Retail Media Strategy: Where the Money Is Going and Why Most Brands Are Behind

Retail media strategy is the discipline of using a retailer’s owned media inventory, including on-site search, sponsored listings, display placements, and off-site audience extensions, to drive measurable commercial outcomes at or near the point of purchase. Done well, it closes the gap between brand investment and revenue. Done poorly, it becomes an expensive version of paying for shelf space you were probably going to get anyway.

Retail media is now the fastest-growing segment in digital advertising. But growth in spend has not been matched by growth in strategic thinking. Most brands are allocating budget reactively, following retailer prompts rather than building a coherent position across the channel.

Why Retail Media Has Become a Boardroom Conversation

Retail media networks have grown because they solve a problem for retailers: monetising the audience they already have. Amazon built the template. Walmart, Kroger, Target, Boots, Tesco, and dozens of others followed. The pitch to brands is straightforward: reach shoppers when they are in a buying mindset, on a platform where the path from ad to purchase is a single click.

That pitch is not wrong. But it flattens a more complicated reality. When I was managing large-scale performance budgets across multiple verticals, the pattern I kept seeing was this: brands would pour money into lower-funnel placements, see strong return on ad spend numbers, and assume the channel was working hard. What the numbers rarely showed was how much of that return was simply capturing demand that already existed, demand that would have converted through another touchpoint if the paid placement had not been there.

Retail media has the same structural problem, amplified. A shopper searching for your brand on a retail platform is already close to buying. Bidding on your own brand terms to intercept that search is defensible in some competitive contexts, but it is not growth. It is protection. The distinction matters enormously when you are trying to build a retail media strategy that actually moves the business forward.

If you are thinking about how retail media fits into a broader commercial growth plan, the Go-To-Market and Growth Strategy hub covers the frameworks that connect channel decisions to business outcomes.

The Structural Difference Between Retail Media and Traditional Digital Advertising

Retail media is not just digital advertising placed in a shopping environment. The structural difference is the data layer underneath it. When a retailer sells you media inventory, they are also, in the better partnerships, giving you access to purchase history, basket composition, loyalty data, and category switching behaviour. That is a fundamentally different signal from a third-party cookie or a demographic proxy.

The problem is that most brands treat retail media as a bidding exercise rather than a data partnership. They optimise for cost-per-click and return on ad spend within the platform’s own reporting, without asking the harder questions: Who am I actually reaching? Are these new customers or existing ones? Am I winning share in the category or just defending it?

I have sat in enough post-campaign reviews to know that “strong ROAS” and “strong business outcome” are not the same sentence. The retailer’s reporting environment is designed to show your ads in the best possible light. That is not cynicism, it is just how any media owner operates. The discipline of retail media strategy is building the analytical layer that sits above the platform’s own numbers and asks what was actually incremental.

Understanding how intelligent growth models approach measurement discipline is useful context here. The principle that growth requires honest accounting of what is working, not just what is reportable, applies directly to how you evaluate retail media performance.

On-Site vs Off-Site: Where Most Strategies Are Unbalanced

On-site retail media, sponsored product listings, banner placements on category pages, search result prominence, gets the majority of budget because it is the most direct. You are in the aisle, metaphorically, when the shopper is deciding. The attribution is clean, or appears to be, and the feedback loop is fast.

Off-site retail media is the less-used half of the equation. This is where the retailer takes their first-party audience data and makes it available for targeting across external programmatic inventory, social platforms, and connected TV. You are reaching a shopper who bought nappies three weeks ago with an ad for your baby food brand, served on a news site or a streaming service. The intent signal is real. The reach is broader. The attribution is harder.

Most brands underinvest in off-site because it does not report as cleanly as on-site. But that is a measurement problem, not a performance problem. Off-site retail media audiences are among the strongest purchase-intent signals available in programmatic advertising. The brands that have figured out how to use them are reaching genuinely new customers, not just re-intercepting existing ones.

The analogy I keep coming back to is one I have used in agency pitches for years. A customer who walks into a clothes shop and tries something on is far more likely to buy than one who browses from the pavement. Off-site retail media is the window display that gets the right person through the door. On-site is the fitting room. You need both, and you need to know which job each one is doing.

