Walmart's Ad Tech Overhaul: A Game Changer for Retail Media and the Battle for Ad Dominance

In 2025, Walmart's strategic realignment in digital advertising is reshaping the retail media landscape, challenging Amazon's long-standing dominance and creating new dynamics for ad tech players like The Trade Desk (TTD). As the global retail media market surges toward $177.7 billion, Walmart's aggressive expansion of its ad tech partnerships—centered on its Walmart Connect division—has positioned it as a formidable competitor. This shift not only threatens Amazon's 67% share of the U.S. retail media ad market but also raises critical questions about the future of programmatic advertising and the role of third-party platforms like The Trade Desk.

Walmart's Ad Tech Play: A Retail Media Powerhouse

Walmart's ad revenue is projected to hit $4.4 billion in 2025, with $3.87 billion coming from the U.S. This growth is driven by a dual strategy: simplifying ad buying for small brands and expanding cross-platform reach. The launch of a self-service API for display ads mirrors Amazon's approach, but Walmart's partnerships with ad tech firms like Pacvue, Skai, and DataCaciques add a layer of sophistication. These tools enable real-time optimization, AI-driven targeting, and budget automation, making Walmart's ad platform more accessible to smaller sellers while maintaining high margins.

The company's collaboration with streaming giants like Roku and TikTok further amplifies its reach. By integrating connected TV (CTV) and social commerce advertising, Walmart is no longer confined to its own ecosystem. This move directly challenges Amazon's programmatic dominance, as advertisers now have a viable alternative to diversify their spend beyond Amazon's DSP. For example, Walmart's CTV partnership with Roku taps into a $12 billion ad market, offering brands a way to blend in-store and digital experiences.

The Trade Desk's Role and Risks

The Trade Desk has been a key enabler of Walmart's ad tech growth, powering its programmatic capabilities and data management. However, Walmart's long-term strategy hints at a potential pivot. While The Trade Desk benefits from Walmart's current reliance on its platform, the retailer is exploring in-house solutions to reduce dependency on third parties. This mirrors Amazon's own evolution, which initially partnered with The Trade Desk but now operates its own DSP.

For investors, this creates a dual narrative: The Trade Desk's short-term growth is secure due to Walmart's ad expansion, but its long-term margins could face pressure if Walmart replicates Amazon's path. The Trade Desk's stock has historically traded at a premium to its peers, reflecting its role as a programmatic infrastructure provider. Yet, as retailers like Walmart and Amazon increasingly build proprietary ad tech, The Trade Desk's market share in retail media could erode.

Amazon's Ad Dominance Under Threat

Amazon's ad business, projected to exceed $60 billion in 2025, remains a juggernaut. Its DSP is now a direct competitor to The Trade Desk, offering full-funnel measurement and closed-loop attribution. However, Walmart's rise introduces a critical variable: brand diversification. Advertisers, particularly in categories where Amazon lacks retail presence (e.g., groceries, apparel), are increasingly allocating budgets to Walmart to avoid over-reliance on Amazon. This trend is especially pronounced among mid-sized brands seeking to balance reach and cost efficiency.

Amazon's dominance is also being challenged by Walmart's first-party data advantage. With 60 million Walmart+ members and a robust loyalty program, Walmart can offer advertisers unparalleled insights into consumer behavior. This data-driven edge, combined with AI-powered tools for catalog optimization and personalized recommendations, positions Walmart to capture a larger share of the $1.2 trillion U.S. e-commerce market.

Strategic Implications for Investors

The realignment of Walmart's ad tech ecosystem has three key implications for investors:

1. Retail Media Growth and Margins: Walmart's ad business, already a 25% contributor to its operating income, is a high-margin growth engine. As it scales its partnerships and expands into CTV and social commerce, its ad revenue could outpace Amazon's in specific verticals.

2. The Trade Desk's Valuation Risks: While The Trade Desk benefits from Walmart's current strategy, its long-term prospects hinge on whether Walmart (or other retailers) build in-house solutions. Investors should monitor Walmart's API usage trends and any signs of vertical integration.

3. Amazon's Competitive Resilience: Amazon's ad dominance is far from unassailable. However, its ability to innovate in programmatic advertising and expand its DSP into non-retail categories (e.g., healthcare, automotive) will determine its ability to retain market share.

Conclusion: A New Era in Retail Media

Walmart's ad tech realignment is a watershed moment in the retail media wars. By combining AI-driven tools, cross-platform partnerships, and first-party data, it is not only challenging Amazon's ad dominance but also redefining the role of third-party ad tech platforms. For investors, the key takeaway is clear: the retail media landscape is becoming more fragmented and competitive. While Amazon remains the leader, Walmart's ascent—and its potential to disrupt the status quo—demands a closer look at how ad tech players like The Trade Desk adapt to this evolving ecosystem.

In this new era, the winners will be those who can balance innovation with agility, leveraging data and AI to stay ahead of the curve. For now, Walmart's ad tech strategy offers a compelling case study in how a traditional retailer can transform into a digital advertising powerhouse.