Latest / The CMO Podcast with Fexingo: Marketing Leadership, Budgets, and Executive Strategy / Why CMOs Are Betting on Retail Media Networks in 2026
Transcript
- Lucas: There's a number that's been rattling around in my head for the past week or so, and it's sixty billion dollars. That's roughly what retail media networks — think Walmart Connect, Amazon Ads, Instacart's Carrot Ads — are on track to collect in ad revenue this year. Luna: And that's just in the US, right? Global is quite a bit bigger. Lucas: Correct. Global projections are north of a hundred and thirty billion by 2027. But here's what I find interesting — this isn't just Amazon eating the world. Walmart's ad business grew something like thirty percent last year. Instacart's grew even faster. And CMOs I talk to say they're actively shifting budget into these networks. Luna: So what's the appeal? Is it just the data? Lucas: The data is a huge part of it. These platforms have something that Google and Meta don't — actual purchase data. When someone buys a bag of coffee on Amazon or scans a loyalty card at Walmart, that transaction is a signal. It's not a proxy. It's not 'someone clicked an ad.' It's 'someone bought the thing.' And in a world where every CMO is under pressure to show return on ad spend, that closed-loop attribution is gold. Luna: Right, because with traditional digital ads you're often guessing whether that click led to a sale. Retail media lets you connect the dots directly. Lucas: Exactly. And the scale is getting serious. Let's talk about a specific case. I spoke with the CMO of a midsize CPG company — makes snacks, household products — and they told me that in 2025, they shifted roughly forty percent of their TV budget into retail media. Not because TV doesn't work, but because they could measure the incrementality of every dollar spent on Amazon. Luna: Forty percent is a massive reallocation. How did they justify that to their CFO? Lucas: They showed a direct correlation between ad spend on Amazon and lift in market share within the category. Their CFO wanted to see a clear line from spend to shelf. Retail media gave them that line. And now they're negotiating better terms with Walmart Connect because they can show that their ads drive incremental sales, not just cannibalize organic demand. Luna: But there's a flip side, right? Not everyone wins in these walled gardens. Lucas: That's the tension. I talked to a founder of a DTC skincare brand — small, maybe ten million in revenue. They started running ads on Amazon two years ago. At first, cost per click was low, maybe fifty cents. Now it's pushing three dollars for the same keywords. And Amazon is also launching its own private-label skincare lines. So the platform is both the ad seller and the competitor. Luna: That's the classic platform risk. You build your business on someone else's infrastructure, and one day they change the algorithm or launch a competing product. Lucas: Exactly. And it's not just Amazon. Walmart has been expanding its private-label offerings. Instacart is partnering with retailers to launch exclusive brands. So the question for CMOs is: how much of your budget do you want to put into a channel where the landlord can also decide to open a competing store next door? Luna: So what are the smart CMOs doing? Are they diversifying? Lucas: Some are. They're spreading spend across multiple retail networks — Amazon, Walmart, Instacart, even newer ones like Kroger Precision Marketing and Target's Roundel. But here's the thing: each network has its own data format, its own attribution model, its own measurement standards. So you end up with a fragmented view of your customer unless you invest in a unified measurement partner. Luna: And that costs money. So it's not a solution for every company. Lucas: Right. If you're a large CPG with hundreds of SKUs, the investment in measurement tech can pay for itself. But a smaller brand might not have the margin to support that. And there's another risk I'm hearing more about — ad fraud within retail media. Luna: Ad fraud? I thought retail media was supposed to be cleaner because it's first-party data. Lucas: You'd think so. But some of these networks allow third-party sellers to buy ads, and there's evidence of bot traffic inflating impressions. A 2025 study by the Association of National Advertisers found that retail media networks had an average invalid traffic rate of about four percent — not terrible, but not zero either. And because the attribution is closed-loop, some networks are resistant to third-party verification. Luna: So the data advantage comes with a transparency trade-off. That's a tough place for a CMO to be. Lucas: It is. And I think that's why we're starting to see some pushback. A few large advertisers are demanding independent measurement — Nielsen or Comscore — as a condition of their media buys. But the retail networks don't want to give up control. They argue that their own measurement is more accurate because it's based on actual sales, not panels. Luna: Which is true, but it's also self-serving. There's a