Instacart and Walmart’s ad growth hint at a deeper trend | WARC | The Feed

Instacart and Walmart’s ad growth hint at a deeper trend

Retail media is on the rise, with US retail heavyweight Walmart posting yet another quarter of robust advertising growth that chimes with reports that lockdown phenom Instacart is hoovering up similar growth in the market.

Why it matters

Amid the hype around AI in marketing, there’s a much more tangible trend now capturing much of the market. Retail media is set to be the fastest growing channel this year with a total market growth of 10.1%, and currently worth a fifth of the global online ad market.

Much of this has historically gone the way of Amazon, which is set to capture 35% of total channel spend this year. However, it appears that rivals are gaining and potentially outgrowing the e-commerce titan in a medium that it has led for years.

Walmart’s consistency

Walmart’s Q1 results show that the company’s advertising services – which are far more profitable than its core retail operation – grew 30% year on year. This continues the growth trend that defined the company’s 2022.

“In the U.S., Walmart Connect advertising sales increased nearly 40% as we experience strong momentum and new advertisers, particularly from marketplace sellers,” said CEO John David Rainey on a call with investors.

Internationally, he added, the ad business was also strong and led by 64% year-on-year growth for Walmex (the company’s Mexico operation) and 50% growth of Flipkart ads in India.

Instacart is turning into an ad company

Instacart, meanwhile, which emerged from the pandemic looking ready for a stock market listing before settling back into building its business, made a reported $740m in advertising revenue – a year on year increase of 30% according to reports from The Information.

Relative to Walmart, this remains a small business, but what it does to the makeup of Instacart’s overall business is staggering: 30% of the startup’s revenue from 2022 came from advertising. It’s a hint at where the company is finding its strength as sales growth slows from its pandemic-era peak.

Instacart CMO Laura Jones recently spoke to WARC about the company’s investment in upper-funnel products, reflecting how retail media networks are now looking beyond performance. “Historically, we've been strong on that point of purchase, but we realized that at the exact moment you’re about to click is not the only moment a decision is being made,” Jones explained.

Sourced from Walmart, Seeking Alpha, The Information, The Wall Street Journal, WARC