What's Happening?
The global retail media ad market is experiencing a slowdown in growth as channels fragment and the industry consolidates around key commerce media players. According to WARC, the market is projected to surpass $200 billion by 2027, but growth rates are
decelerating. Brands are shifting focus from on-site sponsored search to off-site display and full-funnel solutions, including CTV and social media integrations. This shift is driven by a competitive buyer's market, where brands seek more sophisticated and integrated retail media strategies. The consolidation within the industry is leading to the dominance of major players like Amazon and Walmart, which are expected to account for over 84% of retail media ad spending in the US by 2025.
Why It's Important?
The slowing growth in retail media highlights the need for retailers to adapt to changing market dynamics. As brands become more selective with their ad spend, smaller retail media networks face pressure to enhance their capabilities or partner with third-party tech providers. The consolidation of the industry around major players poses challenges for smaller networks, which may struggle to compete without robust digital footprints or resources. This evolution from explosive growth to a mature, strategically focused market underscores the importance of scale and measurable offerings in determining the long-term viability of retail media networks.
What's Next?
Retailers must evolve from media sellers to media platforms to remain competitive. This involves building media ecosystems that advertisers can easily integrate into, leveraging programmatic and cross-channel targeting capabilities. The emergence of broader commerce media as a full-funnel solution offers new opportunities for brands to execute strategies that bridge digital and physical shopping experiences. As the industry continues to consolidate, retailers will need to focus on creating cohesive retail media strategies that streamline budgets and enhance engagement across diverse channels.
Beyond the Headlines
The rise of commerce media and the dominance of major players like Amazon highlight the growing importance of first-party data and programmatic capabilities in retail media. As the industry matures, ethical considerations around data privacy and the use of AI in advertising will become increasingly significant. Retailers must navigate these challenges while fostering innovation and maintaining consumer trust.