How to Build a Retail Media Strategy That Is Not Just a Bidding Policy

A retail media strategy starts with a commercial question, not a channel question. The commercial question is: what does this retailer relationship need to deliver for the business, and what role can media play in that?

That sounds obvious. It is not how most brands approach it. Most brands approach it by asking their retail media agency or internal team to “optimise spend” within whatever budget has been allocated, usually from a trade or shopper marketing budget that was not originally designed for media investment at all. The result is a bidding policy dressed up as a strategy.

A genuine retail media strategy has four components.

1. A Clear Commercial Objective for Each Retailer

Are you trying to grow distribution of a new product? Defend share in a category where a competitor is spending aggressively? Acquire new-to-brand shoppers? Win back lapsed buyers? Each of these objectives requires a different media approach, different placements, different creative, and different measurement criteria. Bundling them all into a single “retail media budget” and optimising for blended ROAS is how you end up with numbers that look good and a business that is not moving.

2. A Data Negotiation, Not Just a Media Buy

When you are in commercial conversations with a major retailer about media investment, the data access you negotiate is as valuable as the placements you buy. What audience segments can you target? Can you access new-to-brand vs. existing buyer data? Can you see basket-level data for your category? Can you run incrementality tests within the platform?

Retailers are getting better at packaging this, but they will not offer it proactively if you do not ask. The brands that treat retail media as a pure media buy are leaving the most valuable part of the deal on the table.

3. An Incrementality Framework, Not Just a Reporting Dashboard

The retailer’s dashboard will tell you your ROAS. It will not tell you how much of that revenue would have happened without the ad. Building an incrementality framework does not require a massive analytics investment. It requires running holdout tests, separating branded from non-branded search spend, and being honest about what the baseline conversion rate in your category looks like without paid support.

Tools that help you understand user behaviour and conversion paths, like those covered in growth-focused analytics approaches, are useful for building the thinking that underpins incrementality measurement, even if retail media requires its own specific methodology.

4. A Creative Strategy That Reflects the Context

Retail media creative is an afterthought in most brand organisations. The same static product shot gets repurposed across every placement, on-site and off-site, across every retailer. This is a missed opportunity at best and a waste of money at worst.

On-site creative needs to be functional and specific. Clear product image, relevant price or offer, strong category keyword alignment. Off-site creative needs to work harder as a brand communication, because the shopper is not in a buying context in the same way. The message, format, and call to action should reflect where the person is in their consideration process, not just what product you want to shift this week.

The Measurement Problem Nobody Talks About Honestly

Retail media measurement is structurally biased toward over-reporting performance. Last-click attribution within a closed retail environment will almost always show strong returns, because you are measuring against a shopper population that was already close to buying. The retailer benefits from this because it makes their network look effective. The brand suffers because it allocates budget based on numbers that do not reflect true incrementality.

I have judged at the Effie Awards, where effectiveness is the entire point. The campaigns that genuinely moved business metrics were almost never the ones with the cleanest attribution stories. They were the ones where the brand had thought carefully about reach, about new customer acquisition, about category growth, and had built measurement approaches that could account for the full picture, not just the last touchpoint.

Retail media is not exempt from this discipline. The brands that will build durable positions in retail media over the next five years are the ones that invest now in understanding what is actually incremental, even when the answer is uncomfortable.

Understanding how go-to-market strategy connects to financial outcomes is useful context for building the business case for more rigorous retail media measurement internally. The conversation with a CFO about incrementality testing is much easier when it is framed as commercial discipline, not marketing theory.

Which Retail Media Networks Are Worth Prioritising

The honest answer is: it depends entirely on where your category’s shoppers are and what data access each network offers.

Amazon remains the dominant player for most product categories, particularly in FMCG, electronics, and home. The network is mature, the targeting is sophisticated, and the data layer is deep. The competition for placements is also intense, and costs have risen significantly as more brands have shifted budget into the channel.

Grocery retail networks, including Tesco’s Dunnhumby-powered offering in the UK and Kroger Precision Marketing in the US, offer category-level purchase data that is genuinely valuable for FMCG brands. The inventory is less extensive than Amazon, but the audience signals are strong and the competitive pressure is lower.

