Walmart is starting to break out the financials of its advertising sales in greater detail as that segment becomes a significant driver of growth.
The demand for retail media, where stores apply their troves of in-store and online purchase data for the purpose of advertising services, has skyrocketed as consumers adopt more digital habits while brands contend with the deprecation of key ad-targeting tactics like cookies, according to Marketing Dive’s report.
Walmart is the largest retailer in the world and has quickly grown Connect into a formidable offering, with executives signaling that the positive momentum will continue in the year ahead. They specifically cited an opportunity to more closely link Walmart Fulfillment Centers with advertising, a bit of synergy that will allow merchants to transact more frequently amid a period of prolonged supply-chain crunch.
“[That’s] really the key to the growth of advertising, is have the large seller and supplier base that can reach our customer base,” John Furner, president and CEO Walmart U.S., said on the earnings call.
The earnings release notes that Connect generated $1.6 billion in recorded net sales in 2021, while the rest of its take stemmed from $500 million “recorded as a reduction to cost of sales” based on the nature of various advertising arrangements. Still, it’s clear that more brands are flocking to Connect as they look to place their messages closer to where people are browsing for a purchase. Walmart’s e-commerce sales grew 1% YoY in Q4, but were up 70% on a two-year basis, reflecting how much the pandemic has enshrined online shopping behaviors.
Overall, Walmart’s Q4 earnings were positive, with the retailer’s comparative U.S. sales up 5.6% and revenue beating analysts expectations.
