Most explainers on retail media describe what it is and call it a day. This one goes further: who’s actually in the room, what each player wants, and why the whole thing works when it works.
The term “retail media” is thrown around in meetings and brainstorming sessions, but everyone who does so has slightly different definitions of it. And none of them actually take the time to compare notes.
Before you dive into the strategy conversation, some questions mustn’t go unanswered:
- What is it
- Who builds it
- Who buys it
- What does each party actually get out of it?
The Short Version
A retailer has customers.
Those customers have a repository of information- purchase histories, browsing behavior, basket data, and loyalty card activity. This data is extremely valuable, especially for the brands whose products those customers buy or might buy.
This is where your understanding of what retail media is makes a huge difference.
Retail media is where a retailer capitalizes on customer data by selling advertising space to brands, letting them target those customers with ads that appear across the retailer’s owned properties and external channels.
This is the template Amazon popularized, and now 277 retailers are globally running distinct version of the same model.
The global retail media market hit $140 billion in 2024. It’s projected to reach $165 billion by the end of 2026. For context, it’s growing faster than the total digital ad market and is on track to account for a quarter of all US ad spend by 2028.
That’s the short version. Now for the parts that actually matter.
The Components: What The Ecosystem Is Actually Made Of
On-site inventory
On-site is where most people’s mental image of retail media begins and ends- sponsored product listings on Amazon, promotional placements on Walmart’s search results, and banner ads on homepages.
On-site is the foundation of retail media. It captures buyers at the sharpest point of intent: they’re already on the platform, searching the category, and in purchase mode.
The brand pays to show up at the exact right moment- in the moment it matters.
Sponsored product ads alone are projected to account for $38 billion in advertiser spend in 2026. It’s the entry point into retail media and often the highest-performing format in the mix for most brands.
However, the limitation is the ceiling.
On-site inventory is finite. With only so many sponsored slots on a search results page, more brands compete for them- leading to rising CPCs and tighter efficiency.
Off-site inventory
Off-site is where the ecosystem opened up. The data doesn’t have to stay on the retailer’s platform.
Off-site retail media uses a retailer’s first-party shopper data to target those same shoppers on external publisher sites, social platforms, programmatic display, and connected TV. The retailer’s audience, everywhere else they go online.
It’s why Amazon DSP is a meaningful product independent of its own pages. It’s why Walmart Connect can reach its audience on third-party inventory. The data travels; the real estate doesn’t have to be owned.
Over 20% of US retail media spend now goes to off-site channels. And Amazon DSP advertisers grew spend by 31% Y-o-Y in Q4 2025 as impressions climbed 32%.
In-store
The most underinvested component for most brands, and the one catching up fastest.
Digital screens at the endcap. Checkout lane displays. Store-mode features in retailer apps that serve offers based on what’s physically around the shopper. Audio in the aisles. Scan-and-go integrations that serve a competing brand’s ad the moment you scan their competitor into your basket.
80% of consumer spending still happens in physical stores. The retail media ecosystem is finally building the infrastructure to monetize that attention the same way it monetizes digital.
The data and measurement layer
This layer is what makes the whole thing worth it: closed-loop measurement.
A brand runs a sponsored product campaign. A customer clicks, or doesn’t. A purchase happens, or doesn’t. The retailer knows, because the purchase happens on their platform or through their loyalty system. The attribution loop closes.
No other advertising channel has this by default. Google knows if someone clicked. It doesn’t know if they then bought the product in-store three days later. But retail media does, which is why the ROI case for brands is structurally stronger than anything else in the media mix.
The catch? Every retailer runs their own attribution model, their own definition of conversion, their own reporting format.
Comparing ROAS across four different networks is still a manual exercise that requires reconciling fundamentally different methodologies. It’s the biggest infrastructure problem in the space.
How the Retail Media Ecosystem Actually Works
Off-site & omnichannel activation
A common misconception is that retail media is restricted to a retailer’s owned app or domain. Modern RMNs operate off-site and across physical channels:
- Off-Site Programmatic and CTV
Retailers leverage DSPs to purchase inventory across the open web, social media, and CTV platforms on behalf of advertisers- leveraging rich deterministic shopper data to target consumers wherever they consume content.
- Physical and In-Store Media
DOOH screens, smart carts, and digital aisle displays bring programmatic targeting directly into physical storefronts. This actively plays into actively closing the loop between physical shopper foot traffic and digital ad performance.
- Branded Storefronts and Immersive Formats
Native and high-intent formats, such as custom Brand Stores, help advertisers curate narrative-focused micro-experiences across the retail platform.
