‘The easy dollars are gone’: Retail media faces new tests as it nears maturity

“Our data has never been monetized,” McMillon told analysts at the time. “[The ad business] could be bigger.”

Fast forward to 2025, and Walmart’s advertising business has now become a multi-billion-dollar behemoth. In 2024, Walmart’s advertising business brought in $4.4 billion in advertising revenue, up 27% year-over-year. While it still pales in comparison to Amazon’s $56 billion advertising business, Walmart’s advertising business is growing at a slightly faster clip.

And, perhaps most importantly, it’s become a significant profit driver for Walmart. Last year, Walmart CFO John David Rainey said that almost a third of Walmart’s profit comes from selling ads. And McMillion has said that having an advertising business has been helpful as Walmart — like every retailer — is trying to figure out how much of the costs it can absorb from tariffs before passing on price increases to consumers. 

But that’s not the case for every retail media network. There are now more than 200 retail media networks on the market, in various states of growth or stasis. Macy’s, for example, reported during its second-quarter earnings on Sept. 3 that the revenue generated by its Macy’s Media Network that quarter was $34 million, flat compared to last year.

What has happened, according to analysts, agency executives and other industry experts interviewed for this article, is that while retail media remains a promising, fast-growing area of the advertising industry as a whole, growth is now harder to come by. According to a January report from the IAB, commerce ad spend is expected to grow 15.6% in 2025, compared to 25.1% growth in 2024. EMarketer, meanwhile, is projecting that retail media will grow by 17.5% this year, but by just 10.4% by 2029. 

In turn, retailers are looking to grow their retail media businesses by running ads in more places – extending advertising opportunities in-store, and even through audio. They’re striking deals with social media companies like Meta or Pinterest, or CTV devices like Roku to use their vast trove of first-party data to help brands reach relevant shoppers on other properties. And, they’re adding more self-service capabilities and automating parts of the advertising process whenever possible. 

All this makes 2025 an important inflection point for retail media, as networks are tasked with proving that they have built a solid flywheel that can continue serving up growth, even in the face of new macroeconomic challenges like tariffs.

As Derek Nelson, senior director of measurement and retail media consulting at Ovative Group, put it, “the easy dollars are gone.” 

“[Retail media] has gone from an emerging media channel to a major media channel, and with that maturity, it’s somewhat inevitable, as we’re comping a much larger base, that we’re going to see the rates of growth start to decelerate year over year,” Sarah Marzano, principal analyst at eMarketer, said.

The haves and the have-nots 

Over the past five or six years, there’s been a steady stream of retailers either releasing new retail media networks or rebranding their existing ones. Most recently, Ace Hardware launched a retail media network at the end of August.  

Nelson from Ovative Group said much of this activity has been spurred by other retailers seeing how much money both Amazon and Walmart have been able to squeeze out of their advertising businesses.

“I think the board of every retailer in the country was like, ‘Well, what are we doing here? These are huge pots of money that we’re not playing in,” said Nelson, who primarily consults with retailers and other players on the sell-side of the retail media business. 

But Nelson said the big challenge facing the retail media space right now is that many of these companies that decided to launch retail media businesses hired third-party consulting firms to evaluate how big their retail media businesses could grow — and in some cases, these third-party firms may have come up with total addressable market sizes that didn’t make sense for that particular business. 

“You’ve got a lot of [retail media] leaders who were put in place — in 2020, 2022, somewhere in there — that are up against revenue goals that are probably [unachievable],” Nelson said. “They’re all doing their best to grow revenue as quickly as possible, and they’re exhausting their owned media opportunities.” 

As Marzano pointed out, one challenge facing many retailers that decide to launch retail media businesses is that the lion’s share of online sales in the U.S. still goes to a few companies. And at least right now, most companies with retail media businesses are focusing their attention on online advertising opportunities, rather than offline. 

Amazon, for example, accounted for more than 40% of U.S. retail e-commerce sales in 2024, according to eMarketer, even though it accounted for just 6.6% of all U.S. retail sales. Walmart, meanwhile, accounted for around 8.2% of all online sales. 

