Retail Media: From the Bottom of the Funnel to Center Stage in Marketing

Retail media is undergoing a transformative shift — it’s no longer just a performance channel; it has ascended to become a strategic pillar of marketing. As brands zero in on precision and scale, retail media networks (RMNs) are evolving, offering a rich tapestry of data, formats, and reach to meet these demands.

The Evolution of RMNs

Retail media networks are rapidly extending from their original lower-funnel, conversion-focused origins into comprehensive, full-funnel marketing ecosystems. What began as a straightforward way to spotlight sponsored products on a retailer’s digital shelf is now an expansive media channel that brands are leveraging to connect with consumers seamlessly.

Bridging Content and Commerce

Today, brands are executing RMN campaigns across a multitude of platforms, including Prime Video and streaming TV, as well as native placements within mobile retail apps. Picture shoppable videos on Walmart.com or product-focused reels embedded in the Target app. This approach signifies a strategic leap for RMNs, aiming to engage consumers in environments where they are already investing their time.

Amazon, for instance, leads this charge with its intricate ecosystem, boasting substantial reach. Its advertisements reach an impressive 130 million monthly Prime Video viewers, with 88% regularly shopping on Amazon.com.

The New Value Proposition of Retail Media

Retail media’s transformation isn’t constrained to new formats; it heralds a new realm of value. The combination of premium inventory and profound consumer insights uniquely positions RMNs to drive immediate conversion goals while fostering long-term brand equity.

In an era where the broader digital advertising landscape is confronting challenges like signal loss and increasing media fragmentation, retail media stands out as a brand-safe, data-centric channel that promises both extensive reach and measurable outcomes. For many businesses, RMNs are becoming an essential piece of their media strategy.

Expanding into the Upper Funnel

Historically, RMNs were associated with sponsored listings and search-driven placements. However, they are now confidently stepping into upper-funnel territory. Retailers are broadening their offerings to include a variety of formats:

• Video ads
• Shoppable branded content
• Native placements
• Interactive formats

Innovative Partnerships

A noteworthy collaboration between Walmart Connect and Roku showcases RMNs’ ability to run connected TV (CTV) campaigns that directly correlate with both in-store and online sales results. Amazon, too, has established a holistic ecosystem that includes everything from Sponsored Ads to dynamic content on Prime Video, blurring the lines between content and commerce.

Retail media is evolving from a siloed sales channel to a versatile full-funnel partner that enables brands to engage audiences meaningfully.

Driving Growth in RMNs

Several pivotal factors are converging to fuel the meteoric rise of retail media networks.

For Retailers

Retailers are keenly focused on profitability. With tighter margins in retail and more lucrative margins in advertising, they are pivoting toward advertising as a revenue stream.

According to Walmart’s CFO, advertising via Walmart Connect accounted for nearly a third of the company’s operating income in Q3 2024. As such, growing a full-funnel advertising strategy is not just a goal; it’s a necessity.

Expanding to New Formats

Retailers recognize that their traditional inventory—like homepage banners and search result placements—has its limits. To boost media revenue and remain competitive, they are exploring new, richer formats, including:

• Programmatic display
• Video
• Audio
• Connected TV (CTV)

This diversification allows RMNs to engage shoppers off-site while they consume media and content, thereby enhancing brand visibility.

Access to Larger Budgets

Traditionally, retail media was funded through trade budgets, which focused on sales-driven tactics. However, RMNs are now attracting full-funnel marketing budgets aimed at broader KPIs like awareness and consideration. This represents a significant opportunity for retailers to elevate their role in integrated campaign planning.

The Advantage of First-Party Data

Retailers possess invaluable first-party data, directly reflecting real customer behaviors. As third-party cookies fall out of favor, RMNs leverage this proprietary data to create privacy-compliant audience segments that brands can target across various media landscapes:

• Retailer-owned sites
• Open web display
• Video
• Streaming TV

This ensures relevant engagement wherever consumers interact with media.

For Brands

As the need for measurable results intensifies, brands are increasingly investing in retail media. They recognize that the data-driven capabilities of RMNs can elevate their marketing outcomes.

Expanding Audiences through Insights

RMN data allows brands to extend their reach beyond existing customers to lookalike audiences that demonstrate relevant shopping behaviors:

• Lapsed buyers
• Shoppers of competitive brands
• Category browsers

This level of behavioral insight is rare in the digital advertising sphere and enables brands to find high-value audiences at scale.

Personalization

The foundation of RMNs is rooted in real shopping data, which facilitates more precise targeting. For example, a pet food brand can tailor its messaging based on whether a consumer is a dog or cat owner or whether they prefer premium versus budget products. This personalized messaging enhances relevance and promotes stronger engagement.

Accountability in Measurement

Retail media networks offer closed-loop measurement linking ad exposure to transaction outcomes, effectively bridging clicks and impressions with actual sales. This is particularly valuable for brand campaigns that have historically struggled to demonstrate their impact on conversion.

Shifting Budgets: From Trade to Brand Teams

The transformation of retail media is reshaping ad platforms and funding sources. Traditionally dominated by shopper and trade marketing teams, RMNs are now poised to capture more attention and budget from brand and media teams.

As these budgets shift, marketers must reassess their strategies and KPIs. Traditional metrics based on units sold are insufficient in this evolving landscape. Advertisers are seeking:

• New success metrics
• Enhanced storytelling in campaigns
• Emotional engagement with consumers

Retail media has transitioned from merely a digital shelf to a compelling storytelling platform.

Innovations and Future Directions

Recent developments highlight this momentum:

• Walmart Connect has formed partnerships within the CTV realm, including ties with Paramount and NBCUniversal, and the acquisition of Vizio, granting access to millions of TV accounts.
• Amazon Ads has expanded its offerings to include AI-driven contextual pause ads on Prime Video, showcasing its commitment to innovation.
• Instacart has introduced Smart Carts in partner grocery stores, allowing advertisers to reach new customers dynamically.

With U.S. ad spend in retail media projected to hit $62 billion in 2025 and potentially exceed $100 billion by 2029, brands must integrate RMNs into their overall strategies to maximize impact.

To unlock the full potential of retail media, brand and performance marketing efforts must align. A coherent message across platforms—be it a brand video on Prime or TikTok—ensures consumers receive consistent and engaging content.

Conclusion

Retail media networks are at the forefront of an advertising revolution. As they continue to grow and innovate, savvy brands that embrace new formats, invest in creative approaches, and incorporate retail media into their strategies will reap significant rewards. The result? Enhanced targeting, actionable data, and meaningful connections with consumers—regardless of where they are.

Dig deeper: Unilever’s Ben & Jerry’s campaign shows why RMNs are the future

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