Latest / Retail Media Breakfast Club / The Retail Media Doom Loop: 2026 Edition
Transcript
- The Retail Media Doom Loop Keeps Spinning In 2026 === [00:00:00] Kiri Masters: One of my most popular episodes last year was the retail media doom loop, and the premise was this. A retailer looks at Amazon and Walmart's ad revenue, and they want a share [00:00:15] of it. The retailer stands up a network and fills it quickly by moving trade and shopper marketing dollars onto a media line. [00:00:25] Growth looks great for a year or two because repackaging [00:00:30] that spend is pretty easy. But then the trade budget runs dry, growth flattens out, and a flat business can't win the internal argument for the tech and talent that would take it to the [00:00:45] next stage. A year later, I'm continuing to hear anecdotes that support this thesis. [00:00:54] So I wanted to revisit the concept. Let's jump in. [00:00:57] [00:00:59] Kiri Masters: But first, [00:01:00] the data. Sarah Marzano, principal analyst for retail and commerce media at eMarketer, presented findings from their work with Bain at Groceryshop last week. Here's a few highlights [00:01:15] of what they found in their survey of retail media network leaders. [00:01:20] ~Retail media networks expect roughly twenty-three percent revenue growth in twenty twenty-six.~ [00:01:20] ~Retail media networks expect roughly 20~ retail media networks expect an average of twenty-three percent revenue growth in twenty twenty-six. Now, that sounds super positive until you see [00:01:30] that fewer than one in five of their respondents think that they will actually beat their ad target plan, and nearly a third expect to come in under plan [00:01:42] That same research says where the [00:01:45] growth is actually expected to come from, and this surprised me. The answer from this cohort of retail media network leaders [00:01:52] Was sponsored search and on-site display. Now, these two ad [00:02:00] units, on-site ads, remain the backbone of retail media ad spending, and it has always been this way. Most analyst estimates that I've seen point to eighty to ninety percent of Amazon and [00:02:15] Walmart ad spend being concentrated in those on-site performance-oriented ad units, not the new formats Not the CTV and the social media offsite audience extension, but [00:02:30] the stuff that these retailers have been selling for a decade or more now. Meanwhile, in that eMarketer and Bain survey, seventy-seven percent of networks say that they're pursuing new agentic advertising formats, and a [00:02:45] third of those without a native AI agent are building one with plans to later monetize it. [00:02:51] Now, I wanna be clear, I don't think that agentic formats are worthless. I think that they will matter enormously, and [00:03:00] I've written plenty about why I believe that. [00:03:04] But this was my point in the doom loop cycle, which I call add sparkles, and it comes right at the end when an RMN isn't able to secure the budget [00:03:15] that it needs for better tech and better talent, and instead they announce some sparkly, shiny, nice-to-have thing that distracts everyone from a lack of [00:03:30] conviction in their core on-site sponsored product offering. [00:03:34] The reality is that performance upgrades to an on-site ad server don't tend to be as newsworthy, and that's because that's [00:03:45] what the boring work looks like. It's the unglamorous side. I wrote recently in my column for The Drum someone that I call Art Vandelay. That is a fake name for a real person that I [00:04:00] spoke with at a mid-sized US retail media network who came into the job and audited their on-site ad stack and found that the retailer was using an ad server built for legacy [00:04:15] publishers, not for retailers. [00:04:16] And the forecasting of this ad server couldn't read and understand a retailer's traffic pattern, that after a tentpole promotion week, the ad server assumed that that [00:04:30] spike in traffic would continue and paced all of the campaigns against that assumption, and then ultimately under-delivered when the traffic came back down to earth. [00:04:40] So Art Vandelay, my friend, asked for [00:04:45] funding to replace this legacy ad server with something built for purpose, and there's many of them in th-- that are purpose-built for retail media today, but that request was denied, so they had to build a [00:05:00] seasonally adjusted forecast by hand that now feeds back into that platform every week or two so that the system doesn't revert to its own bad guesses about future traffic patterns. [00:05:11] So without that, Art Vandelay [00:05:15] estimates that their network would have missed seven figures in ad opportunities that it didn't know that it had, and that's the kind of manual labor that is going in to this core backbone of retail media as it exists [00:05:30] today and where most retail media network leaders believe that their future growth is going to come from. Costco isn't scaling its RMN with [00:05:45] legacy ad tech and manual solutions. It's leaning into a cloud-centric composable stack. As part of the Costco Velocity Network, GrowthLoop empowers the retail media team to [00:06:00] build audiences directly from the Data Cloud, enabling faster activation, greater relevance, and better performance, all while maintaining privacy and governance standards. [00:06:14] The [00:06:15] result? Exceptional value and experience for Costco members and better ROI for brand advertisers. Learn why the GrowthLoop Composable Commerce Media Solution was the right choice for Costco's Velocity [00:06:30] Network. Visit go.growthloop.com/breakfast. That's go.growthloop.com/breakfast [00:06:42] [00:06:43] Kiri Masters: At Ascendant Networks' [00:06:45] RMN Bootcamp in Palo Alto this month, there were some further rumblings that I wanted to include here. These sparkly add-ons that retail media networks have launched over the past year, things like integrations with [00:07:00] creators, off-site media capabilities, these continue to struggle to get actual adoption within brands for many reasons. [00:07:10] And the brands who were present at the bootcamp talked about what the [00:07:15] barriers were. For example, not all CMOs are hot on the idea of creators. It is not a universally beloved concept amongst CMOs. Off-site audience targeting and measurement might [00:07:30] be a genuinely useful layer on a campaign, but the added cost of that audience data and measurement pushes the cost of the campaign up beyond what someone who's responsible for performance [00:07:45] media, ~they're comparing that to, they're comparing that to what they're able to book-- They're comp-they're~ comparing that to what they're able to plan and manage elsewhere and not seeing the value there. [00:07:54] Ultimately, the association that many brands have is that retail media [00:08:00] equals sales and performance. And if RMNs want to shift that perception, that is gonna be a years-long, expensive re-education campaign requiring a [00:08:15] charm offensive from retail media network leaders. And if they pulled it off, it might even kill the golden goose, the on-site owned and operated ad inventory that is already the largest, [00:08:30] most profitable and most controllable portion of their media ecosystem And per the eMarketer study where most RMNs expect their future growth to come from [00:08:41] Now at that same event, one of the agency execs that [00:08:45] attended said that the future of commerce media is going to be survival of the fittest. We're not all going to make it, they said. They pointed towards more consolidation, more aggregation. From their lips to God's [00:09:00] ears, the following week, Gopuff announced it was deepening its relationship with Instacart, including using carrot ads to power advertising on its own storefront. [00:09:12] I'm gonna go deeper on that eMarketer and Bain [00:09:15] research in my column for The Drum next week, so stay tuned on that. [00:09:19] But for now, just wrapping up here, the retail media doom loop is silent. Nobody in this industry is going to announce that they've hit the ceiling, but [00:09:30] they'll probably announce something that sounds cool instead Thanks for listening, and I'll catch you tomorrow [00:09:36]