The latest results from Walmart for 2024 reveal a significant surge in the company’s advertising business, with billings reaching $4.4 billion – a notable 27% increase from the previous year. This growth far outpaces the evolution of its traditional sales business, which saw a modest 4% increase over the same period. Doug McMillon, CEO of the company, emphasized that the advertising business will be “one of the most important drivers of operational profit” for the company, thanks to its high profit margin, making it a key pillar alongside the membership segment, which has also demonstrated a substantial contribution to financial results.
The growth of these revenue streams enables Walmart to allocate more resources to improving its traditional operations, with a particular focus on e-commerce. Although this segment remains challenging due to high storage and shipping costs compared to in-store purchases, Walmart has managed to achieve an 11% growth in sales since 2020 and is working to optimize efficiency in this area. One of the main drivers of Walmart’s growth has been its retail media platform, Walmart Connect, which saw a 50% increase in the number of sellers in 2024. Furthermore, the recent acquisition of smart television manufacturer, Bizio, completed last December, opens up new commercial opportunities. McMillon is confident that this move will encourage brand interest in investing in advertising within the company’s ecosystem.
However, the last quarter of the previous fiscal year marked a negative milestone for Walmart. For the first time, the American company was surpassed by Amazon in overall billings, with $187.8 billion and $180.5 billion, respectively. This milestone is partly attributed to Amazon’s thriving advertising business, which has seen significant growth in recent quarters, providing relief to its main growth engine, AWS. As the retail landscape continues to evolve, it will be interesting to see how Walmart’s advertising business and e-commerce segment perform in the coming year.