Real-Time Bidding (RTB)
Every sponsored product listing or homepage banner entails a lightning fast
Behind every sponsored product listing or homepage banner is a lightning-fast programmatic sequence- taking place in less than 100 milliseconds when a shopper enters a query or loads a page:
[Insert Infographic]
1. Shopper searches for a keyword (maybe “POS systems”) or lands on a category node, triggering a high-priority call from the retailer’s storefront to its internal ad server.
2. The ad server queries the retailer’s CDP by layering first-party signals into the request without exposing raw PII.
3. The retail SSP then wraps these signals into a bid request and broadcasts it to connected DSPs or a native bidding portal.
4. Brands’ automated bidding engines then analyze the request in real time. And based on pre-set bidding rules, the winning DSP submits a bid price alongside the ad creative URL.
5. The retail ad server calculates the winning bid based on combined bid value and relevance algorithms, rendering the winning creative natively within the page layout. This is crucial to prevent irrelevant, low-quality ads from breaking the shopper experience.
Attribution Tracking
The core technical advantage of a retail media network over open-web display advertising is closed-loop attribution. It mathematically ties an ad interaction to a confirmed transaction leveraging verified, deterministic user accounts rather than third-party tracking cookies or mere guesswork.
[Insert Infographic]
The deterministic loop operates across three phases:
1. When an ad is displayed or clicked, the ad server logs the event schema containing a viewability token, placement ID, target SKU, and the user’s hashed unique account/loyalty ID.
2. POS systems from physical registers, digital checkout carts, and click-and-collect orders continuously ingest raw transactions into the retailer’s data lake, mapping every sale back to the same unified hashed account ID.
3. The attribution engine joins ad logs and purchase logs within configured lookback windows, which are typically 3, 14, or 30 days. It applies programmatic rules:
- In-Store Conversion: Did a consumer who clicked a mobile app banner on Tuesday purchase that exact SKU at a physical register on Thursday?
- The Halo Effect: Did an ad for SKU A prompt the shopper to purchase SKU B from the same brand’s catalog?
- New-to-Brand (NTB) Tracking: Was the buyer a first-time purchaser of the brand in the last 12 months, or an existing loyalist?
What’s the need?
Closed-loop tracking eliminates media waste.
Marketers stop optimizing for soft engagement metrics like click-through rates (CTR) and instead reallocate capital based on verified, incremental Return on Ad Spend (iROAS).
Here’s how it would play out in a real-world B2B scenario
A. CTO of a mid-market retail brand is reading a tech article on Ciente on their desktop.
B. The publisher’s ad server broadcasts an impression bid request with hashed corporate IP and domain signals.
C. The retail platform’s Data Clean Room identifies the IP: This company runs a high-volume storefront doing >$10M GMV, but lacks an integrated SMS marketing solution.
D. An enterprise marketing automation platform (e.g., Attentive or Klaviyo), using the retail network’s off-site DSP extension, bids on this high-value target account.
E. The CTO sees a targeted display ad highlighting an enterprise integration case study (“Scale your retail SMS revenue by 35%”).
F. Two weeks later, the merchant upgrades their software stack directly inside the retail platform dashboard. The clean room matches the contract signing back to the off-site ad exposure, verifying an ARR conversion.
The Players: Who Is Actually in This Ecosystem
The retailers
The retailers are the asset owners. They have the data, the inventory, and the customer relationships.
Amazon sits at the top with $60 billion in ad revenue in 2025 and roughly 75% of the US retail media market by some measures. Walmart Connect is the fastest-growing major network. Target’s Roundel, Kroger Precision Marketing, CVS Media Exchange, Instacart Ads, and Home Depot’s Orange Apron Media- each one is a distinct network with its own audience, its own data set, and its own ad tech stack.
What’s changing in 2026 is the mid-market.
Smaller retailers who can’t build proprietary ad tech are licensing Amazon’s Retail Ad Service or partnering with platform providers to stand up competitive networks. The ecosystem is decentralizing faster than most brands have adjusted for.
The brands and advertisers
For brands, retail media sits at an awkward intersection of trade marketing and brand marketing budgets. Historically, money spent at the retailer level came from trade. But off-site CTV campaigns using Kroger data? That’s a brand media buy.
Most large CPG brands now allocate 39% of total advertising spend to retail media. The ones getting strong returns are running it as a performance channel with real incrementality testing, not just renewing sponsored product budgets because they always have.
The ones getting mediocre returns are treating the network’s self-serve dashboard as the strategy.
But not all advertisers in a Retail Media Network (RMN) are selling products on the retailer’s physical or digital shelves.
Endemic vs. Non-Endemic Advertisers
To understand who spends in this ecosystem, we must split advertisers into two distinct groups:
- Endemic Advertisers: These are traditional brand partners such as Samsung advertising on Best Buy or Procter and Gamble running sponsored listings on Walmart. Their goal is direct conversion: paying for prime digital real estate to secure buy-box preference and outrank category competitors at the point of sale.
