Advertising Carries the Quarter
When Walmart reported its fiscal second-quarter results, the headline for marketers was not groceries or general merchandise but advertising. Global ad revenue grew 38 percent in the quarter, and Walmart Connect, the retailer’s United States advertising arm, grew 43 percent excluding its Vizio acquisition. On the strength of that performance and broader ecommerce gains, Walmart raised its full-year outlook for the first time since issuing it, lifting expected constant-currency net sales growth to a range of 4 to 5 percent and adjusted operating income growth to 7 to 8.5 percent. In a business measured in thin retail margins, a fast-growing, high-margin advertising line is doing outsized work.
A Margin Business Inside a Volume Business
The importance of advertising is easy to miss in the top-line numbers. Walmart’s ad business reached roughly $6.4 billion in the prior fiscal year, a figure that amounts to less than one percent of the company’s total revenue of about $713 billion. Yet advertising and membership fees together accounted for close to a third of Walmart’s operating profit. That gap between revenue share and profit share is the whole point. Retail media lets Walmart earn high-margin dollars from the same shopper traffic that produces low-margin sales, and those dollars increasingly fund the low prices that keep the traffic coming.
Connect Becomes a Platform, Not a Channel
The trade reaction captured the strategic shift, urging advertisers to treat Connect as a platform rather than a channel. That framing reflects what Walmart is building. Through its Vizio acquisition, its connected-television inventory and its first-party purchase data, the retailer is assembling the components of a media company that can reach shoppers on Walmart properties and beyond them. The advertising is no longer an add-on to the store; it is a distinct business with its own products, measurement and growth curve, and it is being run with the ambition that implies.
The Amazon Comparison
Walmart remains the second-largest retail media network in the United States, trailing an Amazon advertising business that clears roughly $68 billion a year. The distance is vast, but the trajectory is what matters, since Walmart’s ad revenue grew about 46 percent last fiscal year and kept climbing through the most recent quarter. Retail media is consolidating into a contest between the two companies with the deepest first-party purchase data, and every point of Connect growth narrows the practical choice advertisers face when they decide where shopper budgets should live.
The Market’s Mixed Verdict
Investors did not celebrate uniformly. Despite the advertising strength and the raised guidance, Walmart shares fell about 9 percent after the report as the broader outlook disappointed a market that had priced in more. The reaction underscores a tension inside the story. Advertising and other high-margin businesses are reshaping Walmart’s profit mix in ways that excite marketers, yet the company still answers to investors watching consumer spending, tariffs and the health of its core retail engine. A strong ad quarter can lift the profit picture without settling the questions Wall Street is asking.
What Advertisers Should Take
For brand and shopper-marketing teams, the message is that Walmart Connect has moved from optional to unavoidable. A network growing in the 40s while sitting on Walmart’s scale of purchase data offers reach and measurement that few environments can match, and its momentum gives Walmart leverage in how those budgets are negotiated. The wider lesson is about where retailers now make their money. When a retailer’s profit increasingly comes from selling access to its own shoppers, every supplier becomes an advertiser, and planning for that reality is no longer a choice brands can defer.
