Walmart Connect’s Retail Media Revenue Surges 42% as Advertisers Shift Budgets from Amazon

Walmart Connect’s retail media arm reported a 42% year-over-year revenue increase for Q1 2026, according to figures disclosed during Walmart’s May 20 earnings call, marking the fastest quarterly growth rate the unit has posted since its 2021 rebrand. The number landed well above the 28% growth Wall Street had penciled in, and it arrived at a moment when mid-market DTC brands and marketplace sellers are actively diversifying their paid media stacks away from Amazon’s increasingly expensive sponsored placement inventory.

For operators running dual-channel businesses on both Walmart.com and Amazon, the implications are immediate. Walmart Connect’s CPCs on Sponsored Products averaged $0.61 in Q1 2026, compared to Amazon Advertising’s reported average of $1.14 for comparable non-endemic categories, according to measurement firm Pacvue’s Q1 2026 Retail Media Benchmark Report released earlier this month. That 87% cost gap is driving real budget movement.

What Is Driving Walmart Connect’s Accelerating Growth?

Three structural factors are compressing the gap between Walmart Connect and Amazon Advertising faster than most agency leaders anticipated at the start of the year. First, Walmart’s in-store data integration — connecting 4,700 physical locations to its digital ad attribution stack — now allows brands to close the loop on omnichannel purchases in a way Amazon structurally cannot replicate. Second, Walmart DSP inventory opened to non-endemic advertisers in late 2025 has injected new advertiser demand into the auction. Third, Walmart’s Luminate data platform, which gives suppliers access to shopper basket and substitution data, is being bundled with minimum Connect spend commitments, effectively locking in CPG and health-and-beauty budgets.

“We moved 18% of our total retail media budget from Amazon Sponsored Brands to Walmart Connect Sponsored Search in Q1, and our blended ROAS actually improved by 2.3x. The CPCs are still materially cheaper, and the conversion rate on Walmart grocery-adjacent searches is outperforming anything we see on Amazon for our category.” — Sarah Okonkwo, VP of Performance Marketing, Maude Skincare

Okonkwo’s brand sells in both marketplaces and runs a Shopify DTC site. She said her team uses Perpetua for Amazon campaign management and Intentwise for Walmart Connect, running both dashboards in parallel before consolidating into Northbeam for cross-channel attribution.

How Are Amazon Sellers Reacting to the Retail Media Shift?

The budget reallocation is most visible among sellers in the $2M–$20M annual revenue band — merchants large enough to afford Walmart Connect’s $500/month minimum managed service threshold but not so entrenched in Amazon’s ecosystem that switching costs are prohibitive. Agency executives at Tinuiti, Acadia, and Bobsled Marketing told Ecommerce Times they are fielding three to five new Walmart Connect onboarding requests per week, up from roughly one per week in Q4 2025.

“Amazon’s CPCs in home and kitchen have become almost untenable for sub-$40 ASP products,” said Daniel Shapiro, SVP of Marketplace Strategy at Acadia. “We’re building Walmart Connect into every new media plan we pitch for 2026. It’s not a replacement — it’s a pressure valve.”

“The brands that waited until 2026 to build their Walmart Connect presence are already behind. Shelf space on Walmart.com search results pages is filling up, and CPCs will follow. The window of cheap inventory is not permanent.” — Daniel Shapiro, SVP of Marketplace Strategy, Acadia

Shapiro noted that his team is using Skai (formerly Kenshoo) to manage unified bidding across both Amazon and Walmart Connect, a workflow that became significantly more stable after Skai’s Walmart Connect API integration update in February 2026.

What Does the Walmart Connect Data Stack Actually Offer Sellers?

The operational appeal of Walmart Connect in 2026 goes beyond CPC arbitrage. Walmart’s first-party data infrastructure — built on its acquisition of data clean room technology from Datavant in late 2024 — allows advertisers to match their own customer lists against Walmart’s 144 million weekly shopper universe without exposing raw PII. For DTC brands trying to suppress existing customers from conquest campaigns, or to retarget lapsed purchasers who buy in-store, this is a meaningful capability that Amazon’s DSP has not yet matched at equivalent scale for third-party sellers.

