Imagine opening your grocery app to reorder coffee and seeing a sponsored spot for that brand at the top. That seemingly simple recommendation is powered by retail media, the practice of selling advertising directly on retailer websites and apps. What started as a modest add-on has become a central profit engine for retailers and a precision channel for brands.
Photo by Joshua Earle on Unsplash
Digital Shelves, Big Margins
Retailers typically earn only a sliver of profit on the products they sell directly. By contrast, turning digital real estate into ad placements can transform those tiny margins into significant revenue.
- 1-5% profit margin on core grocery items.
- 40-70% profit margin on ads sold on their own websites and apps.
Those higher margins fund lower retail prices, faster app updates, and richer loyalty perks. Every product page becomes a valuable asset, letting retailers reinvest in experience instead of fighting over slim margins.
Audience + Data = Targeted Ads
Not every ad impression delivers the same value. On retailer platforms, shoppers arrive with clear buying intent. When combined with first-party data, this intent turns into precise ad targeting.
- Conversion rates on retailer apps and sites show a significant conversion of 94% higher.
- First-party data from loyalty programs and past purchases lets brands recommend products you’re highly likely to buy.
Brands benefit from higher conversion efficiency, and you benefit from seeing offers that match your actual shopping needs. This synergy reduces wasteful ad spend and ensures that recommendations feel helpful, not intrusive.
Market Momentum in Plain Numbers
The sheer scale of investment in retail media signals a fundamental shift in where digital ad dollars flow. These headline figures show why no major brand or agency can afford to ignore retailer channels.
- $56-61 billion in U.S. on-site ad sales forecast for 2025.
- $230 billion in global retail-media spending is expected by 2028.
U.S. commerce media spending should hit $68.69 billion in 2025, up 21.8% from last year’s digital ad budgets. This momentum isn’t a fad; it’s reshaping the entire digital advertising landscape.
- Amazon Advertising: Q1 2025 ad services sales hit $13.9 billion (up 18% YoY); full-year 2024 ad revenue reached $56.2 billion.
“Retail media turns every product page into a revenue driver,” says Scott Cohen, CEO of InboxArmy. “With precise first-party data, retailers and brands can finally link ad spend directly to sales lift, no more guesswork.”
Proof on the P&L Statement
Leading retailers are already seeing the financial payoff from their retail-media investments. These figures underscore that ads on retailer sites drive both top-line revenue and bottom-line profit.
- 31% year-over-year ad-revenue growth for Walmart Connect for FY26.
- Walmart Connect: Drove $4.4 billion in global ad sales in FY 2024 (↑27% YoY).
This proves that retail media isn’t a gimmick. By integrating ads into the shopping journey, retailers translate clicks into immediate sales, validating the strategy for stakeholders at every level.
Brands Rerouting Their Budgets
Consumer-goods companies are reallocating their marketing spend to capture the efficiency and measurability that retail media offers. These shifts reflect a broader trend toward performance-driven advertising.
- Consumer Packaged Goods brands now dedicate roughly 10-20% of their digital ad budgets to retail-media networks.
- Target’s Roundel: Grew 20% in 2023 to $1.5 billion in ad revenue.
Focusing on retailer platforms gives brands clearer attribution, tighter budget control, and measurable sales results.
Beyond the Storefront Walls
Retail media’s power extends beyond a retailer’s own digital properties. Today’s leading networks follow shoppers across channels, blending first-party data with omnichannel reach.
- Off-site ad placements grow by 42.1% in 2025, all powered by retailer data.
This lets brands deliver precise, relevant messages, whether you’re on an app or watching a show, using first-party data.
What’s Next for Everyone
The retail-media evolution is far from over. In the coming months, expect to see:
- Self-Serve Platforms that let smaller brands launch campaigns instantly.
- Real-Time Personalization, adapting ads to your latest cart or browsing behavior.
- Privacy-First Data Sharing via secure “clean rooms” that protect shopper anonymity while enabling effective targeting.
As these roll out, consumers get better offers, brands see clearer results, and retailers gain stronger profits.
Why It Matters to You
Even if you’re not in marketing, you’ll notice more relevant recommendations and fewer irrelevant ads cluttering your online shopping experience. For retailers and brands, retail media has become a strategic cornerstone, and in 2025, it goes truly global, making every click, scroll, and “Add to Cart” count in ways that benefit both shoppers and the businesses serving them.