- Non-Endemic Advertisers: These are brands that do not sell products through the retailer but instead leverage the retailer’s high-intent first-party data to reach validated customer profiles. For example, a credit card company or airline advertising within a luxury fashion marketplace, or an auto insurer running campaigns inside a home improvement app.
The main players in the space are set to be non-endemic advertisers.
They represent the next major growth engine for RMNs. It’ll pose a huge advantage for retailers by facilitating networks to monetize their deterministic audience signals without relying solely on trade marketing budgets from existing suppliers.
The tech layer
Behind every retailer’s network is an ad tech stack: demand-side platforms, supply-side platforms, data clean rooms, measurement and attribution tools, creative optimization systems.
While some retailers build their own, others assemble the tidbits from vendors: The Trade Desk, LiveRamp, Epsilon, Criteo, CitrusAd, Quotient. But privacy-safe infrastructure remains imperative still- for which advertisers increasingly adopt Data Clean Rooms.
DCRs: The Privacy-Safe Infrastructure Powering Audience Matching
Data clean rooms have become the infrastructure for brands and retailers to collaborate on audience data without the retailer handing over raw customer records, which they won’t and legally often can’t.
A Data Clean Room acts as a privacy-safe neutral zone where retailers and advertisers can overlay their respective first-party datasets without either party exposing raw personally identifiable information (PII) or proprietary customer records.
- How it works: First-party data from both sides is anonymized and matched in a secure environment. Advertisers can run queries, analyze overlap, and measure real-world offline and online sales attribution.
- The Benefit: Retailers retain strict control over their data assets, while advertisers gain closed-loop attribution- directly linking ad exposures on third-party sites to actual point-of-sale register data or digital checkout receipts.
Only 12% of commerce media decision-makers describe themselves as having reached an advanced state with full-funnel capabilities across on-site, off-site, and in-store. The tech exists. The integration is the hard part.
The agencies
Agencies occupy an awkward position in the retail media ecosystem. Retail media buying historically happened through retail or shopper marketing teams. Digital media buying happened through media agencies. They were separate workflows with separate briefs and separate relationships.
Retail media collapsed that division. A brand now needs someone who understands Amazon’s auction mechanics, Walmart’s audience segments, programmatic DSP buying, and CTV creative requirements, simultaneously. The agencies that built that capability are worth a lot right now. The ones that haven’t are billing for it anyway.
The Benefits: What Each Player Actually Gets
For retailers
Core retail is a margin-thin business. Grocery runs at 1% to 3% net margin in a good year. Retail media generates 50% to 70% operating margins on ad revenue.
That’s not a side business. For retailers operating at scale, media revenue is becoming a meaningful offset to the structural cost pressures in their core operations. Walmart’s media and data business is a strategic asset in a way their apparel category will never be.
For brands
What brands are actually buying when they buy retail media is not impressions. It’s access to purchase data.
Behavioral targeting on social is based on inference: this person liked three fitness posts, so they might buy protein supplements. Retail media targeting is based on purchase history: this person bought protein supplements from this retailer twice in the last 60 days. One is a guess. The other is a record.
For brands trying to reach buyers at the moment of highest commercial intent, and measure whether the ad actually drove a sale, retail media is the sharpest tool available.
For the shopper
This one gets skipped in most ecosystem explainers, but it matters.
When retail media works as it should, the shopper sees ads for products genuinely relevant to what they buy, when they’re already thinking about buying. That’s a different experience from a retargeted ad following someone around the internet for a product they bought three weeks ago.
The ecosystem earns consumer tolerance by being useful. The moment it tips into surveillance-feeling or repetitive, that tolerance disappears fast.
Where The Ecosystem Goes from Here
The three pressure points that will shape retail media through 2026 and beyond are measurement standardization, off-site scale, and consolidation.
Measurement first.
The IAB has pushed for standards. Individual networks have their own incentives to keep methodologies proprietary. Until a brand can compare incremental ROAS across Amazon, Walmart, and Kroger in a consistent format, the budget allocation decisions happening inside brands will keep being made on incomplete information.
Off-site second.
The ceiling on on-site inventory is real. The networks that figure out how to extend their first-party data into premium off-site environments, CTV especially, will hold advertiser budgets through the next phase. The ones that stay purely on-site will commoditize.
Consolidation third.
277 retail media networks is not a stable number. Most of them lack the scale, the data infrastructure, and the advertiser relationships to compete long term.
The market will concentrate. The question is whether it concentrates around retailers or around the ad tech layer that retailers increasingly depend on.
The ecosystem is not finished being built. That’s either a problem or an opportunity, depending entirely on which side of the budget you’re sitting on.
