Retail Media
Retail media refers to advertising placements that brands purchase directly within a retailer’s owned properties, including websites, apps, in-store screens, and email channels. It turns retailers into media companies by monetizing their first-party shopper data and high-intent traffic. The model has grown into one of the fastest-expanding advertising channels globally, with spend surpassing $45 billion in the United States alone in 2023.
What is Retail Media?
Retail media allows brands to place sponsored product listings, display ads, and video units inside the shopping environments where consumers are already browsing with purchase intent. Unlike traditional digital advertising that relies on third-party cookies and probabilistic targeting, retail media uses deterministic first-party data collected from logged-in shoppers.
The core value proposition is closed-loop attribution. A retailer can connect ad impressions directly to transactions because the purchase happens on the same platform where the ad was served. This eliminates the attribution gaps that plague most digital advertising channels.
Retail media networks (RMNs) typically offer three ad formats: sponsored search (keyword-targeted product listings), onsite display (banner and video placements across the retailer’s site), and offsite media (using the retailer’s data to target shoppers on external websites and connected TV). Revenue models vary, but most RMNs operate on a cost-per-click or cost-per-thousand-impressions basis.
The economics work for both sides. Retailers earn high-margin advertising revenue (often 70-80% gross margin) while brands gain access to purchase-ready audiences with measurable return on ad spend.
Retail Media in Practice
Amazon Advertising generated $46.9 billion in ad revenue in 2023, making it the third-largest digital ad platform globally behind Google and Meta. Sponsored Products, its flagship search ad format, accounts for roughly 75% of that total.
Walmart Connect reported $3.4 billion in advertising revenue in fiscal year 2024, growing 28% year-over-year. The platform reaches 150 million weekly shoppers across Walmart’s owned and operated properties, and its offsite demand-side platform extends campaigns to the open web.
Instacart Ads serves over 5,500 brand partners, with sponsored product ads appearing directly in search results during the grocery shopping experience. CPG brands report an average return of $5 for every $1 spent on the platform.
Kroger Precision Marketing, powered by 84.51, uses loyalty card data from 60 million households to target and measure ad campaigns. The platform reported that its retail media campaigns delivered a 4.2x average return on ad spend in 2023.
Why Retail Media Matters for Marketers
The deprecation of third-party cookies has made retailer first-party data one of the most valuable targeting assets available. Brands that once relied on open-web programmatic buying are shifting budgets to environments where identity resolution is built into the platform.
Retail media also compresses the funnel. The distance between ad exposure and purchase is measured in clicks, not days. For CPG and e-commerce brands, this proximity to the transaction makes retail media one of the most accountable channels in the media mix.
Budget allocation is shifting accordingly. GroupM projects retail media will account for nearly 16% of total global digital ad spending by 2028, overtaking traditional television advertising.
Related Terms
FAQ
What is the difference between retail media and shopper marketing?
Shopper marketing focuses on in-store activations like end caps, sampling, and point-of-sale displays. Retail media is primarily digital, data-driven, and programmatically traded. While both aim to influence purchase decisions near the point of sale, retail media offers real-time targeting, bidding, and closed-loop measurement that traditional shopper marketing cannot match.
How do brands measure retail media performance?
The primary metric is return on ad spend (ROAS), calculated by dividing attributed sales by ad spend. Most retail media networks also report impressions, click-through rate, new-to-brand percentage, and incrementality metrics that estimate whether the sale would have occurred without the ad.
Is retail media only for large brands?
No. Most retail media networks operate on self-serve auction models with no minimum spend. Small and mid-sized brands can start with sponsored product campaigns at modest daily budgets. Amazon’s advertising console, for example, allows campaigns starting at $1 per day.
How does retail media compare to Google Shopping ads?
Google Shopping ads target users based on search intent but sit outside the retail environment. Retail media ads appear inside the retailer’s own platform, where the shopper is already logged in and browsing with purchase intent. Retail media benefits from deterministic purchase data, while Google relies on modeled conversions for most offline transactions.