Retail media’s durability is tested as easy growth fades

After five years as one of marketing’s fastest-growing areas, retail media is transitioning from its early growth phase to maturity. IAB’s latest ad spend study projects the industry will grow by 12.1% in 2026.

Retail companies launched dozens of media networks. Brands shifted billions of dollars into retail environments. Technology companies built systems that link media exposure to purchase data. For a while, growth came easily. The market continues to expand: Forrester projects global retail media investments will eclipse $300 billion by the end of the decade.

But beneath that growth, a more complex reality is emerging:

• The growth is primarily coming from a few scaled players, capturing most retail media investment. 
• Trade and shopper budget reallocations have fueled most of the growth so far. Industry estimates suggest that between 30% and 60% of retail media investment comes from trade and shopper funds. But that well is drying up. The next phase of growth depends on attracting incremental media budgets.

These aren’t the only challenges the industry faces as it tries to expand its influence. The industry must answer difficult questions around accountability, integration and business outcomes. How well we address these challenges will dictate our ability to shift investment from other digital channels and incremental budgets.

Retail media must integrate into the core business

Signals suggest retailers are changing how they view their media networks. Early on, many companies treated retail media as a monetization tool — a way to extract extra margin and profit from their existing shopper traffic and data. That approach established the category.

Today, leading retailers treat it as a capability that connects multiple parts of the business. Increasingly, it sits at the intersection of:

• Merchandising.
• Marketing.
• Loyalty programs.
• First-party data.
• Ecommerce platforms.
• Store operations.

That integration creates opportunity, but it introduces significant complexity. It requires organizations to rethink team collaboration and demands new incentives, operating structures and leadership alignment.

Increasingly, operational hurdles are higher than technological hurdles.

Measurement progress has been modest and is far from solved

Measurement is the second major pressure point. Closed-loop attribution helped drive early investment. The ability to link media exposure to purchase data remains valuable. Retail media networks (RMNs) offer more advanced measurement.

But as spending has increased, advertisers are asking tougher questions:

• Did media generate incremental sales or capture existing demand?
• How do I evaluate and compare performance across RMNs?
• How should we measure campaigns that span digital and physical environments?

These challenges grow as commerce media expands into stores. Physical retail captures some of the most valuable shopper attention. Yet measuring in-store media remains difficult, especially when exposure and purchase occur within seconds of each other.

Further progress in commerce media measurement hinges on transparency: disclosure of methodologies, data and blind spots.

AI will accelerate convergence across retail, media and technology

The broader retail industry is shifting as boundaries fade. Retailers are operating as media platforms. Media companies are adding shopping to content environments. Technology companies are embedding commerce into discovery experiences.

At the same time, artificial intelligence is reshaping how consumers research, evaluate and purchase products. In some cases, AI already guides much of the shopping journey.

This raises important questions for marketers.

• When product discovery becomes increasingly automated, how does marketing influence work?
• Where do RMNs fit in that future, if at all?

The answers remain unclear, but they will shape the next phase of the industry.

Structural transformation will define the future of retail media

RMNs’ growth came with higher expectations. The next phase will require the industry to address several structural challenges:

• Integrating RMNs into broader marketing planning and budget frameworks.
• Establishing measurement approaches that demonstrate incremental business impact.
• Building technology systems that allow retailers, brands, agencies and platforms to collaborate more effectively.
• Adapting to a future where AI and automation reshape the path to purchase.

These issues will be central to discussions at the IAB Connected Commerce Summit on April 14 in New York City. Industry leaders across retail, CPG, consumer electronics, service providers and tech companies will examine the future of the category. Join us as we write the answers to the industry’s greatest challenges.

The easy growth phase has ended. The next phase will depend on whether the industry can build the systems needed to scale sustainably.

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