Retail Media Growth Is Outpacing Every Channel. Here Is What Brands Are Getting Wrong

Retail media growth is one of the most significant structural shifts in advertising since the rise of paid search. Retailers are monetising their first-party data and on-site inventory at scale, and brands are allocating serious budget to it. But the speed of adoption has outpaced strategic thinking, and a lot of that spend is being mismanaged.

The channel works. The problem is how most brands are using it. They are treating retail media like a performance channel, optimising for short-term return on ad spend, and missing the broader commercial opportunity entirely.

What Is Actually Driving Retail Media Growth?

The numbers are hard to ignore. Retail media has grown from a niche trade activation tool into one of the largest and fastest-growing segments of the global advertising market. Amazon built the template, and now every major retailer with meaningful digital traffic is building out its own network. Walmart Connect, Kroger Precision Marketing, Boots Media Group, Tesco Roundel. The infrastructure is proliferating.

Three forces are driving this. First, retailers discovered that their first-party data and owned inventory were worth far more than they had been charging. Second, brands were already spending heavily on trade promotions with limited measurability, and retail media offered a more attributable alternative. Third, the deprecation of third-party cookies pushed marketers toward environments where first-party data was native, and retailers sat on some of the richest purchase-based data available.

The result is a channel growing at a rate that most established media formats cannot match. But growth in spend does not automatically mean growth in strategic sophistication.

If you are thinking about where retail media fits inside a broader commercial growth framework, the Go-To-Market and Growth Strategy hub covers the wider context, including how brands should be sequencing channel investment and building for long-term revenue, not just short-term return.

The Performance Trap Most Brands Fall Into

Earlier in my career, I was as guilty of this as anyone. I overvalued lower-funnel performance. It was measurable, it reported well, and it gave stakeholders the numbers they wanted to see. What I came to understand over time is that a significant portion of what performance channels get credited for was going to happen anyway. You are often paying to capture intent that already existed, not to create new demand.

Retail media has the same structural problem, only more pronounced. Sponsored product ads placed against high-intent search queries on Amazon or a major grocery retailer are, in most cases, intercepting shoppers who were already in buying mode. That is not worthless. But it is not growth. It is defence.

Think about how a physical retail environment actually works. Someone who picks up a product and tries it on is many times more likely to buy than someone who walks past the shelf. The job of marketing in that context is to get more people into the store, browsing the right aisle, and picking things up. Sponsored product ads are the equivalent of putting a sign on the shelf for someone who was already standing in front of it. Useful, but not sufficient.

The brands extracting the most value from retail media are the ones using the full stack: upper-funnel display and video to build awareness with high-value shopper audiences, mid-funnel category pages and brand stores to drive consideration, and lower-funnel sponsored products to convert. Most brands are only running the bottom layer and wondering why incremental growth is flat.

This pattern shows up consistently across growth strategy frameworks. Forrester’s intelligent growth model makes a similar point about the risk of over-indexing on conversion mechanics at the expense of demand creation. The channels that generate compounding growth are the ones that reach new audiences, not just recapture existing ones.

Why the Data Is the Actual Product

When I was running agency teams across multiple FMCG clients, one of the persistent frustrations was the gap between what brands knew about their consumers and what they could actually act on in media. You had rich panel data, you had brand tracker insights, you had CRM segments, but translating any of that into precise media targeting was messy and lossy. Retail media changes that equation in a meaningful way.

The first-party purchase data that retailers hold is genuinely differentiated. Knowing that a household buys premium pet food every three weeks, switches between two shampoo brands, and has never purchased a particular category is not just useful for targeting. It is useful for understanding your actual customer base, identifying lapsed buyers, and finding the audiences most likely to convert to a new product.

The brands that are thinking about retail media strategically are not just running campaigns. They are using retailer audience insights to inform creative briefs, to pressure-test assumptions about who their real buyers are, and to identify white space in category penetration. That is a fundamentally different use case than bidding on branded keywords.

There is also a competitive intelligence dimension that is underused. Category-level purchase data can tell you where you are losing share, which competitor products are being bought alongside yours, and where your brand sits in the consideration set for different shopper segments. That is strategic intelligence, not just media targeting.

The Measurement Problem Nobody Wants to Talk About

I spent years judging entries for the Effie Awards, which meant reading a lot of effectiveness cases that had been constructed to tell the most compelling story possible. You develop a healthy scepticism for self-reported metrics. Retail media measurement has a version of this problem that the industry is not being honest enough about.

Most retail media networks report return on ad spend figures that are calculated using their own attribution models, applied to their own data, with attribution windows that they set. The incentive structure is obvious. A retailer running an ad network has every reason to report ROAS numbers that justify continued spend. The brands buying that media often lack the independent measurement infrastructure to challenge it.

This is not a new problem. It is the same issue that plagued Facebook advertising for years, and that still distorts how brands evaluate Google’s Performance Max campaigns. But in retail media it is amplified because the retailer controls both the media and the sales data, which creates a closed loop that is very difficult to audit from the outside.

