The Rise of Retail Media as a Major Advertising Channel
Retail media — the placement of advertising within the digital environments of retailers and e-commerce platforms, targeting consumers at or near the point of purchase using the retailer's first-party transaction and behavioural data — has grown from a peripheral digital advertising format into one of the most strategically significant advertising channels in the global media landscape within the space of five years. The scale of the retail media market is now substantial: global retail media advertising spend is estimated to have exceeded $100 billion in 2025 and is projected to continue growing at double-digit rates through the second half of the decade, making it one of the fastest-growing major advertising channels and one whose growth is drawing spend from both traditional media — television, print, and out-of-home — and from the digital advertising formats that have dominated media investment for the past decade. Amazon Advertising, which pioneered retail media at scale through its sponsored product, sponsored brand, and display advertising products, generates advertising revenue that makes it the third largest digital advertising platform globally after Google and Meta — a position achieved within a decade of launching its advertising business and representing a fundamental shift in the competitive landscape of digital advertising.
The commercial proposition of retail media rests on three structural advantages over conventional digital advertising that explain its rapid growth and the premium pricing it commands. The first is data quality: retail media platforms have access to first-party purchase data — what consumers actually bought, how frequently, at what price, and in combination with what other products — that is more commercially actionable than the interest and intent signals that non-retail digital advertising platforms infer from browsing behaviour. The second is proximity to purchase: advertising shown to consumers while they are actively shopping, on the same platform where the advertised product is available for immediate purchase, converts at rates substantially higher than advertising shown in non-purchase-intent environments. The third is measurement: retail media's closed-loop attribution — the ability to connect an advertising impression or click directly to a purchase on the same platform — provides ROAS measurement with a precision that traditional media and most digital advertising outside the retail media environment cannot match.
The Retailer Monetisation Model and Its Implications
The retail media business model represents a significant expansion of retailer revenue streams beyond the core product margin and service fee revenue that conventional retailing generates. A retailer whose physical or digital footprint attracts millions of shoppers per day is sitting on a first-party data asset and a captive advertising audience that, when monetised through a retail media network, generates high-margin revenue with characteristics more similar to a media company than a retailer. The gross margins on retail media advertising revenue — which range from 70% to 90% for digital advertising placements that have minimal incremental cost to serve — are substantially above the typical retail product margin and represent a structurally more attractive business than the core retail operation for retailers that can build media networks of sufficient scale to attract meaningful advertiser investment.
Walmart Connect, Kroger Precision Marketing, Target's Roundel, Carrefour Links, and the retail media networks of Tesco, Sainsbury's, and a growing number of European and Asian grocery and general merchandise retailers are all pursuing the monetisation opportunity with varying degrees of commercial success. The scale required to build a retail media network that is commercially significant for national or global brand advertisers — in terms of both the volume of shopper impressions available for advertising placement and the breadth and depth of first-party data that allows meaningful audience segmentation and targeting — creates a competitive advantage for the largest retailers that smaller operators struggle to replicate. The concentration of retail media revenue in the largest networks — Amazon, Walmart, and Kroger in the US; Carrefour, Tesco, and Sainsbury's in Europe — reflects this scale dynamic and is creating a tiered retail media market in which a small number of premium networks attract the majority of advertising investment.
Brand Strategy Implications: The Shift From Above-the-Line to Retail Media
The growth of retail media is forcing a fundamental reassessment of advertising budget allocation by consumer goods brands, driven by the combination of retail media's demonstrated ROAS advantage over conventional digital advertising and the commercial incentive — and in some cases explicit pressure — that retailers apply to brand partners to allocate advertising spend through their retail media networks. The shift of advertising budget from above-the-line brand building media toward retail media performance advertising represents a strategic tension for brand marketers who understand that long-term brand equity is built through broad awareness advertising rather than conversion-focused retail media, but who face short-term ROI measurement requirements that favour the measurable, attributable returns of retail media over the brand equity building that television and digital brand advertising delivers over longer time horizons.
The brands that are navigating the retail media shift most effectively are those that have developed explicit frameworks for allocating advertising investment between brand building media — which builds the consumer relationships and brand preference that drive consideration and willingness to pay premium prices — and retail media — which converts the consumer consideration that brand building creates into purchase at the point of decision. The risk of over-indexing toward retail media at the expense of brand building is the progressive erosion of the brand equity that justifies the price premium over private label — a strategic dynamic whose consequences are visible only over multi-year time horizons but whose financial impact is substantial for brands that allow their brand investment to atrophy while optimising for short-term retail media ROAS. The retail media market's growth will continue, and its role in consumer goods marketing will become more important; the brands that maintain the balance between performance and brand investment as the channel grows will be better positioned than those that allow retail media's measurability advantage to drive an excessive shift away from brand building that their long-term competitive position cannot absorb.
The Data Privacy Dimension and Future Market Architecture
The growth of retail media has occurred in a regulatory and data privacy context that is itself evolving in ways that will shape the future architecture of the market. The deprecation of third-party cookies in major browsers — a process that has been delayed multiple times but is proceeding progressively — is increasing the relative value of first-party data assets like those that retail media networks are built on, because the targeting and measurement capabilities that advertising platforms built on third-party cookie data will increasingly not be available to advertising buyers. The clean room technology that allows advertisers to match their own customer data with retailer first-party data for audience targeting and measurement without sharing personally identifiable information between parties is becoming a standard infrastructure component of retail media network operations, enabling the data collaboration between brands and retailers that drives retail media's targeting sophistication while managing the privacy compliance requirements that regulators are progressively imposing across major markets. The retail media market that emerges from this privacy transition will be one in which first-party data relationships — both with consumers directly and through retail partner data collaboration — are the defining competitive assets, and in which the retailers and brands that have built strong first-party data capabilities are structurally advantaged relative to those that have remained dependent on third-party data infrastructure.