Walmart made $2.1 billion in advertising last year—here’s how

Surprising, surprise: Walmart is good at running an advertising business.

The big blue retail behemoth revealed for the first time in an earnings report that it pulled in $2.1 billion in advertising revenue last year, largely on the strength of its retail media network, Walmart Connect.

Sure, it’s less than 1% of the company’s Q4 quarterly revenue ($152.9 billion, if you’re curious) and yet…it’s still $2.1 billion, a testament to Walmart’s scale and interest from advertisers, hungry for data into purchasing habits.

Why is retail data so important? From baby food to lonely, Hungry-Man frozen dinners, few things are as intimate and revealing as our shopping carts. They provide data points retailers can sell to advertisers to understand their audiences, hoping to lure shoppers either online or before their next trip to Walmart.

It’s the mechanisms and signals of digital advertising but *stoned hippie voice* in the real world, man.

Nine of the top 10 largest retailers in the US have started their own media networks over the past couple of years, including Target, Kroger, Lowe’s, Walgreens, and Albertsons.

Walmart’s seems to be doing pretty well, leveraging its massive scale to attract advertising dollars. Some numbers from the retailer:

• Globally, approximately 230 million customers visit Walmart-owned properties every week (!), either in-store or online.
• Nearly 150 million of those customers are in the US.
• 90% of US households shop at Walmart every year.
• Walmart InHome, the company’s grocery-delivery business, plans to expand its availability from 6 million to 30 million homes in the US by the end of 2022.

According to Semrush, Walmart.com is the ninth most-visited website in the US (behind Pornhub). Amazon is in fourth place, FWIW.

“I know how America shops more than anybody,” said Jeff Clark, officer and VP of Walmart Connect. “We’re not just a grocery store, we’re not just a pharmacy, we’re not just an auto-care center; we’re all those things.”

Which means it has lots of data points.

Here’s what he’s pitching: Walmart sells sponsored search inventory and display advertisements on its owned media (like its website). Last fall, Walmart rolled out a demand-side platform built with The Trade Desk that lets advertisers reach Walmart customers across the internet, not just on Walmart’s own properties.

• Clark declined to say how much Walmart’s DSP contributed to the $2.1 billion in ad revenue or how revenue was broken up. Though this revenue accounts for global ad revenue, all of Walmart’s advertising products aren’t available globally yet.
• The number of active advertisers on Walmart Connect grew more than 130% year over year in 2021, with about half of ad sales coming from automated channels in the quarter, more than double that of last year according to the company’s earnings report. Clark declined to say how many advertisers specifically use Walmart Connect.

Traceable tender: Every time someone buys something at Walmart with a debit or credit card—whether online, through Walmart+ (the company’s subscription offer), or in-store—the company can match that transaction with an “anonymized ID” that is mapped to an individual.

Clark told us that Walmart works with data brokers LiveRamp and Experian on “identity resolution,” helping the retailer connect people’s online and offline purchases with information about them, which can often include things like their email addresses, IP addresses, and zip codes.

Those households can then be aggregated and segmented for targeting. So, if you’re trying to sell soda, Walmart can tell advertisers how to reach 18-24 year-olds in suburbia who they believe have an interest in highly caffeinated, sugary drinks. Through the DSP, they can target those customers while they’re reading Rolling Stone, for instance, or watching Frasier on Hulu.

Walmart uses these same identifying methods, though Clark declined to get into specifics, to see whether those exposed to advertising actually bought the soda. Clark called measurement capabilities the “holy grail” of advertising, providing insights like what else was in a shopping cart and whether those customers were first-time buyers or loyal customers.

“There’s a whole slew of measurement programs that we’re working with that we’re rapidly scaling out as part of Walmart Connect,” said Clark.

We’ll never be loyals (maybe not)

Though its size may make up for it, Walmart is without one key advantage: It doesn’t have a loyalty program, which would give the retailer even more granular insight into who bought what and why. For example, Kroger brags that 96% of in-store sales are captured on a loyalty card.

Historically, Walmart has had “significant resistance” to a discount-driven loyalty program, explained Bryan Gildenberg, SVP of commerce at Omnicom, citing the company’s credo of “everyday low price” as a “cornerstone” of the company’s strategy, according to Walmart’s corporate website.

But, Clark hinted that Walmart+, the membership program it rolled out in 2020, might soon fill the void.

“We are moving in that direction…Walmart+ is a huge initiative for us and it does check a lot of those boxes,” said Clark. “There’s a huge focus on continuing to move this towards…a fully deterministic way to do measurement.”

Gildenberg agreed.

“Walmart has been trying to discover ways to, without using the discount mechanism of a loyalty card, get better traceability on individual shopper purchases for a very long time,” Gildenberg told Marketing Brew. “Walmart+ is a pretty logical way to do that.”