Walmart's head of growth says AI is rewriting the rules for its fast-growing ads business

Walmart is stepping into the future of shopping with the integration of AI technology, specifically in its advertising strategies. According to Seth Dallaire, Walmart's chief growth officer, the retail giant is adopting a more strategic approach to advertising that seeks to enhance the overall shopping experience rather than disrupt it. Since last fall, Walmart has been experimenting with ads in its AI-powered shopping assistant, Sparky. Dallaire noted that the presence of sponsored listings in this chatbot is noticeably lower compared to traditional search results, indicating a more measured introduction of advertising in this context. During his remarks at the Evercore ISI Consumer and Retail conference, he emphasized the importance of monitoring customer interactions with these tools to ensure that the ads remain relevant and helpful. The advertising business at Walmart has seen remarkable growth, with revenues soaring by 46% last year to reach $6.4 billion. Dallaire's vision is for Walmart to capture a share of the expanding market for AI-driven advertising. He is also responsible for enhancing Walmart's e-commerce marketplace and the Walmart Plus membership program, stressing that advertising must not only drive sales but also improve the shopping experience for members. Dallaire is cautious about overloading customers with ads that could lead to cart abandonment. He believes that advertising can serve as a valuable tool to introduce customers to new products, likening it to merchandising in its function. Currently, Walmart is gaining more insights from customer interactions with Sparky than from the ads themselves. Dallaire highlighted the unique prompts that customers provide in this AI-driven environment, which differ from traditional queries. For instance, a shopper might express concerns about allergies while searching for a suitable laundry detergent, showcasing a shift towards more detailed and personalized interactions. This evolution allows Walmart to better understand customer needs and preferences, ensuring that advertising remains aligned with what shoppers truly want.