The practical response is not to abandon retail media measurement but to treat it as one perspective rather than ground truth. Incrementality testing, where you deliberately withhold exposure from a matched control group and measure the difference in sales, is the most reliable method available. It is harder to run and less flattering in its results, but it tells you what is actually incremental versus what you would have sold anyway.

Brands serious about understanding channel contribution should be running incrementality tests across their retail media activity, not just accepting the ROAS figures that come back in the dashboard. The analytics tools are a perspective on reality, not reality itself.

How the Proliferation of Networks Creates a Complexity Problem

When I was scaling agency operations and growing headcount from a small team to over a hundred people, one of the consistent lessons was that complexity kills execution quality. Every new channel, every new platform, every new reporting requirement adds overhead that compounds. The same principle applies to how brands are managing retail media today.

Five years ago, a brand might have had one or two retail media relationships to manage. Today, a mid-size FMCG brand could be running campaigns across ten or more retail networks, each with its own interface, its own ad formats, its own audience taxonomy, and its own reporting logic. The operational burden is substantial, and it is not scaling proportionally with the value being generated.

The smarter approach is prioritisation based on where your category actually converts. Not every retailer network deserves equal investment. The question to ask is where your target shopper is actually making purchase decisions, and which retailer’s first-party data is most aligned with the audience segments that drive your growth. That narrows the field considerably.

There is also a resourcing question that brands are not confronting clearly enough. Running retail media well requires a combination of commercial understanding, media planning capability, and data fluency that sits awkwardly between trade marketing, brand marketing, and performance teams. The brands getting the most out of retail media have resolved that organisational ambiguity. The ones struggling are the ones where nobody is clearly accountable.

Building scalable channel strategy is a recurring theme in growth-stage businesses. BCG’s work on scaling operations makes a relevant point about the importance of clear ownership and decision rights when adding capability. The same logic applies to how marketing teams structure retail media ownership internally.

What a Genuinely Strategic Retail Media Approach Looks Like

The brands that are doing this well share a few characteristics that are worth spelling out.

They start with a commercial objective, not a media objective. The question is not “how do we spend our retail media budget?” but “which shopper behaviours do we need to shift to hit our category growth targets, and which retail media capabilities can help us do that?” That framing changes everything downstream, from audience selection to creative to measurement.

They integrate retail media into go-to-market planning rather than treating it as a trade activation bolt-on. When a new product launches, the retail media strategy is built alongside the above-the-line plan, not added afterwards. The retailer audience data informs the broader targeting strategy. The creative is developed with the retail context in mind. This kind of integration is described in detail in BCG’s analysis of go-to-market launch strategy, which, while focused on a different sector, makes a transferable point about the cost of channel misalignment at launch.

They use full-funnel activation rather than defaulting to sponsored products. Upper-funnel retail media, display and video served to retailer audiences off-site and on-site, is underused relative to its potential. It reaches shoppers earlier in the decision process, when brand choice is still being formed, rather than at the moment of transaction when the decision is largely made.

They invest in independent measurement. Not because they distrust retailers, but because honest approximation is more useful than flattering precision. Knowing that your retail media activity is generating genuinely incremental sales, even if the number is smaller than the dashboard suggests, is more valuable than a high ROAS figure you cannot trust.

And they treat retailer relationships as strategic partnerships, not just media buys. The brands with preferred access to new ad formats, early data integrations, and collaborative planning sessions are the ones that have invested in the relationship beyond the transaction. That is a commercial advantage that compounds over time.

For more on how channel decisions fit into broader revenue planning, the Go-To-Market and Growth Strategy hub covers the frameworks that connect media investment to commercial outcomes, including how to sequence channel activation across a product lifecycle.

The Emerging Formats Worth Watching

Retail media is not a static channel. The formats are evolving quickly, and a few developments are worth paying attention to.

Off-site retail media, where retailer audience data is used to target shoppers across third-party environments including social platforms, connected TV, and programmatic display, is growing rapidly. It extends the reach of first-party retail data beyond the retailer’s own properties and creates more touchpoints earlier in the purchase experience. The data asset is the same. The reach is significantly larger.

In-store digital media is an underappreciated frontier. Digital screens at point of sale, connected to the retailer’s data infrastructure, create a targeting capability that physical retail has never had before. Showing different creative to different shopper segments based on their purchase history, at the moment they are standing in the aisle, is a meaningful capability. It is early-stage, but the direction is clear.

Creator-driven retail media is also emerging as a format. Some retailers are beginning to integrate creator content directly into their media products, connecting the social proof of influencer endorsement with the purchase intent of a retail environment. Later’s work on creator-led go-to-market campaigns points to how this integration is developing in practice, particularly around seasonal activation where purchase intent is concentrated.

None of these formats change the fundamental principles. They still need to be evaluated against a commercial objective, measured with appropriate scepticism, and integrated into a broader channel strategy. But they do expand the range of what retail media can do beyond sponsored search, which is the mental model most marketers are still working from.

About the Author

Keith Lacy is a marketing strategist and former agency CEO with 20+ years of experience across agency leadership, performance marketing, and commercial strategy. He writes The Marketing Juice to cut through the noise and share what works.

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