Latest / The CMO Podcast with Fexingo: Marketing Leadership, Budgets, and Executive Strategy / How CMOs Use Retail Media Networks to Monetize Shelf Space
Transcript
- Lucas: You know that moment when you're browsing for a bag of coffee on Amazon and the first three results are sponsored, then the fourth one is also sponsored, and you start wondering — wait, is anything here organic anymore? Luna: Oh, I do that multiple times a week. And the answer is increasingly no. Amazon's advertising revenue last year was something like forty-seven billion dollars. Lucas: Forty-seven point two, to be precise. That's bigger than the entire global newspaper ad market. And it's not just Amazon. Walmart, Instacart, Target, even grocery chains like Kroger and Albertsons have built their own ad businesses. The industry term is retail media networks, or RMNs. Luna: Right. And the growth is staggering. GroupM projects that retail media will hit one hundred and sixty billion dollars globally by 2027. That's roughly fifteen percent of all digital ad spend. Lucas: So the question for a CMO in mid-2026 is: how do you treat retail media — is it a trade spend line item, a performance marketing channel, or a whole new media discipline? Because the answer determines your org chart, your agency relationships, and your measurement philosophy. Luna: And I think a lot of CMOs are still figuring that out. My sense is most companies defaulted to treating it like trade promotion — the digital version of paying for end-cap displays in a physical store. But the smart ones are rethinking that. Lucas: Exactly. And the smartest ones are looking at the closed-loop measurement piece. When a customer sees a sponsored product on Walmart.com and buys it at a physical Walmart store, that's a single identifier connecting the ad to the sale. That's the holy grail of attribution that linear TV and even a lot of digital display can't give you. Luna: So the pitch to a CFO becomes very clean. 'Give me ten dollars for ads, I can show you twelve dollars in incremental revenue at the same retailer.' No modeling, no multi-touch attribution headaches. Lucas: But here's where it gets tricky. Those retailer platforms also compete with the brands that advertise on them. Amazon sells private-label coffee, and it also sells ad space to Starbucks. So there's a data-sharing tension. Brands give the retailer their customer insights, and then the retailer uses that intel to launch its own products. Luna: That's the dark side of retail media. I've talked to CMOs who say, 'We love the ROAS, but we hate handing over our customer data.' Some are demanding clean-room agreements or third-party verification. Lucas: And some are building their own retail media networks. Best Buy has one. Lowe's has one. Even a company like Albertsons — it's a grocery chain with thin margins, but its advertising business has much higher margins than selling milk and eggs. Luna: So the retailer side loves it because it's a high-margin revenue stream. The brand side loves it because it's measurable. But the consumer? They may not love the increasingly commercialized experience of browsing a store. Lucas: And that's actually the tension I want to drill into. A recent survey from the CMO Council found that sixty-two percent of consumers feel retail media ads are 'helpful' when they're relevant. But that number drops to twenty-two percent when the ads feel repetitive or unrelated. Luna: So the walled gardens have to use their data well. Otherwise, they risk the same ad fatigue that killed banner ads in the early 2000s. Lucas: Let me give you a concrete example that I think captures where the smart money is going. A midsize CPG brand — call it a premium snack company — was spending about twelve million dollars a year on linear TV. In 2025, they shifted two million of that into Walmart Connect and Instacart Ads. Their measured return was three times what they got from TV, because they could tie every dollar to a specific purchase. Luna: But that's a short-term optimization. You can't replace brand building with performance alone. Lucas: No, and they didn't. They kept ten million on TV for awareness. But they used the retail media learnings to inform the creative. They found that ads featuring the product packaging and a visible price tag drove higher conversion than lifestyle imagery. That changed how they shot their TV spots. Luna: So it's not just a new channel — it's a new source of consumer insight that can feed the whole marketing machine. Lucas: Exactly. And that insight piece is what I think separates the leaders from the followers. The CMOs who treat retail media as a data partnership, not just a media buy, are the ones who will build a competitive advantage. Luna: And if these marketing conversations have sparked something you've actually used in your own strategy, a couple of dollars a month is genuinely what keeps these going — buy me a coffee dot com slash fexingo, if you've gotten