Walmart is pushing brands to increase their retail media spending by at least 25% YoY or risk losing key benefits in their supplier relationship with the company such as Walmart DSP data fee discounts, onsite sponsorship deals, and early access to reporting, according to three CPG brands and two agency media buyers who spoke to ADWEEK.
For one of those brands, Walmart asked for a 50% increase versus a year ago. Another brand cited an increase of 30%, which would equate to nearly $45M in retail media ad spend this year.
Walmart recently disclosed that advertising and membership together represented a little more than a quarter of the overall operating income for the company in Q4 2024, which creates immense pressure to keep growing the high-margin business.
As part of joint business plans, it's common for brands to pay retailers for selling their products, with some of the money going towards advertising. However advertisers are currently facing stagnant sales from retail media networks broadly, and from Walmart specifically, making these additional spend commitments a difficult ask, especially as an economic slowdown looms.
One CPG brand reported only moderate sales growth, while even seeing a decline in market share in some years, despite tripling its spend on Walmart over the past three years. Another CPG brand shared that despite increasing investment in retail media, there has been little to no growth in top-line sales or overall volume.
Ryan Mayward, SVP of Retail Media Sales at Walmart Connect told ADWEEK:
“Actual advertising spend, much like sales, is not guaranteed. Likewise, sales performance can be influenced by several factors beyond advertising investments—such as price, availability, and competitor behavior.”