Link: How Walmart became an advertising powerhouse

Walmart reported increasing sales in household items but saw even faster growth in profits from its advertising business. The retailer is tapping into the booming retail media industry, which is expected to exceed $54bn in the US by 2024.

Competing with giants like Amazon, Walmart's advertising venture, Walmart Connect, has grown by 30% in the past year. This marks a significant outperformance compared to the company's overall growth.

Advertising offers higher profit margins than traditional retail operations, making it an attractive prospect for Walmart. The industry's transition to retail media could see revenues reaching $130bn within four years.

Analysts highlight that retail channels like Walmart are increasingly becoming initial search destinations for shoppers, offering lucrative advertising opportunities. This shift allows Walmart to monetize substantial traffic through sponsorships and targeted advertisements.

Walmart's physical stores provide an unparalleled scale of audience, which rivals even major events like the Super Bowl in terms of weekly foot traffic. The company also integrates advertising through digital screens and targeted campaigns in-store.

However, the expansion of retail media could lead to tension between retailers and brands, especially if advertising becomes a prerequisite for better shelf placement. Critics also warn that excessive in-store ads might disrupt the shopping experience unless they add value for customers. #

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