'The easy dollars are gone': Retail media faces new tests as it nears maturity

"Back in 2018, Walmart CEO Doug McMillon felt that Walmart's ad business was " tiny." "Our data has never been monetized," McMillon told analysts at the time. "[The ad business] could be bigger." Fast forward to 2025, and Walmart's advertising business has now become a multi-billion-dollar behemoth. In 2024, Walmart's advertising business brought in $4.4 billion in advertising revenue, up 27% year-over-year. While it still pales in comparison to Amazon's $56 billion advertising business, Walmart's advertising business is growing at a slightly faster clip."

"And, perhaps most importantly, it's become a significant profit driver for Walmart. Last year, Walmart CFO John David Rainey said that almost a third of Walmart's profit comes from selling ads. And McMillion has said that having an advertising business has been helpful as Walmart - like every retailer - is trying to figure out how much of the costs it can absorb from tariffs before passing on price increases to consumers."

"But that's not the case for every retail media network. There are now more than 200 retail media networks on the market, in various states of growth or stasis. Macy's, for example, reported during its second-quarter earnings on Sept. 3 that the revenue generated by its Macy's Media Network that quarter was $34 million, flat compared to last year. Growth is now harder to come by."

Walmart transformed an unmonetized data asset into a multibillion-dollar advertising business that generated $4.4 billion in 2024, a 27% year-over-year increase. The ad unit remains smaller than Amazon's $56 billion operation but is growing slightly faster. Advertising now contributes nearly one-third of Walmart's profit and helps absorb tariff-related cost pressures. The retail media market includes over 200 networks with uneven performance; some, like Macy's Media Network, reported flat quarterly revenue of $34 million. Overall commerce ad spend growth is slowing, making further expansion harder to achieve.

Read at Digiday