Marketers and agencies grapple with divisions over who controls retail media spend

In Target’s latest earnings report, for example, strong performance at its retail media unit ($649 million in annual revenue, a 25% increase over 2023) offset gloomy net revenues across the rest of its business. Walmart’s retail media ad business tells a similar story, having grown 27% year over year in 2024 to net in $4.4 billion in global ad revenue.

But there are disparities among top advertisers over which teams control retail media budgets.

Take sports drink brand Powerade, for example. CMO Tom Gargiulo told Digiday that retail media is “a big part of our strategy,” adding that the brand focuses its investment on Kroger’s 84.51° platform and Walmart Connect. (Gargiulo didn’t provide a breakdown of the investment.) He said Powerade’s retail media investments are handled by a team within GroupM’s Coca-Cola unit (for now), meaning media buying and retail media are managed under the same roof. Powerade has a similar arrangement internally, Gargiulo added.

It sounds straightforward enough, but according to industry sources, retail media dysfunction is far from the exception. When it comes to who holds the purse strings, there’s tension among marketing, media, sales and commerce teams over which oversees RMN budgets and strategy.

Who controls retail media spend?

According to a Forrester survey published in January, 36% of U.S. retail media spend comes from existing trade marketing budgets, and 26% from shopper marketing budgets — the departments that manage the broader commercial relationships with retailers, and which in the past managed a brand’s shopper marketing spend — while the remainder typically belongs to marketing teams’ budgets.

“Retail budgets are generally sitting with sales teams. National [marketing] budgets are generally sitting with marketing and media teams — and that is the tension,” said one CPG marketer, who exchanged anonymity for candor.

Agency teams, on the other hand, will generally work with a brand’s marketing team to organize media spend, without the involvement of sales or trade marketing teams.

VML, for example, usually handled commerce and shopper marketing activations for clients, according to global head of media and commerce Kiesse Lamour. Upper-funnel media activations like CTV would be handled by agencies within GroupM.

Havas’ commerce-focused Market unit leads its clients’ retail media investments, according to Alex Walker, managing director at Havas Market UK. For clients that only maintain a brief with Havas Media Network, he said the Market unit would execute investments with a “white label” approach.

How does this hold marketers back?

Control issues over budgets cause headaches for anyone trying to get a handle on where media investments are going, how they’re performing and how much has actually been spent — critical issues for marketers working through the retail media boom.

“How do you evaluate Walmart in a [media mix model]?” said Forrester analyst Nikhil Lai. “Do you include slotting fees and trade promotion and fines and all the costs that you have to incur to participate in Walmart Connect … or do you just account for the cost of media?”

Agency briefs become a lot harder to fulfill when investments aren’t all accounted for. “It’s hard to measure how much money is being spent. It’s a lot of different hands talking to each other,” said Will Margaritis, evp of commerce and retail at Dentsu.

Furthermore, fragmented control of budgets means agencies either might have to deal with a single client team hamstrung by their own organization — or, where brand sales and shopper teams are in the room, multiple clients with competing priorities. “That can be challenging,” said VML’s Lamour.

“They’re stuck in the middle of this, and it’s making their jobs impossible,” added the anonymous CPG marketer.

In part, this dysfunction is a symptom of the sector’s immaturity. The retail media boom is only a few years old, starting when retailers looked to take in extra revenue by cashing in on their first-party data as Google’s third-party cookie began to crumble. “We still are early on in the game,” said Lamour.

Overlapping priorities

But this isn’t just about messy org charts. “Shopper and trade dollars have strings attached to them that the digital and national dollars don’t,” said Lai.

At companies where sales teams control retail media purse strings, investments become another form of leverage when it’s time to negotiate with retailers for crucial shelf space. “Sales teams in their annual negotiations with retailers want to be able to talk about the marketing spend,” said Havas’ Walker.

“It’s a really tricky dance for both parties,” added Nikhil Raj, chief business officer, retail media, at Moloco, an ad tech firm that provides media and advertising software to retailers.

Marketers who want to reduce their retail media spend with a given network for performance reasons might find it difficult to extricate themselves from agreements struck by their sales teams. (Take a closer look at the retail media frenzy and pressure to spend here.)

“Once you’re committed, they can ask for additional investment or require that [increased spend],” explained Chris Rigas, vp of media at performance media agency Markacy. “It’s really tough to say no to that.”

With brands and agencies increasingly drawing on retail media data to inform TV buys and other big-ticket marketing activity (and retail media networks pitching themselves as media businesses), client marketing teams want to control more of the overall budget.

In response, agency execs told Digiday they’re gently pushing for clients to centralize. “It works better for us if it is managed by the marketing team … they’ve got a more holistic view. I think that is the direction of travel, to be honest,” said Walker.

With that said, collapsing silos is easier said than done. For now, such a change remains on agencies’ wish lists, said Elizabeth Marsten, vp of commerce media at indie media shop Tinuiti.

In the meantime, marketers and agencies will continue to navigate a fragmented and often fraught retail media landscape.

One suggestion: “We should firewall the merchant from all media conversations entirely,” concluded the anonymous marketer. “The incentive structure for this whole thing is goofed.”