At the IAB’s Annual Leadership Meeting this month, retail media was formally recognized as a distinct advertising category — joining search, display, video, audio, and social as a named segment of the digital advertising market. The recognition is overdue. Retail media advertising has been growing faster than any other digital ad category and is on track to exceed $30 billion in the US within the next two years. The formalization of the category is the industry’s acknowledgment that this is not a niche channel — it is a fundamental shift in how performance advertising budget is allocated.
Amazon, of course, is the dominant player, with advertising services revenue exceeding $7 billion in Q2 2021 alone. But the emergence of Walmart Connect, Kroger Precision Marketing, Target Roundel, Home Depot’s retail media network, and a dozen other major retailer ad platforms has created a genuinely competitive multi-player category that agencies and brand media teams now need explicit frameworks for evaluating and buying.
The implications for media planning are significant. Retail media is competing for budget that used to belong entirely to search, lower-funnel programmatic, and direct-to-consumer digital — and in many cases it is winning that competition on measurable ROAS.
What Retail Media Actually Is
Retail media is advertising placed within a retailer’s owned digital environments — websites, apps, search results, product pages — targeted using that retailer’s customer purchase and browse data. The core product is sponsored placement in search results: a brand pays for its products to appear at the top of a retailer’s organic search results when shoppers search for relevant terms.
What distinguishes retail media from paid search on Google or Bing is the proximity to purchase. A consumer searching on Amazon or Walmart is typically in an active shopping context — they have opened the app or website with purchase intent. Sponsored placement at that moment is advertising served to someone who is actively evaluating the purchase category. The conversion signal is direct and measurable in ways that most digital advertising is not.
Retail media has expanded beyond sponsored search to include: display advertising on retailer websites and apps (using shopper data for targeting), off-site programmatic advertising (using retailer first-party data to target shoppers outside the retailer’s owned properties), in-store digital advertising (digital screens and checkout display), and connected TV sponsorship in some cases. The core product remains sponsored search, but the full-funnel ambition of major retail media networks is evident in their product portfolios.
The Amazon Advertising Ecosystem
Amazon’s advertising business deserves specific treatment because of its scale and its distinctive data advantage.
Amazon Advertising is built on a first-party data asset that no other retail media network can match: purchase history and browse behavior across the world’s largest e-commerce platform, at the individual account level, tied to deterministic purchase intent. When Amazon targets a shopper with a sponsored product ad, it is using intent signals that would be unavailable to any third-party advertising platform — whether the shopper bought a specific product category before, how recently, at what price point, and whether they have searched for similar products recently.
Amazon’s DSP extends this targeting off-Amazon through programmatic display and video. Advertisers can use Amazon purchase data to target advertising on third-party websites and apps — a capability that becomes dramatically more valuable as third-party cookies deprecate and other DSPs lose audience targeting signal. Amazon’s logged-in customer identity infrastructure is immune to cookie deprecation in ways that cookie-based DSPs are not.
The structural implication: Amazon Advertising’s competitive advantage will increase, not decrease, as the cookie-based programmatic ecosystem degrades. Brands with significant Amazon channel presence should be examining how much of their total media budget is allocated to Amazon Advertising relative to the actual purchase volume driven through the platform.
Walmart, Kroger, Target, and the Challenger Networks
The second tier of retail media networks — Walmart Connect, Kroger Precision Marketing, Target Roundel, and similar networks from CVS, Walgreens, Best Buy, and Home Depot — are structurally different from Amazon in important ways, and those differences create different evaluation criteria for advertisers.
Walmart and Target operate both physical stores and digital properties, giving their advertising networks visibility into cross-channel behavior. A shopper who browses a product on Walmart.com and then purchases it in a Walmart store is trackable within Walmart’s ecosystem in ways that are genuinely differentiated — the cross-channel purchase data is valuable for understanding omnichannel attribution.
Kroger Precision Marketing operates the largest US grocery retailer advertising network, with shopper data from Kroger, Fred Meyer, Ralphs, and affiliated banner stores. CPG advertisers in grocery categories — food, beverage, household care, health and beauty — have access to category purchase data that is directly relevant to their target audiences. Kroger’s data reflects actual product purchases at category level, which for CPG advertisers is more directly relevant intent signal than the general browsing behavior that walled garden advertising platforms offer.
