Walmart last week reported rising sales of household items such as clothing, groceries and toys, but profits rose even faster, thanks in part to a product that doesn’t fit in a shopping cart: advertising.

The world’s largest retailer has placed countless ads in newspapers, on television and online over its 62-year history. Now it is selling airtime to other advertisers and competing with traditional media companies for marketing dollars.

The Walmart Connect U.S. advertising business is part of an emerging industry called “retail media,” in which major retailers flex their muscles as gatekeepers between suppliers and consumers to sell ads to brands seeking a competitive advantage. U.S. retail media spending will exceed $54 billion in 2024, up from $18.7 billion in 2020, according to Emarketer forecasts.

E-commerce giant Amazon is expected to hold a dominant market share of 77 percent, while Walmart will achieve a market share of 6.8 percent and advertising revenue of $3.7 billion, according to analysts at Emarketer.

Nevertheless, Walmart announced in an earnings release this week that its U.S. advertising business grew 30 percent last year, significantly outpacing the growth rate of the entire company.

According to Emarketer, the retail media industry will be worth $130 billion in four years, and chain stores are rushing in. Advertising is far more profitable than the roughly 4 percent operating margin Walmart earns from selling merchandise and groceries, and brick-and-mortar retailers see it as an opportunity to take business away from their arch-rival in e-commerce.

Sarah Marzano, an analyst at Emarketer, said: “Amazon is now often the place where consumers start their product searches instead of going to Google. As retailers become the go-to place for consumers to search for products they want to buy, there is an opportunity for retailers to monetize that traffic.”

The prospect of higher-margin businesses like advertising has excited investors and helped Walmart’s shares rise 38 percent this year. The retailer is now the 16th-largest seller of advertising outside China by revenue, according to Madison and Wall, a media and technology consulting firm.

One of the main sources of revenue is sponsored search results in Walmart’s app and website, where vendors pay to have their products prominently featured. A recent online search for dish soap yielded sponsored listings from Procter & Gamble’s Dawn brand, while a search for chicken breast returned a variety of cuts from meatpacker Tyson Foods.

Such companies already buy general search results on platforms like Google. The difference with retail media is that companies like Walmart and Amazon have data not only about what consumers see in apps, but also whether they made a purchase.

“After you click on an ad in a general search engine, they don’t know what you did after that,” said Ryan Mayward, senior vice president of retail media sales at Walmart US. “We capture the click and we also know that you checked out and purchased those specific things after seeing or interacting with the ads. That’s the core value (the core offering) of retail media compared to other media types.”

Walmart is doubling down on advertising with a proposed $2.3 billion deal with Vizio. The connected TV maker has been losing money on device sales but managed to generate gross profits of $356.3 million last year thanks to technology that tracks what people watch and presents them with targeted ads. The acquisition, agreed to in February, is currently under review by federal antitrust regulators.

Unlike Amazon, Walmart has 4,600 hypermarkets in the U.S. and hundreds more Sam’s Club hypermarkets. “Walmart has a size that Amazon can’t compete with,” Marzano said.

Chief Financial Officer John David Rainey has found that Walmart can link customers’ purchases to ads they viewed days earlier using bank card and electronic payment data. “A week goes by, you decide to buy that item in a store, and we know there was an association with that ad,” he told an analyst in June.

The company is unable to determine the identity of store customers who pay in cash, Mayward said.

Walmart is also increasing advertising in its stores to complement online campaigns. Mayward, a former Amazon executive, argues that stores can help marketers counteract the effects of media fragmentation.

Mayward said: “140 million people shop here every week. That’s a huge audience. About 110 million people tune in to the Super Bowl. That’s an audience that comes into our stores every week, more than the Super Bowl.”

On a recent tour of a Walmart Supercenter in Springdale, Arkansas, Mayward passed by meat and bakery counters with digital screens installed above them. “We’ll be rolling out advertising opportunities on the deli and bakery screens in a few days,” he said.

At a nearby “TV wall,” where some of the televisions for sale broadcast ads placed through Walmart’s advertising service, the company is experimenting with selling so-called “non-endemic” ads for products not available in its stores, such as cars or cruises.

The music in the store was also accompanied by advertising. “It’s a light advertising load,” said Mayward. In the checkout area, the screens of the self-service kiosks also showed advertising, in this case for T-Mobile.

How Walmart’s suppliers will respond to the increasing advertising opportunities remains uncertain. Successes for retailers “can mean losses for advertisers” as they find it difficult to compare the performance of competing retail media networks, wrote Nikhil Lai of market research firm Forrester. In addition to Walmart, its US competitor Target and the grocery delivery service Instacart are also building up their retail media businesses.

While analysts expect retail media to grow, they see the potential for new conflicts in the relationship between big retailers and big brands – including concerns that brands will feel pressured to run ads to improve their access to retailers’ shelves. In a Forrester survey, 19 percent of consumer marketing executives said they want to build stronger partnerships with retailers to invest in retail media.

“I spoke to an executive at a major (consumer goods) brand who said that for them, buying advertising from Walmart was like tithing to the church,” Lai said.

There’s also the question of whether consumers are tired of the coordinated campaigns they see online and in stores. “Launching digital media in unfamiliar places can be an embarrassing mistake if it doesn’t resonate well with shoppers,” Emarketer noted in a report.

Walmart is aware of the risk that customers might find the advertising annoying or disruptive. “We want it to enhance the shopping experience,” Mayward said. “It’s not like we’re going to take away from the shopping experience one bit. The advertising has to benefit the customer in some way.”