Retail Media Ad Growth Outpaces Sales at Walmart, Target, Amazon

Ad sales are outgrowing the stores that produce them

At America's biggest retailers, the fastest-growing business no longer sells merchandise. It sells access to the people buying it. In the most recent quarter, Walmart Connect revenue rose 43% from a year earlier. Target's advertising revenue, most of it from its Roundel network, climbed 29% to $279 million. Amazon's advertising services revenue grew 26% to $19.8 billion.11 Core retail grew far more slowly. Walmart U.S. net sales rose 3.5%, Target's merchandise sales rose 5%, and Amazon's online stores grew about 15%.11

This is no longer a one-quarter blip. Walmart's global advertising business reached nearly $6.4 billion in fiscal 2026, up 46% including the connected-TV maker Vizio. Walmart Connect then grew 44% in the first quarter of the new fiscal year and 43% in the second.11 Target's annual ad revenue went from $522 million in 2023 to $649 million in 2024 and $915 million in 2025.11 Retail media is starting to look like the profit center of physical retail, and these figures suggest that change is already well underway.

Why the margin math matters

The main reason this matters is profitability. Walmart's head of advertising, Ryan Mayward, has said Walmart Connect earns profit margins above 70%, compared with roughly 5% in the core retail business.16 CFO John David Rainey told investors that advertising and membership income made up a third of Walmart's profit in the fourth quarter of fiscal 2026.36 After the most recent quarter, he credited advertising, membership and marketplace with nearly half of the company's profit growth.33 He also said strong ad and membership revenue helped Walmart U.S. e-commerce post double-digit incremental margins in the first half of the year.11

Selling merchandise means carrying inventory, paying for fulfillment and fighting on price. Advertising earns money from traffic and transaction data that the merchandise business produces anyway.11 That is why Walmart's ad growth now explains its margins, not just its revenue mix. When ads grow faster than e-commerce, every online order becomes more profitable.33

Other retailers see the same thing. Incoming Best Buy CEO Jason Bonfig has said the company is "becoming a retail, media, advertising and technology company." Best Buy expects advertising collections to approach $1 billion this year, after passing $900 million last year.12 That is still only about 2% of its more than $41 billion in revenue.14 Tariffs, supply-chain problems and price-sensitive shoppers make this extra profit especially valuable right now. One retail consultant described services and solutions as the profit engine that product sales can't currently be.13

Moving past sponsored listings

Retail media began with sponsored product slots in search results. It now covers much more of the advertising funnel. Retailers are using marketplaces, e-commerce traffic, video and connected TV to go beyond paid listings.11 Amazon describes its ad category as sponsored ads, display and video sold to sellers, vendors, publishers, authors and others.11

Connected TV is a big part of this. WARC estimates CTV already makes up 23% of retail media spending.26 Walmart's results show both the promise and the risk. Vizio ad revenue grew at triple-digit rates in the fourth quarter of fiscal 2026.32 But by the most recent quarter, Walmart Connect excluding Vizio grew 43% while the combined U.S. ad figure grew 38%, which means Vizio grew more slowly than the core business.33 Walmart doesn't report Vizio's ad revenue separately, so the size of that drag can't be measured from public numbers.33 The CTV purchase is still promising, but it doesn't yet clearly add to Walmart's growth.

The store itself is also becoming ad space. Walmart is testing screens on high-traffic aisle endcaps. Walgreens is adding Looma displays to about 1,200 stores. Looma expects most major chains to have 100 to 200 screens per location within seven years.16 Best Buy sells "store takeover" packages that put brands such as Nintendo, Meta and ESPN on displays and checkout screens.12 A field study of smart shopping carts found that shoppers with in-cart ads spent an average of €52.95, compared with €46.15 for those without, an increase of about 14.7%.18 The same study found that spending also rose on rival products in the advertised categories. That's good for the retailer but a mixed result for the brand paying for the ad.18