Emerging retail media networks from fashion, DIY, and pharmacy retailers are worth watching, particularly for categories where the retailer has strong loyalty programme data. The networks are less polished, but the data access is often more negotiable and the CPMs are lower.

The strategic question is not which network has the best platform features. It is which retailer relationship matters most to your business and whether the media investment is strengthening or just monetising that relationship. Those are different things.

How Retail Media Fits Into a Broader Go-To-Market Plan

Retail media does not exist in isolation. It sits within a go-to-market plan that includes brand investment, category management, trade terms, and customer acquisition strategy. The brands that treat it as a standalone channel, optimised purely on its own metrics, tend to underperform against those that integrate it into a broader commercial framework.

Early in my career I overvalued lower-funnel performance. I was seduced by the clean numbers, the clear attribution, the sense that every pound was working. What I was slower to recognise was that lower-funnel activity is mostly harvesting demand that was created elsewhere, by brand advertising, by word of mouth, by category growth, by distribution gains. Retail media, particularly on-site sponsored search, sits firmly in that harvest zone. It is valuable. It is not sufficient.

The brands that are winning in retail media are the ones that use it as part of a system. They invest in brand to create demand, they use off-site retail media audiences to reach new shoppers in the consideration phase, and they use on-site placements to close at the point of purchase. The measurement connects across all three stages, even if imperfectly.

Building that system requires thinking about growth holistically. The Go-To-Market and Growth Strategy hub covers the planning frameworks that help connect channel-level decisions to business-level outcomes, which is exactly the thinking retail media strategy needs.

For brands thinking about how to activate audiences effectively across the full funnel, the approaches covered in resources like creator-led go-to-market campaigns are a useful reminder that retail media is one piece of a broader activation picture, not the whole picture.

What Good Retail Media Governance Looks Like

One of the practical challenges with retail media is governance: who owns the budget, who owns the strategy, and how does it connect to the rest of the marketing plan.

In many large organisations, retail media budgets sit in trade or shopper marketing, managed by people whose primary expertise is commercial negotiation rather than media strategy. The media team manages brand and performance budgets separately. The result is that retail media gets optimised in isolation, by people who are excellent at managing retailer relationships but may not have the media planning depth to build a coherent channel strategy.

The organisations that are getting this right have created a governance model where retail media sits at the intersection of trade, media, and data. There is a clear owner for the channel strategy, a shared measurement framework that connects to business outcomes, and a process for integrating retail media planning into the broader annual go-to-market cycle rather than treating it as a separate quarterly negotiation.

Scaling that kind of cross-functional coordination is genuinely hard. The principles behind scaling agile ways of working are relevant here, not because retail media is an agile project, but because the coordination challenges are similar: getting people with different expertise and different incentives to work toward a shared commercial outcome.

When I was growing an agency from twenty to a hundred people, the hardest part was not the hiring or the pitching. It was building the internal structures that let people with different skills work on the same problem without defaulting to their own functional metrics. Retail media governance has exactly that challenge at a brand level.

The Pipeline Question: Is Retail Media Building Anything?

The most important strategic question about retail media is one that most brands are not asking: is this channel building anything, or is it just converting what already existed?

Conversion is valuable. Protecting your position in a category, ensuring your products are visible when high-intent shoppers are searching, defending against competitor conquest, these are legitimate objectives. But they are defensive objectives. They maintain share. They do not grow it.

The brands that will build durable retail media positions are the ones investing in new-to-brand acquisition through off-site audiences, in category expansion through content and discovery formats, and in the data partnerships that let them understand whether their investment is reaching genuinely new customers or just re-reaching existing ones.

Understanding how pipeline thinking connects to revenue is a useful frame here. The untapped pipeline potential in go-to-market approaches is a concept that applies as much to retail media as it does to B2B sales. The question is always: how much of your potential customer base are you actually reaching, and how much are you just recapturing?

Retail media strategy, done properly, answers that question with data rather than assumption. That is what separates a channel strategy from a bidding policy.

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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