How Walmart Connect Is Challenging Amazon Ads
The rise of retail media networks continues to dominate the advertising landscape. There are hundreds of them now, offering advertising services built on all the data they collect from their customer online and in-store. Approximately 75 percent of the net retail ad spend in the U.S. is commanded by Amazon Ads. But there are many other impressive retail media networks that are ascending in this highly fragmented industry. Walmart Connect is one of them. Walmart Connect enjoys an advantage over Amazon Ads in one significant way: Walmart Connect can capitalize on data collected from customers shopping both online and in-store.
Within the U.S., nearly 139 million consumers frequent Walmart’s brick-and-mortar stores, website, or mobile application on a weekly basis. As a result, Walmart has nearly doubled the scope Walmart Connect, according to statements made by executives during a call about the retailer’s Q2 results for fiscal 2024. Walmart Connect experienced a 36 percent increase in ad sales year over year in Q2, mirroring the growth in Walmart’s global ad business, including Flipkart in India. Advertising for Walmart’s Sam’s Club brand saw a 33 percent year over year rise.
The growth is credited to a strong demand for sponsored product advertisements, a core aspect of the retail media sphere where Walmart Connect is a competitor. Leadership also recognized the growing appeal of in-store marketing methods. Earlier this year, Walmart said that customers at Walmart stores will soon encounter an increased number of third-party advertisements, including visual ads at self-checkout areas and TV sections, audio advertisements over the store’s radio system, and product samples at designated demo stations.
This move into advertising by Walmart mirrors similar strategies undertaken by other retailers such as Kroger, which recently entered an agreement to install digital smart screens in the refrigerated sections of numerous stores. Similarly, Target has started experimenting with in-store demonstrations and giveaways, like a co-branded “Barbie” event with Mattel, which was held in around 200 stores.
Walmart’s strategy of selling advertising space provides an additional revenue stream, leveraging the company’s vast influence and paving the way to higher-profit ventures. As a major discount retailer, Walmart operates close to 4,700 stores across the United States, with approximately 90 percent of the country’s population residing within a 10-mile radius of a Walmart location.
Executives at Walmart reported that, on average, advertisers see a 30 percent boost in the return on digital ad spending. In May, Walmart brought on a team of third-party partners to enhance marketing creativity and connect with consumers.
Walmart Connect’s ongoing success is indicative of the continued growth in retail media, notwithstanding some advertisers’ dissatisfaction with the fragmented nature of the industry and uncertainty in the broader digital advertising market. As a point of reference, Amazon Ads posted a 22 percent year over increase in ad sales in Q2, amounting to $10.7 billion. Amazon recently announced that it will expand its Sponsored Products ad unit to sites beyond Amazon, including Pinterest and BuzzFeed.
We suggest that advertisers:
- Consider retailer-based ad networks as a complement to your existing digital ad strategy, not as a replacement.
- Monitor the effectiveness of your advertising on Meta and Google amid the demise of third-party cookies. Retail media networks offer the advantage of tapping into first-party data that is unaffected by the erosion of third-party cookies.
- Work with an agency partner that knows the terrain. For instance, at True Interactive, we complement our history of helping businesses advertising on Google and social media with expertise across retailer ad networks such as Amazon and Walmart.