Just two weeks after flagging a huge opportunity in advertising during its fourth-quarter earnings report, Walmart has rolled out a three-pronged strategy to link its massive customer base with an eager roster of brands looking for new ways and places to connect.
Aptly named Walmart Connect, the retailer’s new domestic advertising arm is similar to the core money-saving mantra of its stores and website, yet it marks an entirely new revenue stream that has rapidly grown into a $2 billion business.
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“Every year, 90% of American households rely on Walmart for a range of products from must-buy brands, both large and small,” Rich Lehrfeld, senior vice president and general manager of Walmart Connect, wrote in a blog post. “And every week, more than 150 million customers shop with us in-store or online.”
Lehrfeld said the ad unit’s mission is to help brands and sellers connect with its customers during their shopping journeys, whether that’s happening in-store or online, by either helping them to find the product they’re looking for, or to introduce them to something they’ve never purchased or known about.
“The power of these connections and shopping experiences, combined with Walmart’s scale and reach with U.S. shoppers in stores and online, is propelling Walmart Connect to become a top advertising platform,” Lehrfeld said in the post, before outlining a three-pronged focus aimed at making it a top ad platform.
Among those goals, Lehrfeld said, there will be new and improved ad formats and omnichannel experiences at self-checkout screens, TV Walls, and in-store events and product samplings, as well as a planned launch of a premium advertising experience for its website by the end of the year.
In addition, the Arkansas-based retailer said it is also deploying a range of automation tools to help unlock growth for suppliers, such as a newly launched “Display Self-Serve” feature that gives advertisers the ability to control their display campaigns.
“… [W]e are committed to exceeding advertiser performance goals, by leaning into our core offerings through a combination of innovation and evolution,” Lehrfeld said.
Ad Sales Versus Merchandise Sales
The shift to boosting its ad sales comes at an interesting time for Walmart, which is in the throes of an ongoing digital and omnichannel transformation aimed at making better use of its 5,000 domestic locations.
On the company’s conference call with analysts in February, Chief Financial Officer Brett Biggs said the company is especially pleased with the growth of some of its “newer, higher margin initiatives.”
“In fact, the number of active advertisers using Walmart connect grew more than 130% year over year, and about half of the ad sales came from automated channels in Q4 — more than double last year,” Biggs said on the call, noting that Walmart Connect is expected to continue to grow in the coming years with the retailer expecting it to become a Top 10 ad business.
