In a tariff-depressed and confused market, advertising can be a lifeline. We saw that yesterday with Walmart’s Q2 earnings. Total revenue in Q2 reached $178.9 billion, up 5.6%. But the real story was retail media: Walmart Connect, the company’s advertising business, grew by nearly one-third (31%). (This is the real inventory, people, am I right?)
Additionally, gross profit hit $33.7 billion, up 5.8%, with Walmart crediting gains in digital advertising. In fact, ads grew nearly 50% (46%) when including smart TV manufacturer Vizio.
Why This Matters:
Walmart’s ads business is exploding, and its potential to keep growing is clear as more dollars shift into retail media. Walmart is arguably the only true threat to Amazon as a retailer-turned-advertising powerhouse. At least right now.
Target, per its Q2 earnings, is seeing “double digit growth” for Roundel, its ad business, while pointing to a 14.2% YoY lift in non-retail revenue (this also includes non-advertising revenue). Still, the business is still fairly nascent. For further context, Amazon’s ad business generated $15.7 billion in Q2 revenue, up 23% YoY.
Experts React:
John Rainey, Walmart’s CFO and EVP, summed it up:
“It is a kind of a nuanced earnings report given some of the cost pressures. But when you dig into the details, particularly of the eCommerce business, you look at things like membership growth of 16%, advertising growing 50% year-over-year, 30% in the US. You can go line by line, and you can see why we’re excited about the momentum in the business.”
With (tariff-induced) cost pressures tied to the choppy macroeconomic environment, Walmart is clearly eager to highlight the growth of its high-margin ads business. Makes sense.
Our Take:
Two quick thoughts as we compare Amazon, Walmart, and Target’s ad numbers:
Why aren’t we seeing more discussion about how these budgets are siphoning money away from traditional publishers? Billions are pouring into retailer ad networks and owned-and-operated inventory. That’s a growing concern for publishers already under pressure—especially with AI further reshaping the landscape.
Walmart wasn’t asked about The Trade Desk on its call (whether the relationship continues to be exclusive, etc.), but it’s worth noting: perhaps the thought is, by opening up its ads business to more partners, it could sustain the level of growth it’s seeing. It’s almost like CTV democratization—the more access points, the more opportunity. More collaboration with adtech partners could fuel the next leg of expansion. Just a thought as we’re not clear how this might play out. (Or if The Information’s Walmart-TTD report is accurate.)
