If you have been in CPG for any length of time, you have heard the term retail media come up more frequently in the past few years than almost any other topic in advertising. It shows up in agency pitches, trade show agendas, and increasingly in conversations between brand teams and their retail partners. Despite how often it gets mentioned, there is still a fair amount of confusion about what retail media actually is and why it has become such a central part of how CPG brands grow.
The Basic Definition
Retail media refers to advertising that runs within a retailer’s own ecosystem, using that retailer’s first-party shopper data to reach consumers. This includes ads that appear on a retailer’s website or app, in-store digital displays, and increasingly, placements on third-party channels that use the retailer’s shopper data for targeting.
The clearest way to understand what makes retail media different from traditional digital advertising is the data that powers it. Platforms like Google and Meta target consumers based on browsing behavior, search intent, and demographic data. Retail media targets consumers based on verified purchase history. The targeting is built on what real shoppers have actually bought, in which categories, from which brands, across which retailers. That distinction has significant differences for how effective the advertising is and how precisely it can actually be measured.
When a shopper searches for protein bars on Walmart.com and sees a sponsored product at the top of the results, that’s retail media. When a brand runs a display ad on Instacart targeted at shoppers who have previously purchased in their category, that’s retail media. When a digital screen in the snack aisle at Kroger shows a targeted ad as a shopper walks by, that’s retail media.
How Retail Media Networks Are Structured
The infrastructure behind retail media is built around what the industry calls Retail Media Networks, or RMNs. A retail media network is the advertising platform that a retailer builds on top of its shopper data, allowing brands to purchase ad placements across that retailer’s channels. Amazon Ads, Walmart Connect, Target Roundel, and Instacart Ads are among the most widely recognized examples, but nearly every major US retailer now operates some version of this.
Within these networks, there are three primary ad formats that brands can use. Sponsored product ads appear in search results when a shopper is actively looking for products in a given category, making them the highest-intent format and the one that receives the largest share of retail media investment. Display ads run across the retailer’s digital properties and are typically used to drive brand awareness or reach shoppers at earlier stages of their purchase journey. Off-site ads use the retailer’s first-party data but run on external channels, including social platforms, programmatic networks, and connected TV, extending the reach of the retailer’s audience beyond its own properties.
Alongside these ad formats, brands also have access to digital shopper marketing tools, which focus on promotions and incentives rather than paid placements. Platforms like Ibotta help brands drive trials among new households through digital coupons, cash-back offers, and targeted discounts. These tools sit adjacent to retail media networks but serve a complementary purpose, converting the awareness that retail media builds into first purchases.
What This Means for CPG Brands
For brands selling through major retailers, retail media has become an important part of how retail sales velocity gets built and defended. Search ranking on retail platforms is influenced by both sales performance and ad investment. Brands that invest in retail media tend to rank higher in search results within the retailer’s ecosystem, which drives more organic visibility, which in turn supports sales velocity.
For emerging CPG brands specifically, retail media offers the ability to reach high-intent shoppers inside the retailer where their product already lives, using targeting that is grounded in actual purchase behavior rather than demographic assumptions. The minimum investment thresholds for sponsored product ads are low enough that brands at early stages of growth can participate meaningfully, unlike some digital shopper marketing programs that require substantial upfront commitments.
Understanding how retail media works and why it has grown is the foundation for building an effective strategy around it. From there, the practical questions are which platforms make sense given your distribution, how to allocate budget across retail media and shopper marketing, and how to measure what is actually working. You can also see how retail media platforms increase retail sales velocity.
