Walmart demands 25% more ad spending amid trust issues

In recent months, Walmart has increased demands for brands to raise their retail media spending by 25% year-over-year as part of joint business plans. This push, reported amid rising tensions, comes despite many brands experiencing stagnant sales growth from these investments. Brands are being pressured to commit to higher media spend targets to retain essential benefits in their supplier relationships with Walmart. As the company seeks to maximize profits from its media business, many brands view this renewed spending mandate as a disconnected requirement that does not correlate with actual performance improvements. Retail media has become increasingly lucrative for Walmart, which is evident in Wall Street analysts’ focus on the robust margins associated with this business segment. Retailers that enhance their media services show promising growth potentials, compelling brands to invest more heavily or risk losing visibility in the market. One brand executive summarized this predicament as an impossible choice: invest heavily in Walmart’s media offerings to remain competitive, or risk being unfindable to consumers, likening it to being invisible in a retail environment. However, not every retailer follows Walmart's model of demanding increased ad spending without guarantees of performance. Some retail media networks are adopting alternative strategies that emphasize technological enhancements and better measurement tools for advertisers. Reports indicate that one consumer packaged goods (CPG) brand chose not to renew their joint business plan with Walmart, citing inflexible deals with no sales growth or performance guarantees. This trend illustrates a broader shift among brands, with some opting out of formal agreements in favor of self-serve advertising solutions that offer greater flexibility and control. The growing dependence on retail media investments raises a trust deficit between brands and media platforms like Walmart. Many brands feel compelled to increase their advertising budgets without a clear understanding of the returns on these investments, leading to frustration and potential disengagement from these platforms. Renee Caceres, Head of Retail Media at StackAdapt, emphasized the challenges faced by brands, stating that while retail media may not be a tax, many feel pressured into spending decisions imposed by retailers. Walmart’s push for higher spending could be interpreted as an attempt to garner trust from brands, advocating a narrative that portrays these increases as long-term investments towards improved advertising capabilities, but this fails to address the immediate concerns about performance and transparency.