CNBC has an interesting story that mentions Walmart is looking to ramp-up its use of ads in its physical store locations. Where will the ads appear?

• TV and digital display screens in the electronics department and elsewhere.

• Self-Checkout screens

• Store radio

• Product samples at store demo stations

Walmart claims that it can deliver a Super-bowl sized audience each week to its advertisers in a targeted manner. While not targeted on the consumer level like digital (we don't have Minority Report-like targeting yet, but we will eventually! Just wait lol), at least by location and area of the store.

Digital ads still deliver less than 1% overall Walmart revenue, but it's high margin, and there is significant room for growth as Walmart ramps up the amount of ad inventory in stores, as well.

This has several benefits for Walmart:

• Difficult for competitors (including Amazon) to address because Walmart has a much broader reach.

• Improves the profitability of its stores, relative to other grocers like Kroger.

• Continued growth of Walmart online will continue to give this a nice tailwind.

• Demo sample stations could even serve as a testing ground or kind of marketplace in stores for new product introductions. (Though this part is much less scalable)

The only real downside risk is if ads start to interfere too much with their stores experience.

It's a well-worn playbook to use another more profitable line of business to reinforce the growth of your primary, lower-margin, more mature business. Walmart is starting to lean into this playbook, and it's a good move for them.

The results will play out in earnings, but given it's all upside for Walmart, this is a fantastic bet for them. You could easily see Walmart as one of the largest digital and physical integrated media platforms in the entire United States in the future.

That prospect should worry the rest of the grocery industry, including Amazon.