Walmart Connect Grew 43%. Your CPCs Are Next.
Advertising now carries a third of Walmart’s profit. What that means for the brands buying the auction, and what to re-baseline before Q4.
Walmart reported Q2 FY27 on August 20, 2026. Walmart Connect in the U.S. grew 43% excluding VIZIO. Total advertising across the company grew 38%. Walmart U.S. operating income rose 20.6% to $8.1 billion, and the gross profit rate expanded 158 basis points, which Walmart credits partly to tariff refunds and an improved business mix from digital advertising.
Read that last part again. Walmart is telling investors that selling ads is improving its margins.
Two weeks earlier, on August 4, Walmart closed its acquisition of Vibe.co and put a self-serve connected TV platform inside Walmart Connect. And its advertising assistant, Marty, was supposed to reach every Sponsored Search advertiser during the first half of 2026, a window that closed almost two months ago without a public confirmation.
Three separate announcements, one consequence for anyone buying Walmart ads: the platform now depends on your ad spend for its profit growth, the number of advertisers competing with you is climbing fast, and a growing share of shopper demand is moving into AI conversations your attribution reports cannot see.
Here is what each piece means for a real ad budget.
Planning Your Q4 Walmart Budget on 2025 CPC Numbers?
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Talk to a Walmart StrategistWhich 43% Are You Reading?
The number moving around trade coverage this week is either 43% or 38%, and both are correct.
Walmart’s earnings release states advertising was “up 38% overall, including 43% increase in Walmart Connect (ex-VIZIO).” The 38% is total advertising including VIZIO. The 43% is Walmart Connect in the U.S. with VIZIO stripped out. When someone quotes you a Walmart ad growth figure, ask which one before you build a plan on it.
For context on where this sits: Walmart’s global ad business reached $6.4 billion in 2025 against $713 billion in FY26 company revenue. That is roughly 1% of sales. Amazon’s advertising runs closer to 8% of its gross merchandise value. Walmart’s CFO has said publicly there is significant runway left.
That gap is the part sellers should sit with. A retail media network at 1% of sales with a stated ambition to look more like one at 8% is not a network with an incentive to keep clicks cheap.
Advertising Is Carrying a Third of the Profit
On the Q4 FY26 earnings call in February 2026, CFO John David Rainey told investors that “fully a third of our profit” in that quarter was related to advertising and membership income.
That quote gets recycled a lot right now, and it keeps getting attached to the wrong quarter. It is from February, not from the August call. The point still holds, and it is the most important thing on this page: Walmart’s profit story is no longer only about moving groceries.
When ad revenue carries the margin, the platform’s incentives change in ways that show up in your account. More ad surfaces get added. Ad load per page tends to rise. The advertiser base gets recruited harder, including into self-serve tools built for brands who have never bought retail media before. Every one of those brands lands in the auction next to you.
Rising CPCs make organic placement worth more, and on Walmart that starts with complete Item Spec 5.0 attributes rather than with bid strategy.
Walmart’s CPC advantage over Amazon has been the single best argument for putting budget on the platform. That advantage is a function of demand outpacing advertiser supply. Walmart is working directly on the advertiser supply side of that equation. If you are still planning against the cost structure that made Walmart the cheaper channel, re-baseline your numbers before you build Q4.
Vibe.co Closed. Self-Serve CTV Has a Door Now.
Walmart announced the completed acquisition of Vibe.co on August 4, 2026, roughly six weeks after the June 23 agreement. Vibe was founded in 2021, runs a self-serve connected TV buying platform, and Walmart’s release puts its advertiser count above 10,000, weighted toward ecommerce brands, growth-stage businesses and small and mid-sized advertisers.
Ryan Mayward, GM and Senior Vice President of Walmart Connect U.S., framed the platform as one that “makes streaming TV advertising simple and accessible for businesses of all sizes.” On the Q2 call, management said it expects Vibe to widen access for small and medium advertisers through self-service tools.
Here is what Walmart has not said. The release does not describe how Vibe inventory will connect to Walmart’s first-party shopper data, does not name a timeline, and does not specify availability for Marketplace sellers as distinct from suppliers. Walmart Connect’s own description covers suppliers, Marketplace sellers and brands of all sizes, so the expectation is reasonable. It is an expectation, not a shipped capability, and anyone selling you a Walmart CTV plan this month is filling in blanks that Walmart left empty.
The harder question is whether you want it when it arrives. CTV is upper funnel. For a brand doing $20K to $1.5M a month, upper funnel spend without incrementality measurement is a very expensive way to generate a chart. The brands that should be watching this closely are the ones already running clean holdout tests on their existing media. Everyone else has cheaper problems to fix first.
