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    Walmart ad sales hit $2.7B as execs eye greater scale

    • Walmart’s U.S. advertising division, Walmart Connect, grew 41% year-over-year in the fourth quarter, according to an earnings statement.
    • The retailer’s global ad operations were up 20% over the period and jumped nearly 30% in 2022, generating $2.7 billion for the full year, executives said. Connect and FlipKart Ads, an India-based business, were attributed as the biggest growth drivers. 
    • Strong performance from retail media bets supported healthy sales over the crucial holiday period, though Walmart warned of uncertainty ahead in 2023 that advertising could help alleviate.

    Walmart’s advertising take for 2022 reached $2.7 billion, demonstrating that demand for its retail media networks remained resilient despite a sharp inflationary period that led many brands to pull back on spending. Ad sales growth in Q4 was particularly strong in relation to Walmart Connect, the company’s U.S. division that spent much of last year expanding its infrastructure and partnership roster in areas like ad tech and social commerce, including through a tie-up with TikTok. 

    U.S. comp sales for the retailer climbed 8.3% in Q4, while e-commerce was up 17% YoY, bolstered by the grocery category. Despite the comparatively healthy holiday takeaway, Walmart warned that high prices and ongoing consumer pressures were leading it to take a cautionary stance for 2023.

    Advertising could remain a bright spot as choppy waters endure following a chaotic few pandemic years. Executives have called out strengths in advertising more frequently to investors as retail media becomes a magnet for brand dollars and a more significant generator of income for Walmart. 

    “We’re driving a lot of change in our company,” said Walmart CEO Doug McMillon on a call discussing the Q4 and full-year results with analysts. “We’ll keep shaping the business model by scaling our newer, mutually reinforcing businesses in areas like marketplace, fulfillment services and advertising.”

    Walmart joins other retail companies, including Amazon, in putting a finer point on their ad sales expansion. An explosion of retail media investments has contrasted with the performance of more conventional digital players like Meta Platforms and Google, which are contending with weakening advertiser demand, sharper competition and a flurry of privacy-related challenges. 

    Retail media at the global level is forecast by WARC to be the fastest-growing marketing channel this year, reaching $122 billion in revenue. The researcher expects it to become more valuable than linear TV by 2025, according to a new report. 

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