Walmart Connect’s new self-serve Display product, which exited beta in March 2026, also allows sellers to run on-site display placements without requiring a Walmart Media Group managed service contract. For smaller operators, that removes a significant access barrier.

Key capabilities Walmart Connect now offers marketplace sellers and DTC brands:

• Sponsored Products and Sponsored Brands across Walmart.com search, browse, and item pages
• Self-serve Display targeting by purchase history, category affinity, and life stage segments
• Walmart DSP access for off-site programmatic, including CTV inventory via Vizio’s WatchFree+ platform
• In-store digital screen inventory across Walmart’s 4,700 U.S. locations via the Walmart In-Store Retail Media product
• Luminate shopper basket analytics bundled with qualifying Connect spend tiers
• Clean room audience matching via Walmart’s Datavant-powered Data Collaboration Center

Is Amazon Advertising’s Dominant Position Actually at Risk?

To be precise: no analyst firm is forecasting Walmart Connect to overtake Amazon Advertising in gross retail media revenue within the next 24 months. Amazon’s retail media business generated an estimated $58.7 billion globally in 2025, per eMarketer’s March 2026 Retail Media Forecast, while Walmart Connect’s global figure was approximately $4.8 billion. The gap remains enormous.

But the competitive dynamic is shifting in ways that matter operationally for sellers. Amazon’s sponsored inventory load — the percentage of above-the-fold search results occupied by paid placements — crossed 65% on high-volume keywords in several major categories in Q1 2026, according to Jungle Scout’s quarterly SERP analysis. That saturation is a structural ceiling on marginal return for incremental Amazon ad spend, and sophisticated operators are recognizing it.

“Amazon is still where most of the purchase intent lives, and we’re not telling clients to pull back dramatically,” said Liz Giorgi, founder of Soona, whose platform helps brands produce creative assets for marketplace listings and paid media. “But the creative strategy has to be different now. On Amazon you’re fighting for attention in a saturated auction. On Walmart Connect you still have room to build brand presence before the auction gets crowded.”

“Brands that build Walmart Connect muscle now are going to have a structural cost advantage in 12 to 18 months. It’s the same playbook early Amazon advertisers ran in 2016 and 2017 when CPCs were still rational.” — Liz Giorgi, Founder, Soona

What Should Shopify and DTC Operators Do With This Data Right Now?

For DTC operators who have historically treated Walmart.com as a secondary or even tertiary channel, the Q1 2026 data creates a concrete operational case for accelerating marketplace expansion. Walmart Fulfillment Services (WFS) has reduced average fulfillment cost-per-unit by an estimated 9% since its Q3 2025 rate restructuring, narrowing — though not eliminating — the operational gap with Amazon FBA for standard-size items under 20 lbs.

Agency leaders recommend a phased approach for Shopify-native brands entering the Walmart ecosystem:

• Phase 1: List top 20% of SKUs by Amazon revenue on Walmart.com via Shopify’s Walmart sales channel integration, using identical main images and A+ equivalent content
• Phase 2: Activate Walmart Connect Sponsored Products with a minimum $50/day budget to establish auction history and quality score baselines before scaling
• Phase 3: Enroll in WFS for at least 30% of Walmart SKU catalog to qualify for the Walmart-fulfilled badge, which Pacvue data shows lifts conversion rate by an average of 19%
• Phase 4: Layer in Walmart Connect Display retargeting against category browsers once Sponsored Products campaigns have generated 90 days of first-party signal
• Phase 5: Apply for Walmart Luminate access and begin using substitution data to identify defensive keyword and assortment gaps vs. Walmart private label

The broader implication of Walmart Connect’s Q1 surge is not that Amazon is weakening — its advertising business remains the most efficient performance media channel in e-commerce at scale. The implication is that the retail media landscape in 2026 has genuine plurality for the first time, and operators who treat it as a single-platform game are leaving measurable margin on the table.

Walmart’s next earnings call is scheduled for August 19, 2026. Analysts will be watching whether Connect sustains its growth rate as more advertisers flood the auction — and whether that influx begins compressing the CPC gap that is currently its most compelling selling point.