Retail Media Is Eating Ad Budgets

Walk into any large brand's marketing meeting this year and you will hear a phrase that barely existed a decade ago: retail media. It refers to advertising sold by retailers themselves — the sponsored products you scroll past on a shopping app, the banner on a supermarket website, the screen above the checkout. Analysts now put global retail media spend at well over a hundred billion dollars a year, and it is growing faster than any other major channel.

The reason is simple: data. A retailer knows what you bought, not just what you clicked. When a brand buys a search ad on a retailer's site, it can match the spend directly to units sold on the same platform, usually within days. Compare that with a television campaign, where the link between the ad and the purchase has always been an argument rather than a number.

The scale is easy to underestimate. The advertising business of the largest online marketplace alone brings in tens of billions of dollars a year, more than many traditional media companies combined, and grocery chains, pharmacies and even airlines have now launched ad networks of their own. For retailers running on thin margins, this revenue is close to pure profit: they are selling access to shoppers they already have.

For brands, the shift has an uncomfortable side. Budget moves out of brand building and into the last click, because the last click is the part you can prove. Marketers describe a slow drift in which every quarter a little more money goes to the channel with the cleanest dashboard, and the long, unmeasurable work of making people want the product quietly loses its funding.

There is also a dependency problem. The retailer is now your sales channel, your competitor through its own private-label products, and your advertising platform at the same time. It sets the rules, reports the results, and marks its own homework. Some brands report that the cost of appearing in search results on a major marketplace has risen every year, with no realistic option to stop paying.

Smaller companies feel this most sharply. A new brand can no longer reach shoppers simply by getting onto the shelf; it has to buy its way onto the first screen as well, which turns shelf space into a subscription. On the other hand, the entry cost is low and the feedback is immediate, so a founder with a genuinely good product can test real demand in a week rather than a year.

So how do you talk about this at work? Two sentences do most of the job. "How much of our growth is coming from retail media, and would it still happen if we stopped?" is the question that exposes whether you are creating demand or simply harvesting it. "What is our take rate to the platform this year, and where is it heading?" turns a vague worry into a number your finance team can act on.

The sensible position is not to refuse the channel — that is no longer realistic — but to know what it is buying you. Track incremental sales rather than attributed ones, keep some budget in places the retailer does not control, and renegotiate before your dependency becomes visible to the person on the other side of the table. Retail media is not a trend to wait out; it is the new floor of the shelf.