizio and its SmartCast Operating system to our portfolio of advertising capabilities,” McMillon said in the Feb. 20 earnings call.

Caravella, the Connecticut professor, is an unabashed fan.

“I love Walmart, and I think they’re fabulous,” she said. “Walmart’s business is built on the relationship with their customers. So they’re not going to reveal their data in a way that hurts that relationship. They have skin in the game to make sure that this data is used well, and they’ve figured out ways to share that information with advertisers while still keeping a trusted relationship with customers. For me, that matters, because I’m kind of a privacy person.”