The Retail Media Race No One Thought Was Close
Amazon built its advertising business into a machine so dominant that most retailers stopped trying to compete with it directly. For years, brands accepted Amazon’s ad platform as the default entry point for reaching online shoppers – a near-mandatory cost of doing business in e-commerce. That assumption is now under pressure. Walmart’s advertising network, Walmart Connect, has been growing at a pace that is forcing brand marketers to rethink how they allocate retail media budgets.
The shift is not happening because Walmart suddenly became a tech company. It is happening because Walmart has something Amazon cannot manufacture: physical stores. Nearly 90 percent of Americans live within 10 miles of a Walmart location, and that geographic footprint is the backbone of an ad network that can connect digital impressions to in-store purchases in ways that pure e-commerce platforms structurally cannot replicate.
What Walmart Connect Actually Is
Walmart Connect is the company’s self-serve and managed advertising platform, offering sponsored product listings, display ads, video placements, and offsite media – including programmatic ads served across third-party websites and connected TV. The network draws on Walmart’s first-party purchase data, both online and in-store, which gives advertisers closed-loop measurement: they can see whether someone who saw an ad actually bought the product, and where that purchase happened. That kind of attribution is what marketers have been chasing for years.
The platform has been maturing quickly. Walmart added Vizio’s SmartCast operating system to its data ecosystem after acquiring the TV manufacturer, which extended its reach into living rooms in a way that goes well beyond the store. A shopper who buys laundry detergent in a Walmart store, browses Walmart.com, and later watches a streaming service on a Vizio TV can now be addressed – and measured – across all three touchpoints. For packaged goods brands that have long struggled to connect TV ad spend to actual sales, this is a genuinely different kind of offering.
Why Amazon’s Lead Is Narrowing
Amazon’s advertising revenue is still larger in absolute terms, and its platform remains the first choice for brands selling exclusively online. But Amazon’s strength is also its constraint. Its ad inventory is overwhelmingly tied to its own marketplace, which means a brand that sells through Target, Walmart, Home Depot, and Amazon simultaneously has to make a strategic choice about where its retail media dollars go. Walmart Connect directly targets that allocation decision.
Brand advertisers are also increasingly wary of Amazon’s dual role as both a retailer and an ad platform that competes with them through its own private-label products. Running ads on a platform where the host is simultaneously your retail partner and your competitor introduces a tension that brands are quietly discussing more openly. Walmart does not carry the same conflict-of-interest perception at scale, at least not yet.
The in-store dimension is where the argument for Walmart Connect becomes hardest to dismiss. Walmart processes an enormous volume of grocery and household staples transactions in physical locations every week – categories where consumer packaged goods companies spend heavily on advertising. The ability to tie a digital ad to an in-store purchase of a specific SKU, without relying on panel-based estimates or probabilistic matching, is a measurement capability that CPG brands have wanted from retail media since the category started growing.
Walmart is also investing in its advertising technology infrastructure aggressively. The company brought more of its ad tech stack in-house rather than relying entirely on third-party vendors, which gives it better margins on the business and more control over how its data is packaged and sold. That mirrors the path Amazon took in building its own DSP, and it signals Walmart is treating advertising as a long-term revenue line rather than a side feature.
The Budget Shift Brands Are Making
Marketing teams at large consumer goods companies are now routinely including Walmart Connect as a separate line item in annual media plans, rather than folding it into a generic “retail media” bucket. That change in how budgets are structured internally signals a maturation in how the industry perceives the platform. When a brand’s media planning team treats two platforms as structurally distinct rather than interchangeable, money tends to follow that distinction.
The growth in Walmart Connect’s advertising revenue has been sustained across multiple quarters, running well ahead of Walmart’s overall revenue growth rate. That margin profile – high-margin advertising revenue growing faster than low-margin retail revenue – is the same financial story that made Amazon’s ad business so valuable to its investors, and it is now the story Walmart is beginning to tell on its own earnings calls.
Where the Competition Gets Complicated
Neither platform is winning this in isolation. The broader retail media market is expanding fast enough that Amazon and Walmart are not purely fighting over a fixed pool of dollars – they are both growing as brands shift budgets away from traditional linear TV and print. The real competition is less about stealing from each other and more about which platform captures the next wave of ad dollars coming out of legacy media channels.
That said, Walmart’s growth puts specific pressure on Amazon in the CPG and grocery categories, which are among the highest-frequency purchase segments in retail advertising. A brand that sells shampoo or breakfast cereal has a strong incentive to advertise close to the point of purchase, and for those brands, Walmart’s store-level reach is not a secondary consideration – it is the primary one. Amazon’s grocery ambitions, through Whole Foods and Amazon Fresh, have not yet produced the physical footprint that would neutralize that argument.
The competitive dynamic also extends to how each company courts smaller brands and emerging consumer goods companies. Amazon built much of its ad revenue on the back of third-party marketplace sellers who had no choice but to advertise on the platform to remain visible. Walmart’s marketplace is growing but is not yet close to Amazon’s scale, which means Walmart Connect still depends heavily on large established brands for its ad revenue base. If Walmart can attract more third-party sellers at scale, the flywheel that powered Amazon’s ad growth becomes available to it as well – and the gap narrows faster than most brand marketers currently expect.