The challenger networks are not yet Amazon-scale, but they offer targeting precision that is competitive with Amazon for their specific categories and geographies.
How Retail Media Should Appear in Agency Media Plans
The formalization of retail media as a category has a practical consequence: agencies and media teams that have been treating retail media as an e-commerce channel management question (handled by account teams, not media planners) need to integrate it into media planning as a full-funnel channel with explicit budget allocation and measurement frameworks.
The media planning questions for retail media differ from traditional programmatic questions in several ways:
Attribution is commerce-native, not cookie-based. Retail media attribution is measured in product sales, not clicks and view-through conversions. The measurement currency is ROAS in platform-measured purchase transactions. This makes retail media attribution more directly actionable for performance advertisers than cookie-based last-touch models — but it is also siloed within each retailer’s measurement infrastructure.
Budget allocation competes with search, not display. Retail media sponsored search products are competing for the same performance budget as Google Shopping, Amazon Organic, and lower-funnel programmatic retargeting — not with brand awareness display budget. Media planning frameworks that treat retail media as a separate category from search are miscategorizing the competitive budget dynamic.
Retailer-specific expertise is required. Walmart Connect and Amazon Advertising have different auction mechanics, different targeting options, different creative specifications, and different measurement APIs. Agencies serving major CPG or consumer brand clients need dedicated retail media specialists alongside their search and programmatic teams.
Forrester’s retail media research projects the US retail media market reaching $50 billion by 2023. For agencies and in-house media teams, the question is not whether to allocate to retail media — it is how to build the evaluation, buying, and measurement capabilities needed to compete effectively in a channel that is now formally part of the digital advertising ecosystem.
FAQ
What is retail media and how is it different from regular search advertising? Retail media is advertising within a retailer’s owned digital environment — product listing pages, search results, homepages, and apps — targeted using the retailer’s customer purchase and browse data. It differs from general search advertising (Google, Bing) in two important ways: the shopping context is active purchase intent rather than general web search, and the targeting data comes from actual purchase history rather than inferred intent signals. A sponsored product ad on Amazon or Walmart is served to someone in the process of shopping for that category, which is why retail media generally delivers higher conversion rates than comparable general search or display investment.
How should we evaluate a retail media network before committing budget? Key evaluation criteria: data quality (is the retailer’s audience data large enough and relevant enough to your category?), measurement capabilities (does the network provide closed-loop purchase attribution?), inventory scale (enough ad impressions to deliver meaningful reach?), self-serve accessibility (can you buy and optimize without managed service minimums?), and off-site capabilities if you need reach beyond the retailer’s owned properties. For CPG brands, Kroger and Walmart networks merit evaluation alongside Amazon. For general merchandise categories, Amazon and Target are primary. For home improvement, Home Depot’s network is directly category-relevant.
Does retail media work for brands not sold in retail stores? The strongest retail media value proposition is for brands whose products are available on the retailer’s platform — the attribution loop is direct and measurable. For service brands, software, financial products, or anything not sold on the retailer’s digital shelf, retail media’s primary value is audience quality rather than closed-loop purchase attribution. Amazon’s DSP, for example, allows service brands to use Amazon purchase signals for off-Amazon targeting — this is essentially a high-quality programmatic audience product rather than true retail media. The evaluation framework should focus on audience quality and off-site reach rather than closed-loop ROAS for non-retail products.
How does retail media measurement differ from standard programmatic attribution? Retail media networks typically provide closed-loop sales attribution within their own ecosystem: they can measure product sales that followed ad exposure using their own transaction data. This is deterministic for purchases made on the platform and for in-store purchases at retailers with loyalty card matching. The limitation is attribution of influence that extends beyond the retailer’s ecosystem — if a consumer sees an Amazon sponsored ad and then purchases the product on the brand’s own website, Amazon’s measurement does not capture that. Multi-retailer media mix modeling is an emerging discipline for brands running across multiple retail media networks and needing a unified view of incremental sales impact.