Retail media has claimed the crown as digital’s fastest-growing channel, acting as a magnet for ad dollars from brands facing signal loss and gravitating toward performance marketing. The narrative has been certainly one of breathless growth, with retailers touting massive gains from their bets on selling ads that lean on customer data. Now comes the hard part.
This yr, the main target for retail media networks is shifting from onsite promoting — running campaigns on assets the retailer owns, like a website — to the offsite world, in areas like connected TV (CTV), social and open-web programmatic. Retail media networks execs view offsite as a swing at the massive leagues, a likelihood to prove their first-party data power can extend beyond retail to reshape the broader digital landscape.
“It is a real expansion, I believe, of the worth proposition that retail media can provide,” said Ali Miller, vp of ads product at Instacart, which works with platforms like Google, Roku and NBCUniversal.
However, the chance for retail media networks trying to broaden their appeal might be significant. Without the correct safeguards in place, retailers could find yourself contributing to programmatic’s transparency woes. Even worse, individual networks could undermine their value proposition to advertisers at a time when standing out against the growing competition is critical.
For now, advertisers and publishers appear to be buying in. Ad spending on offsite programmatic retail media will hit $20 billion this yr, a massive leap over the $7.5 billion recorded in 2023, in accordance with researcher Advertiser Perceptions. Media heavyweights like Disney are linking with a number of the biggest retail media networks to enhance the precision of CTV campaigns as buyers prioritize driving business outcomes over the same old video metrics like reach and frequency.
But underpinning the offsite trend are pressures, including strains on supply. Mature retail media networks are nearing the limit of what number of ads they’ll run onsite without hurting the user experience. On the flip side, more nascent networks can’t compete as well in the case of onsite inventory, placing them at a drawback without offsite levers to tug.
“One of the largest drivers here of why off-property is expanding and going to expand a lot faster is the inventory is limited on-property,” said Nicole Perrin, senior vp of business intelligence at Advertiser Perceptions. “It is essentially unlimited off-property.”
Google’s reversal on cookie deprecation is unlikely to dampen the need for retail media as CMOs are tasked with making their promoting more performant. Offsite then stands to be a lucrative opportunity, but one with very different financial, privacy and ad quality considerations.
“At its best, [offsite] is really the promise of additional scale and performance,” said Nicholas Ward, co-founder and president of ad-tech firm Koddi. “At its worst, it might probably be sold and resold data from trusted customers, and it’s ending up on Made For Advertising sites.”
‘Oh s—t, where’s my supply?’
Offsite activity is on the rise as retail media’s overall rate of growth is expected to chill. Ad spending on the channel will grow 10.6% in 2025, a roughly three percentage-point drop in comparison with 2024, as trade budgets begin to be exhausted, per WARC.
“We’re coming as much as the top of a phase transition in retail media, in commerce media, where the story was the expansion,” said Ward.
Retail media networks see offsite as a solution to win over nonendemic advertisers, akin to financial services and automotive. Those buyers could provide a boost as CPGs are tapped out. Offsite also tends to skew upper-funnel in comparison with onsite, when consumers are already visiting a retailer to make a purchase. But offsite media also represents an adjustment in promoting returns and the degree of control retailers can exert, presenting a steep learning curve for platforms which might be, in lots of cases, still learning the marketing ropes.
“The reality is that it’s lower margin,” said Andrew Lipsman, an independent analyst at Media, Ads + Commerce. “It’s still healthy margins, but while you’re talking about onsite being often 80% to 90% gross margin, offsite is perhaps 20% to 40%.”
Those results remain appealing to retailers whose core businesses carry even thinner margins. However, offsite’s lower returns compounded with onsite supply constraints come at a time when retail media is receiving more public scrutiny.
“Loads of that growth was predicated on having unlimited supply for this overwhelming demand. Now, they’re like, ‘Oh s—t, where’s my supply?’”