something out of them. Lucas: Yeah, that's right. It's a small way to keep the podcast ad-free and focused on the substance. Appreciate anyone who does. Luna: So back to retail media — one of the big organizational challenges is that RMNs sit at the intersection of marketing, sales, and e-commerce. Who owns the budget? Who manages the relationship with the retailer ad platform? Lucas: That's the org chart question. In many companies, the trade marketing team owns the retailer relationship and the digital marketing team owns the ad platform. Those two groups often don't talk. I've heard of CMOs creating a dedicated 'retail media' role that reports directly to them, with a dotted line to the chief revenue officer. Luna: And what about the agency side? Are the big holding companies building retail media practices? Lucas: They are. Omnicom launched a dedicated retail media unit in 2024. Publicis acquired Epsilon partly for its retail data capabilities. But the challenge is that many agencies still silo retail media within their e-commerce teams, separate from the broader media planning. So a brand might have one agency doing TV and digital, and another agency doing retail media. That creates fragmentation. Luna: And the worst case? You end up bidding against yourself — your display ad on one platform competes with your sponsored product on another, and the only winner is the retailer. Lucas: Exactly. So the smart CMOs are consolidating. They're telling their agencies, 'I want one integrated plan that covers all retail media networks, and I want it connected to my overall media mix model.' That's easier said than done, but that's the direction. Luna: Let's talk about measurement again. You mentioned closed-loop. But is it really closed loop if the retailer controls the data and the attribution window? Lucas: Great point. The retailer defines what counts as a conversion — is it a view-through within one day? Click-through within seven days? And they don't share the raw data. They give you a dashboard with aggregate numbers. So you're trusting the house's scorecard. Luna: And there's an incentive for the retailer to over-attribute. They want to show you a high ROAS so you spend more. Lucas: Right. That's why sophisticated advertisers are running their own incrementality tests. They hold out a control group that doesn't see the retail media ads, then compare sales lift. Some are using third-party measurement firms like Nielsen or IRI to validate the retailer's numbers. Luna: So the CMO has to be both a media strategist and a data scientist — or hire someone who is. Lucas: And that's the through line of this whole episode. Retail media is not just a new ad format. It's a fundamental shift in the balance of power between brands and retailers. The retailer now owns the customer relationship AND the ad platform. Brands have to decide whether to play ball, and if so, how to play smart. Luna: And what about the smaller brands that can't afford the minimum ad spend required by some RMNs? Are they being locked out? Lucas: It's a real concern. Walmart Connect requires a minimum of a thousand dollars per campaign, which is manageable for many. But some premium networks demand six-figure commitments. That's creating a two-tier system: big brands get the data and the reach, small brands get the shelf but not the algorithmic boost. Luna: So there's an equity issue. And it might lead to regulatory scrutiny down the line, similar to how the EU has looked at Amazon's use of seller data. Lucas: Absolutely. The FTC and the European Commission are both watching. If a retailer uses its own ad data to favor its private-label products in search results, that's a classic self-preferencing concern. We're likely to see more antitrust attention on retail media in the next couple of years. Luna: So where do you see this going by, say, 2028? Lucas: I think we'll see consolidation — the top ten RMNs will capture eighty percent of spend. And we'll see more standardization in measurement, possibly through industry bodies like the IAB. Also, more retailers will open up their ad inventory to programmatic buying through demand-side platforms, so brands can buy across retailers in one place. Luna: That would be a game changer. It would make retail media feel more like a real media channel and less like a bespoke partnership. Lucas: Exactly. And the CMOs who start building the capabilities now — the data partnerships, the incrementality testing, the integrated org structure — will be the ones who benefit when that shift happens. The ones who wait will be playing catch-up. Luna: Any final piece of advice for our listeners who are about to enter their 2027 budget planning? Lucas: Yes. Don't let retail media live in a silo. Bring it into your full-funnel planning. And insist on independent measurement, even if it costs more. The retailer's dashboard is a starting point, not the truth. Luna: Good note to end on. Thanks, Lucas. Lucas: Thanks, Luna.