Walmart’s second-quarter earnings call on Aug. 20 was more like a party. You’d be breaking out the hats and noisemakers too if your global advertising revenue was up 38%. Walmart Connect, its U.S. retail media arm, posted even higher gains of 43%.
The scale of that growth is staggering. In 2025, Walmart made $713 billion with $6.4 billion coming from advertising, up 46% year-over-year. That might only represent 1% of Walmart’s revenue, but consider that its advertising arm alone is nearly as big as a retailer like Ralph Lauren’s entire business.
And remember that’s retail revenue, not profit. Walmart’s retail business operates at around a 4% margin. Retail media is a much more profitable pursuit, typically operating at around 70% margin. So the profit numbers tell a very different story.
That’s why Bentonville is so enthused about its ad business. And it’s growing at a rate like nothing else on its books.
Walmart is just the most prominent example of the ongoing retail media revolution. Target reported $915 million in advertising revenue last year, up from $522 million two years earlier, even as it reported three years of flat or falling sales. Instacart and DoorDash each clear about a billion dollars a year selling ads inside food-delivery apps. And of course there is Amazon, whose ad business took in $76 billion over the last 12 months and holds just under 80% of the U.S. retail media market.
The store business is mostly flat. The ad business is not.
Same tactic, different name
Retail media is nothing new. It’s slotting fees with a fancy name and a dashboard. Ever since the 1980s, brands have been paying retailers for a whole raft of favors: shelf position, end caps, gondola ends, and the distinct privilege of not being delisted.
Retail media just represents its natural evolution. And like slotting fees, none of the manufacturers paying into the retail media machine are going to complain about it. Quite the opposite.
P&G CEO Shailesh Jejurikar recently described retail media as an opportunity that will “enable our brands to create value across all retail formats.” I’m sure in private he loves reallocating millions from his brand-building budgets so Walmart and Target will do what they used to do for free. But nobody, not even P&G, messes with big retail. So for now, the retail marketing business keeps growing and everyone is “happy” with the “opportunity.”
But scratch the surface of retail media, and problems are brewing. First, there is ROI and the utter incomparability of ad performance across retailers. Jackson Bazley, the ANA’s head of measurement, describes comparing performance across retail networks as “evaluating purple to bananas to 9.7 stars.” Good luck asking notoriously private, self-serving behemoths to unite around a common standard with their arch rivals.
