Business

Walmart is expanding its advertising business and changing its relationship with brand manufacturers.

Walmart is further expanding its lucrative advertising business, thereby changing the dynamics between retailers and brand manufacturers.

Eulerpool News Aug 20, 2024, 3:12 PM

Walmart, the world's largest retailer, has significantly contributed to its profit growth through advertising sales in the USA. The company's US advertising division, Walmart Connect, saw a 30 percent growth last year, far exceeding the general company growth rate. This indicates that advertising is playing an increasingly important role in Walmart's business model, especially given the rising significance of "Retail Media.

Retail Media" refers to a growing industry where retailers use their platforms to sell advertisements, thereby creating a direct connection between brands and consumers. According to market research company Emarketer, expenditures for "Retail Media" in the USA are expected to exceed 54 billion dollars by 2024, compared to 18.7 billion dollars in 2020. Amazon dominates this market with a 77 percent share, while Walmart is expected to achieve a 6.8 percent share and 3.7 billion dollars in advertising revenue.

Walmart has established itself in this area by selling sponsored search results in its app and on its website. This allows brands to place their products more prominently while also tracking conversions – from advertising to the actual purchase.

Another significant step towards advertising expansion is the planned acquisition of TV manufacturer Vizio for $2.3 billion. Vizio, known for its technology that tracks viewer behavior and delivers targeted advertising, could help Walmart further expand its advertising business.

Walmart leverages its extensive presence with 4,600 large stores in the USA to offer advertising in brick-and-mortar retail as well. Digital screens in stores and ads at self-checkout counters complement online advertising campaigns. Ryan Mayward, Senior Vice President of Retail Media Sales at Walmart, emphasizes that Walmart can provide advertisers with valuable insights by linking online and offline data, which other platforms cannot offer.

The growing importance of the advertising business has contributed to Walmart’s stock rising by 38 percent this year, making the company the 16th largest ad seller outside of China. The challenge now is how brand manufacturers will respond to the increasing advertising options and whether this expansion will affect the shopping experience for consumers.

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