Still, Marazno doesn’t see the retail media boom slowing down. 

“It still makes a lot of sense [for retailers] to work really hard on optimizing the monetization strategies on their websites, because even if the dollar volume they can make pales in comparison to an Amazon, a Walmart or even a Target, that revenue is so margin-rich that it can still really influence those retailers’ bottom lines in a positive way,” she said. 

That, in turn, presents a challenge for many of the more nascent retail media businesses, as they seek to fine-tune their unique differentiators in a landscape where the Amazons and Walmarts of the world dominate e-commerce sales. 

Nick Drabicky, svp and gm at January Digital, a media agency and consultancy that has worked with brands like Kendra Scott and Carhatt, said that when he looks at the “haves and have-nots” of the retail media world, there are three buckets of companies that are doing well right now. There’s Amazon, which remains the biggest player in retail media because of its size and because it has built such a vast advertising ecosystem that now encompasses upper-, mid- and bottom-funnel placements.

“You can do Thursday Night Football, and then you can do Prime Video, and then you can do PDPs and sponsor brands and sponsor stories, and they all sit in the same ecosystem,” Drabicky said. 

Then, he said the other types of retail media networks he sees a lot of interest in are those that focus on CPG and beauty — Walmart, of course, touches both. In CPG and grocery, Drabicky said, “[Target’s] Roundel is certainly [a bigger player]. And then you’ve got Kroger, which is sort of nipping at its heels, and Albertson’s, as well.” 

Even though Ulta Beauty’s and Sephora’s advertising networks are still pretty young — they both launched in around 20222 — both are attracting a lot of interest because of their influence on the beauty world, Drabicky said.

“Both are new, both are still unproven, but both have potential behind them simply due to the size of the  customer base they support,” Drabicky said. 

Looking for new areas of growth 

In the most opportunistic cases, Drabicky said his clients may spend as much as 50% of their marketing budgets on retail media.

But, this spend isn’t just appearing out of thin air — as Drabicky put it, retail media is an incremental channel, which means many brands are taking spend from somewhere else in their marketing budget and putting it toward retail media. 

“It’s not like, all of a sudden, you [as a brand] just have 10% more to spend,” Drabicky said. “You have to take 10% from elsewhere. And so, if you’re going to do that, [you’re choosing] channels that are tried and true — it had better have a return.” 

As a result, one of the biggest ways that retail media networks are looking to differentiate themselves is by investing more in measurement tools — specifically, incrementality, which aims to measure what sales wouldn’t have happened without that advertising spend. 

Investing in incrementality or lift studies has been a key area of focus for newer advertising networks, like Instacart. Kroger’s precision marketing arm, toward the end of last year, introduced incremental sales reporting to self-service programmatic campaigns. And other companies are trying to push new forms of measurement that they think will be useful in convincing marketers that their particular advertising network is worthy of their dollars. At its second annual advertising InFronts conference this year, Home Depot pitched advertisers on a new metric: ROMO, or return on marketing objectives. 

“It helps advertisers measure that impact that goes beyond the immediate sales and aligns marketing efforts to your long-term business objectives,” Zach Darkow, senior director of marketing and measurement at The Home Depot, said at the time.

Keith Bryan, founder and CEO of retail media consultancy Colosseum and the former president of Best Buy’s advertising network, believes that measurement and incrementality in retail media “have to start to include some more pragmatic retail and brand fundamentals, like: Are receipts going up at the rate of spending on a retailer’s retail media network? If the receipts aren’t going up as fast as the investments in retail media, then that’s a problem.” 

Investing more in mid- and upper-funnel placements that can fuel brand awareness is also an important part of the measurement story. Earlier this year, Walmart rolled out a beta test to offer advertisers direct access to CTV inventory from Vizio, the smart TV maker Walmart acquired last year. Nelson said he’s also seeing more retailers invest in self-service capabilities. 

It all points to the fact that retailers are increasingly tasked with building a well-rounded advertising business — not just finding new places to slap more ads. 

“If you [as a retailer] want repeat purchases and you want growing budgets, you’re gonna have to come to the table with more than just placement,” Drabicky said.