Walmart tests ads in AI shopping assistant Sparky as retail media revenue hits $6.4 billion

Walmart has been testing advertisements inside its AI-powered shopping assistant, Sparky, since last autumn — and its Chief Growth Officer says a more thoughtful approach to advertising in these tools is essential as the retail giant looks to capture a share of the growing AI advertising market.

Seth Dallaire, who oversees Walmart's ads business, e-commerce marketplace and Walmart Plus membership programme, addressed the company's strategy on Wednesday at the Evercore ISI Consumer and Retail conference.

Ads in AI — but fewer of them

Walmart has confirmed that sponsored listings do appear within Sparky's chat interface, but the company says their presence is significantly lower than the volume of ads customers encounter in conventional search results. Dallaire was clear that the approach must earn its place by serving shoppers rather than disrupting them. "We'll be careful to watch our customers and how they're using these tools," he said. "Advertising and retail media will have a role to play because it helps customers shop. It's not an interruptive experience, it's contextually relevant."

A revenue stream that is already significant

Walmart's retail media business has grown into a meaningful operation in its own right. Its advertising revenue grew 46 per cent last year, reaching $6.4 billion — and the company's latest moves in AI are positioned to capture further growth as brands shift budgets towards AI-powered channels.

Dallaire has a dual mandate: growing ad revenue while also ensuring that advertising actively supports merchandise sales and member satisfaction. An ad experience that overwhelms a shopper and causes them to abandon their purchase, he made clear, is not a success by his measure.

Discovery, not disruption

Dallaire framed well-executed advertising as a tool for product discovery rather than an obstacle to it. "I like to be exposed to new products," he said. "Advertising plays a critical role in that. In fact, it's very similar to merchandising." The goal, in his view, is for ads to function the way a well-placed product on a shop floor does — surfacing something relevant at the right moment rather than forcing it on a customer.

What Sparky is teaching Walmart

For now, Dallaire said the more immediate value of Sparky lies not in the ad revenue it generates but in the customer behaviour data it produces. "The types of prompts that we get from customers in those agentic environments are quite different than what maybe historically we've seen," he said.

Where a shopper might once have typed "fragrance-free detergent" into a search bar, they might now tell Sparky they have allergy concerns and ask for a suitable recommendation.

That richer context reduces the guesswork involved in serving a relevant ad and makes the overall shopping experience more personalised. "If that's how our customers are coming to us to shop," Dallaire said, "we need to orient ourselves around that."