Michael Jaconi
Co-Founder and CEO, Button
Companies like Walmart and Amazon have began to make ad sales a big a part of their earnings discussions with Wall Street, and retailers broadly see the strategy as a solution to boost profits. If the long run growth trajectory doesn’t line up with the expectations retail media networks have set to date, there might be a reckoning.
“As the retailers were looking a quarter or a yr ahead and starting, in the general public markets, to speak about their growth of those initiatives, a lot of that growth was predicated on having unlimited supply for this overwhelming demand,” said Michael Jaconi, co-founder and CEO of retail media solutions provider Button. “Now, they’re like, ‘Oh s—t, where’s my supply?’”
Wading into murky waters
A special financial picture is only one piece of the offsite retail media puzzle. Retailers will not be historically sophisticated with digital media, and plenty of have built out their onsite offerings with the help of outside vendors.
“Getting into the ad-selling space is not a core competency [for retailers] and never all of them have enough talent to support a few of these opportunities.”
Andrew Lipsman
Analyst, Media, Ads + Commerce
Offsite adds additional layers of complexity to the equation. Retail media data is plugged into third-party services, like demand-side platforms and apps, to be spread across the web.
“You can create a situation where perhaps in the event you push your data out to too many places, you truly disintermediate yourself in a sense and reduce the worth [proposition] that you simply ultimately have,” said Ward.
Programmatic is also within the highlight within the wake of research that uncovered a high amount of waste on Made For Advertising (MFA) sites: clickbait content farms that use shady tactics to mask their purpose of maximizing ad loads. While progress has been made combating MFAs, retailers must ensure their offsite blitz doesn’t exacerbate the issue. A scarcity of care in executing the push into open-web programmatic could also reduce retail media performance, a crucial driver of advertiser interest.
“Great targeting data against bot traffic is going to have zero effect,” said Lipsman. “Getting into the ad-selling space is not a core competency [for retailers] and never all of them have enough talent to support a few of these opportunities.”
Build, rent or buy
Some retail media networks are higher equipped to surmount these hurdles than others. As retail media investments soar, platforms like Amazon and Walmart have enshrined a dominant position (the previous is sufficiently big to effectively act in its own category). Those with the deepest pockets can staff up experienced talent, develop proprietary ad tech and acquire media properties that hone their upper-funnel muscles.
“The challenge for a not top-five or top-10 retailer to construct offsite is that it’s a lot of technology and a lot of capabilities,” said Jaconi.
The disparities might be particularly sharp in CTV, an offsite channel where marketers are spending heavily. Amazon opened the floodgates for the CTV-retail media convergence when it began running commercials on Prime Video in January. Walmart earlier this yr acquired the smart TV maker Vizio for $2.3 billion to shore up its own video strengths. Few other retail media networks will give you the chance to completely capitalize on the CTV boom.
“If you’re not an Amazon that has [its] own streaming TV platform, otherwise you’re not a Walmart that has a Vizio platform, it’s good to fulfill those goals elsewhere,” said Perrin.
Another route retail media networks could take is publisher partnerships within the model of Best Buy’s with CNet and Instacart’s with The New York Times Cooking. Digital media publishers are cheaper to work with, and a few currently have fire sale price tags.
“We could potentially see M&A because a lot of the media firms’ valuations are depressed,” said Lipsman.
Out of ahead of their skis
As retail media networks ready their next chapter, they may proceed to be dogged by questions on whether or not they’ll repeat the mistakes of walled gardens past. Analysts are in agreement that retail media can deliver superior performance however the drive for sustaining short-term profits, enabled by rapid offsite expansion, might put retailers out ahead of their skis.
Advertisers, meanwhile, express mixed feelings, coveting the first-party data but feeling frustration that retailers implement retail media buys as part of selling agreements. Almost two-thirds of brands surveyed by the Association of National Advertisers, a trade body representing marketers, view retail media networks as a “should buy” versus “wish to buy” strategy. Will those sentiments grow sour or more positive within the offsite era?
“The promise, again, is this connected experience across the board,” said Koddi’s Ward. “The risk is that we’re selling something as an industry that perhaps is not quite there yet.”
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