How Retail Media Is Evolving From Performance Tactic to Full-Funnel Growth Engine
Rich Lehrfeld has been coming to CES for more than 20 years. The biggest shift he has seen in the last few years, he said, is that CES is now filled with media people. The conversations have moved from electronics and hardware to business problems and solutions, with retail media, AI, and CTV as the dominant topics.
Lehrfeld, SVP and General Manager of Walmart Connect, sat down at CES 2026 with Stacy Kemp, Executive Lead for the CMO Program at Deloitte, for a conversation that covered the full scope of where the platform is headed: from the myth Lehrfeld wants the industry to retire, to how creativity and AI are reshaping what the platform can do for brands.
This article draws on that CES 2026 Content Studio conversation between Lehrfeld and Kemp, supplemented by Walmart Connect’s own published data and independent industry reporting where noted.
The myth Lehrfeld wants to retire
Kemp asked Lehrfeld what retail media myth he would love to see sunset in 2026. His answer was clear: the idea that retail media is only performance-based, lower-funnel, conversion-driven media.
That description was accurate in the early days, Lehrfeld said. On-site at Walmart.com, a customer searches for something, Walmart Connect delivers a relevant sponsored product, and the transaction happens right there. Very powerful, very impactful. But retail media is expanding beyond on-site at a retailer and moving toward full-funnel, because the real power is data and information and the relevance of targeting.
The signal retailers have is strong, Lehrfeld said. Walmart knows what customers are buying and what their purchase patterns are. That signal can now go off-site in a privacy-safe way into upper-funnel media, whether that is social, display, or what is growing fastest: connected TV.
The capabilities, Lehrfeld said, fall into three areas. First, scale: 150 million customers on a weekly basis across an omnichannel footprint. Second, solutions: not just performance-based media but full-funnel, from on-site through mid-funnel engagement formats like social all the way to upper-funnel broad-based media like connected TV. Third, signals: the ability to optimize in real time and show results, on a real-time or next-day basis, of actual sales. That closed loop, Lehrfeld said, is what makes retail media powerful, because you can tell advertisers exactly what customers are buying.
Kemp summarized it: the words “transactional” and “lower-funnel” do not capture what is possible anymore. Lehrfeld agreed, calling it a new hybrid media that is not traditional media and not just shoppable or retail media, but something in the middle that can solve many different business challenges.
Why this matters for suppliers: The financial weight behind this shift is real. Walmart’s global advertising revenue reached $6.4 billion in 2025, up 46% year over year, with Walmart Connect in the U.S. growing 41% in the fourth quarter alone, according to Adweek’s reporting on Walmart’s Q4 FY2026 earnings. CFO John David Rainey told investors that advertising and membership income accounted for a full third of Walmart’s profit in the most recent quarter, as reported by AdExchanger. Ryan Mayward, SVP of Sales at Walmart Connect, told Marketing Dive in December 2025 that CTV is the fastest-growing segment of the platform, accelerated by the Vizio acquisition. Suppliers whose Walmart Connect investment is still concentrated primarily in Sponsored Search are allocating against a version of the platform that is being outgrown by the platform itself.
Creativity now has a role in retail media
The conversation then turned to creativity. Lehrfeld acknowledged what he called another misconception: that retail media or performance-based media is only about data and optimizing conversion. As you move to full-funnel, creativity plays a new role, he said.
Retail media data can help brands make better decisions about what creative should be, through better targeting of customers Walmart Connect knows would want a product or should be introduced to it. And then you can see the results all the way down to conversion. In the past, Lehrfeld said, we were a little blind. He referenced the old advertising line: I know 50% of my advertising works, I just don’t know what 50%. Now, he said, you actually know all of what is working.
Kemp reflected on the combination of data, category breadth, delivery capability, and media access that gives Walmart Connect teams the ingredients to build what she called “solution recipes” for brands. Lehrfeld agreed: the platform is seeing incredible reach through CTV and Vizio partnerships, and clients are growing their customer bases in ways that were not possible before. He framed it as crafting customer engagement solutions versus selling media or selling data.
That led to his point about briefs. He said he always tells clients to give Walmart Connect a brief that goes beyond wanting to sell at the point of sale. A great brief describes the brand’s objectives, who the customer is, and what he called the product and the feeling. Give the team that information, he said, and they can build creativity and impact into the campaign all the way from broad-based media down to performance-based media.
Why this matters for suppliers: Lehrfeld is describing a platform that can do more than most briefs ask it to do. If the brief a brand sends Walmart Connect is framed around search share and cost per acquisition, the team builds against those objectives. The creative and full-funnel capabilities Lehrfeld walked through at CES are available, but they require a different kind of brief to activate, one that includes who the brand is trying to reach, what role the product plays in that person’s life, and what the brand wants the campaign to accomplish beyond the next promotion cycle. Suppliers planning their next JBP conversation should consider whether the brief they are preparing gives the Walmart Connect team enough to work with.
How AI is showing up on both sides of the platform
Kemp said AI feels very different from a year ago. She pointed to a shift she has observed among CMOs: from proofs of concept and MVPs in April and May to “let’s just transform” by September.
Lehrfeld said AI is real and being infused into every part of the business. On the consumer side, he pointed to Sparky, Walmart’s AI-based tool on its site that allows customers to ask more conversational questions and get more personalized recommendations. But he added that the industry is still in the early stages of how companies use AI.
