US retailer Walmart has revealed for the first time how much it’s making selling advertising.
The company’s advertising business globally grew to $2.1 billion in 2021, more than doubling the number of active advertisers over the 12 months.
Walmart’s move into advertising is part of a global trend for retailers to be media players, leveraging their connection, via loyalty programs, to large groups of consumers.
Giant online retailer Amazon earlier this month revealed it generated $US31.2 billion in advertising last year.
In Australia, The woolworths media business Cartology has been ramping up the installation of digital screens at its supermarkets.
While $2.1 billion is small compared to Walmart’s total earnings of $572.8 billion, up 2.4% over the year, the retailer has big plans to grow the “high margin” advertising side.
At Walmart, like Amazon, third-party sellers are driving advertising demand.
Walmart CEO Doug McMillon told analysts in a briefing: “As we bring more customers, sellers, and suppliers into our ecosystem, it expands our ability to monetise those relationships.
“A great example is our advertising business. Globally, it's been growing at a high rate, with high margins and is now a $2.1 billion business in only a few years, and we expect this strong growth to continue.”
Walmart Connect has a strong pipeline of new advertisers and large growth opportunities aheads.
The number of active advertisers using Walmart Connect grew more than 130% year-over-year.
And about half of the ad sales in the December quarter came from automated channels, more than double last year.
Walmart Connect plans to become a top 10 ad business.
McMillon: “The business model is changing. I think that's the headline. We've got a business that's becoming increasingly digital. The eCommerce business, first-party, third-party is growing.
“It gives us the opportunity to grow advertising income. It's grown at a fast rate, and it's growing across markets.
“The US is important in that number, but India, Mexico, and other markets are going to have growth there, too. And the margins are helpful. They help us keep prices low for customers, and they help us deliver the operating income number percentage.
“So we're excited about what the future looks like as it relates to the growth of the advertising business.“
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