Retail media meets social and influencer budgets

The social media and influencer angle shows where retail media is heading next. Brands increasingly use retailer data to buy ads on other platforms. Google and Walmart have agreed to let brands target YouTube ads with Walmart shopper data and track whether those ads led to purchases at Walmart.12 Target is testing sponsored messages inside ChatGPT shopping conversations through its partnership with OpenAI.12 EMARKETER puts U.S. ad spending on retail-media-powered social formats at $7.76 billion in 2026, and retail-powered CTV at $6.10 billion.24

Influencer budgets are moving in a similar direction. EMARKETER forecasts U.S. influencer marketing spend of $12.17 billion in 2026, up 15.7%.5 Its broader estimate of creator marketing reaches $21.10 billion, and the firm says part of that growth comes from brands extending creator work into retail media networks and connected TV.6 The IAB measures even more broadly and projects U.S. creator ad spend of $44 billion in 2026.4 Brand surveys also point upward: 87.49% of respondents expect their influencer budgets to grow this year.2

The two channels are being pitched on the same idea, which is proof that ads lead to purchases. Retail media's selling point is closed-loop measurement, linking an ad to a sale in the retailer's own records.11 Influencer marketing, meanwhile, is moving toward affiliate commissions as social commerce grows.8 As creator content shows up on retail networks and retailer data guides targeting on YouTube and in chatbots, the old divide between "social" and "commerce" budgets matters less. Retailers that own purchase data are well placed to profit from both.

Forecasts agree on direction but not on size

Estimates of the market's size vary widely. WARC projects global retail media spend of $200.4 billion in 2026, rising to $223.4 billion in 2027.30 That is up from its November 2025 estimate of $196.7 billion.27 For the U.S., EMARKETER's figures have risen from $69.33 billion22 to $71.09 billion25 to a June 2026 estimate of $72.97 billion, about 20.3% growth.23 NielsenIQ uses a broader commerce-media definition and puts U.S. spend near $107.6 billion.23 The numbers differ because each firm defines the market differently, so readers should check the definition before comparing totals.

The real disagreement is about speed. WARC says global growth is slowing toward single digits, forecasting 11.5% in 2027 and 9.8% excluding Amazon, as the market matures and retailers try to avoid cluttering the shopping experience.26 The quarterly results show no slowdown at the top. Walmart Connect's growth went from 41% in the fourth quarter of fiscal 202632 to 44% and then 43% this year.11 Amazon's ad growth was 23% in the fourth quarter of 202539 and 26% in the latest quarter.11

Both views can be true because growth is so concentrated. EMARKETER expects Amazon and Walmart to take about 89% of the roughly $10.53 billion in new U.S. retail media spending in 2026.23 Within that, Amazon gets about $8.26 billion and Walmart about $1.16 billion.29 Overall market growth is slowing because the hundreds of smaller networks are fighting over a small share, while the two leaders keep pulling ahead.

Where this goes next

Walmart still has plenty of room to grow. Its ad revenue equals roughly 1% of sales, compared with about 8% of gross merchandise value at Amazon.31 Rainey has called Walmart "middle of the pack" on that measure and noted that tennis shoes bring in more ad dollars than broccoli. As Walmart's general-merchandise marketplace grows, its ad inventory grows with it.32 U.S. marketplace sales rose 52% last quarter.33 Mayward argues that ad growth can also happen outside e-commerce, pointing to in-store screens and ads from outside retail, such as fast-food chains and car dealers on Vizio and the Walmart app.16

Two things could slow this down. The first is measurement. Only about 15% of marketers say they strongly trust retail media network metrics,24 and NielsenIQ warns that brands too often confuse return on ad spend with true incrementality, meaning sales the ads actually caused.23 The second is the shopper. Surveys show people accept screens at store entrances or above the deli but push back on screens on cooler doors and shelves.16

Even so, the direction is clear. Over the next few years, Walmart, Amazon and, to a lesser degree, Target and Best Buy will likely be judged as much by how well they earn money from shopper attention as by how much merchandise they sell. Brands moving money from social feeds, creators and TV into these networks will pay to reach customers who already shop with them.