Retail media: the new power in retail

Retailers have realised they possess something advertisers want badly: purchase data and the attention of a customer who is actively buying.

Why it converts

The customer is in a shop, digital or physical, with intent. An advertisement appearing in a product search on a retailer's site reaches somebody who has already decided to buy something in that category.

That is the highest-intent moment in the entire purchase journey, and it is why conversion rates in retail media exceed almost every other digital channel.

The formats

The first is the workhorse. The fourth is where retailers have expanded most aggressively, selling their purchase data for targeting on other sites.

The uncomfortable dynamics

The retailer sells you advertising, sets the auction, controls the placement, measures the result and reports it to you. There is no independent verification.

The retailer also sells its own label products in the same auction, which creates an obvious conflict.

And the cost of retail media is increasingly a condition of good listing terms rather than a discretionary marketing choice, which changes it from advertising into a trading cost.

Measuring it honestly

The retailer's reported return on ad spend will look excellent, because it credits sales to advertisements shown to people who were already buying.

The relevant question is incrementality: how many of those sales would have happened anyway. Some larger retailers offer holdout testing; ask for it.

Where testing is unavailable, run your own: pause advertising on a subset of products for four weeks and compare their sales trajectory against the rest.

Where it fits for a smaller brand

If you sell through a retailer that offers it, the honest position is that some spend is now the price of visibility on that platform. Treat it as a trading cost and negotiate it alongside terms.

Concentrate spend on the products where you have margin and where search volume within the retailer is meaningful. Spreading a small budget across a full range produces nothing.

The direction

Retail media is growing faster than almost any other advertising category, and every retailer of scale is building one. Expect the inventory to expand, the rates to rise, and the negotiation to become part of the annual trading discussion rather than a separate marketing conversation.