conflict of interest when the platform measures its own performance. Lucas: Exactly. And that's the core debate right now in the industry. On one hand, retail media offers the most direct attribution available. On the other hand, the lack of independent verification means advertisers are taking a leap of faith. Some CMOs are comfortable with that leap because the ROI numbers look so good. Others are more cautious. Luna: So what's your take? Are retail media networks a smart bet or a dangerous concentration of power? Lucas: I think they're both. For most brands, ignoring retail media is leaving money on the table. But putting all your eggs in one basket — especially Amazon's — is risky. The savvy CMOs I've talked to are using retail media as one piece of a diversified mix. They're negotiating hard on terms, demanding transparency, and investing in their own measurement tools. Luna: And they're probably also building direct relationships with retailers beyond just ad spend, to have some leverage. Lucas: Yes. The brands that do best are the ones that treat retail media as a partnership, not just a channel. They share data, co-develop promotions, and align on category growth. It's not just about buying ads. It's about being a preferred vendor to the retailer. Luna: That's a good point. It's almost like the old trade marketing model from the 1990s, but with a digital overlay. Lucas: Completely. And if you think about it, the best CMOs are essentially resurrecting an old playbook — relationship-based selling with the retailer — but now they have data to back it up. The difference is that in the 1990s, you had a sales rep and a spreadsheet. Now you have a programmatic ad platform and a real-time dashboard. Luna: Speaking of real-time dashboards, I've heard that some networks are now offering dynamic creative optimization based on purchase history. So if someone bought diapers last month, they might see a formula ad next time. Lucas: Yes, that's happening. Amazon's demand-side platform allows for that kind of targeting. Walmart Connect has similar capabilities. It's powerful, but it also raises privacy concerns. Even though it's first-party data, consumers may not realize their purchase history is being used to target ads on the same platform. Luna: And we're seeing some pushback on that from regulators. The FTC has been looking into how retail media networks use purchase data. Lucas: Right. There's a fine line between personalization and surveillance. And I think the smart CMOs are being careful about how they message this to customers. They're framing it as 'we use your purchase history to show you relevant offers' rather than just quietly doing it. Luna: It's interesting that you mention messaging, because that's a marketing challenge in itself. How do you explain to a customer that their data is making the ads more relevant without creeping them out? Lucas: It's a delicate balance. Some brands are using opt-in models, where customers can choose to receive personalized offers in exchange for discounts or loyalty points. That seems to work better than just assuming consent. Luna: That's a good approach. It turns data sharing into a value exchange rather than a hidden practice. Lucas: Exactly. And that's really the theme of this whole shift — CMOs are being forced to think more strategically about data, measurement, and relationships. Retail media is just the latest manifestation of that. Luna: If these marketing conversations have sparked something you've actually used — a tactic, a framework, a new way of thinking about a problem — that's exactly what we hope for. And a small group of listeners already chips in monthly through buy me a coffee dot com slash fexingo to help us keep making these episodes ad-free. Lucas: Yeah, it's a simple way to support the show if you find value in it. No pressure, just a heads up that it exists. And it genuinely helps us keep going. Anyway, back to retail media — one last thing I want to touch on is the international dimension. Luna: Sure, go ahead. Lucas: In markets like China, retail media is even more advanced. Alibaba's platform, for example, integrates advertising, e-commerce, and logistics into a single ecosystem. Western retailers are still catching up. But I think by 2027, we'll see a handful of global retail media giants — Amazon, Walmart, Alibaba, maybe a combined European player — that control a huge share of digital ad spend. Luna: And that concentration is something regulators are starting to watch. The EU has already launched investigations into Amazon's advertising practices. Lucas: Right. So the future of retail media isn't just about technology. It's about power — who controls the data, who sets the rules, and who gets to measure the results. CMOs who understand that dynamic will be better positioned to navigate it. Luna: Well said. I think the key takeaway is that retail media is too big to ignore, but too risky to rely on exclusively. Lucas: That's a perfect summary. Diversify, negotiate, measure, and always keep the customer's trust in mind. That's the playbook for 2026.