Walmart’s own executives have shared early results on Sparky’s impact. Dave Guggina, President and CEO of Walmart U.S., said during the Q4 FY2026 earnings call that roughly half of Walmart’s app users have used Sparky, and that when they use it, it drives them to build bigger baskets, as reported by Adweek.
On the B2B side, Lehrfeld talked about Marty, Walmart Connect’s agentic advertising tool, which is already in beta and delivering value. Advertisers are using Marty to understand consumer buying patterns, analyze campaign results, and explore their data in new ways. As the tool moves from beta to general availability, Lehrfeld said, clients will be able to ask even more complex questions about the customers they want to reach, what is happening with their campaigns, and how to optimize. Walmart Connect’s CES recap specified that Marty is currently in beta for Sponsored Search, and that 97% of advertiser queries have been unique, reflecting how different every advertiser’s objectives and questions are.
Lehrfeld also mentioned a creative builder tool that lets advertisers ask different questions about creative execution. And he talked about where Sparky is headed: ads will become part of the experience, but they will be better because they will be more personalized and more informed by customer understanding. Walmart has already begun testing advertisements within Sparky, per the same Adweek report.
Throughout the AI discussion, Lehrfeld was clear about one thing: AI is not going to replace the human aspect. Creativity and humanity will still be part of the prompting and the process, he said. What AI will do is handle more of the routine work, like billing and simple questions, and move teams toward solving business challenges for clients. That, he said, is what Walmart Connect is set up to do.
Why this matters for suppliers: Two things to watch. First, Sparky is already changing how customers discover products, and it is being monetized. If half of Walmart’s app users have tried it and they are building bigger baskets, then how a brand’s products show up in AI-driven recommendations is becoming part of the path to purchase. The product content that feeds those recommendations is the same content sitting on product detail pages. Suppliers should evaluate whether their PDP content is built for AI interpretation, not just human browsing. Second, Marty is moving from beta to broader availability. Brands that engage with it early will have a head start in understanding what the tool can surface about their campaigns, customers, and competitive positioning.
CTV and the Vizio opportunity
When the conversation turned to CTV, Lehrfeld walked through the evolution: as advertisers started asking for full-funnel solutions beyond performance and lower-funnel, Walmart Connect began infusing CTV through relationships and off-platform media. The Vizio acquisition, he said, makes that even more powerful because it creates a true integrated platform that can be full-funnel from brand all the way down to performance-based on-site.
The practical example he gave showed where this is heading. A family is sitting down for movie night watching a Vizio TV. They realize they do not have popcorn or candy or a beverage. One click, and a half hour later through Walmart’s express delivery, it can be at the house. That connection all the way through the funnel, from a campaign perspective or just from a tactical moment of consumer engagement with entertainment, is what the platform is building toward.
The early data supports the investment. Mayward told Marketing Dive that customers who see CTV ads are 28% more likely to buy products from Walmart. Research shared at CES, with campaign categorization performed by iSpot, showed that adding Walmart Connect CTV or Vizio inventory to linear TV buys reached audiences that were 75% incremental to linear alone, according to Walmart Connect’s CES recap. And Walmart’s CFO disclosed triple-digit advertising growth from the Vizio business in Q4, per the Adweek earnings report, though from a relatively small base.
Why this matters for suppliers: CTV through Walmart Connect is not a general awareness buy. It is a buy that carries Walmart’s first-party purchase data into the living room and measures whether the person who saw the ad bought the product. For suppliers who have historically treated CTV and retail media as separate budget lines, Lehrfeld’s point is that they are converging. The 75% incremental reach figure is particularly relevant for brands whose linear TV plans are already mature and reaching a ceiling on new audiences.
Lehrfeld’s advice to CMOs: scale, solutions, and signals
For the final question, Kemp asked Lehrfeld to imagine he is advising a CMO on how to think about Walmart Connect strategically. His answer came back to his three-part framework.
On scale: focus on scalable solutions and partners first, because fragmenting across too many data sources makes it hard to understand what is working. On solutions: think full-funnel. The world has collapsed for CMOs, he said, meaning they can no longer separate upper-funnel brand responsibilities from lower-funnel performance marketing. Retail media and broad-based media are not separate anymore. They have to think about it from performance-based to consideration to acquisition. On signals: hold media accountable for driving sales, not just reach or frequency, and be clear about how you measure that.
Kemp connected the advice to Sam Walton’s legacy, noting she had recently relistened to his autobiography. Scale, signals, and solutions have been the name of the game since the beginning, she said. Lehrfeld agreed, adding that everything Walmart Connect does has to be customer-centric. The advertising has to be relevant to the consumer, or they will not purchase, and then the advertisers will not come, and Walmart will not benefit. It is a flywheel, he said, and Sam Walton would be proud of where retail media has taken the company.
Why this matters for suppliers: Lehrfeld’s framework is a practical checklist for any supplier evaluating their Walmart Connect investment. Are you working with partners that give you scale, or are you spreading budget across fragmented channels? Are your solutions full-funnel, or are you still planning search, display, and CTV as separate line items? And are you measuring results against actual sales, or against channel-level proxies that do not capture in-store impact? The answers to those questions will determine whether a brand is getting the full value of a platform that has grown well past where most supplier plans were originally built.
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