The Auction Is Becoming Agent-Mediated on Both Ends
Walmart has two AI agents pointed at the same shelf from opposite directions.
Sparky is the shopper-facing assistant in the Walmart app. Walmart piloted ad formats inside it in fall 2025 and now runs sponsored prompts there, which appear inside the conversation when a shopper asks for a recommendation. In a Walmart Customer Spark Community survey conducted in August 2025, Walmart reported that 81% of respondents had used Sparky to check availability or product details before buying.
Marty is the advertiser-facing assistant. Walmart said in January that it would be available to all Sponsored Search advertisers in the Walmart Connect Ad Center during the first half of 2026. That window closed on June 30. As of this writing, Walmart Connect’s own article on the assistant still describes it as being in beta for Sponsored Search, and no general availability announcement has appeared. Check your own Ad Center rather than trusting any date you read in coverage, including this one.
The measurement problem sitting underneath both of these has no public data behind it yet, and it is worth instrumenting before it becomes a surprise. If a meaningful share of purchase decisions gets made inside an agent conversation, the traffic pattern that produces should look strange in reporting: product page sessions flat or falling while units hold or grow. Nobody has published numbers on this. Start logging the two series side by side now so you have a baseline when someone does.
The deeper treatment of Walmart’s AI tooling, including the creative generation side, lives in our breakdown of how AI is reshaping Walmart Connect campaigns.
What To Do Before Q3 Closes
Re-baseline your Walmart CPC assumptions. Any planning figure you carried in from 2025 predates two quarters of 40%-plus advertiser growth. Pull your own trailing 90-day CPC by campaign type and plan against that, not against a published benchmark.
Separate branded from non-branded before the auction tightens. Walmart turned on negative keywords for Sponsored Products on July 29, 2026, with a fixed-bidding restriction on auto campaigns that most coverage skipped. Getting branded traffic out of your auto campaigns and into a controlled campaign is more valuable in a rising-cost auction than it was in a cheap one.
Leave CTV alone unless you can measure it. Self-serve access lowers the barrier to spending, not the barrier to knowing whether the spend worked.
Instrument the sessions-versus-units divergence. Two lines on one chart, pulled weekly. It costs nothing and it is the only way you will notice agent-driven demand before it shows up as a mystery in your ROAS.
The pattern here rhymes with what Amazon’s Q1 2026 numbers showed sellers: ad revenue growing faster than the units it moves, and a platform quietly repricing access to its own customers. Walmart is running the same play four years behind Amazon and considerably faster.
How Canopy Management Can Help
Canopy Management is a full-service omnichannel marketing agency based in Austin, Texas. We run Amazon, Walmart, TikTok Shop, Shopify, Meta, and Google for brands doing $20K to $1.5M in monthly revenue, with the same dedicated brand manager owning the account for the life of the engagement. We watch retail media cost curves inside partner accounts before they surface in an earnings release.
Schedule a strategy session to see how we would approach your Walmart account.
Planning Your Q4 Walmart Budget on 2025 CPC Numbers?
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Talk to a Walmart StrategistFAQ
Both figures are in Walmart’s earnings release and they measure different things. Walmart Connect in the U.S., excluding VIZIO, grew 43%. Total advertising across the company, including VIZIO and Walmart International, grew 38%. If someone quotes a single Walmart ad growth number without saying which, the number is not usable for planning.
Walmart has not said that. The August 4 release confirms the deal closed and describes Vibe as a self-serve platform for advertisers of all sizes, and Walmart Connect broadly serves suppliers, Marketplace sellers and brands. Specific availability, timing, and how the inventory connects to Walmart’s shopper data are all unannounced. Verify in your own Ad Center before you plan against it.
Walmart said in January 2026 that the advertising assistant would reach all Sponsored Search advertisers during the first half of 2026. That window has closed and Walmart Connect’s own page still describes the assistant as in beta. Log into your Ad Center and look rather than relying on any published date.
In most categories, yes, though the gap has been narrowing as advertiser count rises. The more useful question is what your own CPCs did over the last two quarters, because category-level movement varies widely and published benchmarks lag the auction by months. Pull your trailing 90-day numbers by campaign type and plan from those.
Sponsored prompts are ad placements that appear inside a conversation with Sparky, Walmart’s shopper-facing AI assistant, when a customer asks for a product recommendation. Walmart piloted the format in fall 2025 and has since expanded it. Visibility there depends more on product data completeness and review quality than on bid price, which makes catalog hygiene an advertising input rather than a listing chore.
Rising costs are a reason to tighten execution before they are a reason to leave. Most accounts have recoverable waste in auto campaigns, branded traffic, and unmonitored search terms that is larger than the CPC increase they are worried about. Fix the leaks, re-baseline your targets, then decide about allocation with clean numbers.
