Retail Media Explained: How Marketplaces Turn Data into Revenue

Jan 15, 2026 • 19 min read

Retail media platforms continue to revolutionize advertising, with yearly growth exceeding 20% through 2027. BCG projects that this thriving market will reach $100 billion by 2026 and account for over a quarter of digital media spending.

A retail media network enables retailers to create new revenue streams by utilizing their customer data. Brands get access to targeted advertising based on first-party shopper data. Many leading retailers now earn 2-5% of their total revenue from media and data monetization services. Retail media advertising yields profit margins between 70-90%, making it a compelling business model.

Let's explore how marketplaces can leverage their valuable first-party data to generate revenue streams. Our detailed analysis covers retail media monetization strategies and successful case studies. You'll find a clear roadmap to help you build and optimize your retail media strategy, whether you're new to commerce media or already active in this space.

Key Takeaways

Retail media networks are transforming how marketplaces monetize customer data, with the market projected to reach $100 billion by 2026 and growing at over 20% annually.

Retailers generate 2-5% of total revenue from media services with impressive 70-90% profit margins by monetizing first-party customer data through advertising platforms.
Third-party cookie deprecation drives 84% of marketers toward retail media as privacy-compliant alternatives, and using first-party data becomes essential for targeting.
Four key monetization strategies maximize revenue: on-site sponsored listings, off-site audience extension, analytics subscriptions, and API access to shopper insights.
Off-site retail media exploded 167% in one year, jumping from $7.5 billion to $20 billion as retailers extend their reach beyond owned properties.
Success requires balancing monetization with customer trust while building a robust data infrastructure that connects POS, eCommerce, and mobile touchpoints for closed-loop measurement.

What is Retail Media and Why It Matters Now

Retail media has become one of the fastest-growing sectors in digital marketing, showing up everywhere from digital shelf space to in-store displays. This advertising channel helps brands connect with consumers right when they're making decisions, creating new ways to generate revenue for marketplaces and retailers.

Retail media networks definition and scope

A retail media network is an advertising system where retailers can sell ad space on their digital properties to other brands. These networks operate in retail environments and include both online and in-store channels.

Retail media goes beyond simple banner ads to include:

On-site advertising: Ads placed directly on a retailer's website or app, such as sponsored product listings, search results, and category pages.
Off-site advertising: Making use of information from retailers' first-party data to target audiences across the broader internet.
In-store advertising: Digital displays, shelf-edge screens, and other physical touchpoints.

The numbers are impressive. US retail media ad spend is projected to reach $59.61 billion in 2024 - about 19.4% of all digital ad spending. The market could grow to $100 billion by 2028, and it will be bigger than traditional TV advertising by the end of 2025.

Commerce media vs traditional advertising

Commerce media and retail media mean different things. Commerce media acts as a bigger umbrella that includes retail media. Retail media focuses on advertising within retail spaces, while commerce media includes all forms of advertising that make use of information from commerce across industries like financial services, travel, and healthcare.

Here's how commerce/retail media differs from traditional advertising:

Targeting precision: Traditional advertising reaches broad audiences based on general demographics. Retail media uses first-party customer data to show relevant ads based on actual buying behavior and browsing history.
Purchase proximity: Ads appear closer to where people buy, which helps convert more sales.
Measurement capabilities: Retail media lets advertisers see the direct connection between ads and purchases, giving them a clearer picture of their return on investment than traditional channels.

Commerce media is growing fast. The growth rate from 2023 to 2027 could hit 21%, moving ahead of display, connected television, and search advertising.

The end of third-party cookies has helped retail media grow quickly. These cookies let advertisers track users across websites for targeting and measurement, but their removal creates new challenges.

About 84% of US marketers say they're more likely to invest in retail media because third-party cookies are going away. This makes sense since retail media networks offer a privacy-friendly alternative through their first-party data.

Google recently decided to keep some cookie functions, but experts think retail media networks will keep growing. People care more about privacy now - 70% of consumers already limit cookies when they browse online.

The move away from third-party cookies affects several key advertising areas:

Reach capabilities: Advertisers need new ways to find customers without cookies.
Personalization potential: It's harder to track behavior.
Measurement accuracy: Analytics and tracking results become more difficult.

Retailers with good first-party data are in a great position to step in. They can help advertisers reach consumers while respecting privacy rules.

How Marketplaces Monetize First-Party Data

Marketplaces with vast amounts of first-party customer data have found several ways to turn this asset into major revenue streams. Retail media networks will reach $100 billion globally by 2026. Retailers now use smart approaches to make money from their customer insights.

On-site retail media advertising platforms

On-site retail media means ad placements on a retailer's digital properties—websites and mobile apps. Brands can target shoppers who are actively filling their carts. These targeted placements yield impressive 80-90% profit margins. They have become excellent revenue sources.

Key on-site formats include:

Sponsored product listings - These ads show up in search results and category pages. They boost visibility when shoppers show clear buying intent. About 41% of all search-related cart additions come from just the top two results.
Display advertising - Banner ads and promotional content appear throughout the shopping trip, from homepage to checkout.
Themed content hubs - These seasonal or thematic collections blend sponsored products with inspiring content.

Retailers must balance profit with user experience on their platforms. Ads should boost rather than interrupt the shopping trip. Many retailers let brands manage their own campaigns through self-service platforms. This approach increases efficiency.

Off-site audience extension and retargeting

Off-site activation takes a retailer's first-party data beyond its own properties. Brands can reach customers across the wider digital world. This matters because retailers reach only 10% of shoppers through on-site channels.

Off-site retail media grew from $7.5 billion in 2023 to $20 billion in 2024. This represents 167% growth in just one year. About 62% of brands spent more on off-site media since 2023.

Off-site strategies focus on:

Using first-party audiences across social media, programmatic display, and connected TV
Finding potential new customers through AI-powered lookalike modeling
Using retail data to target ads precisely across external platforms

Connected TV (CTV) leads the growth. Retail media networks will drive $5.63 billion in CTV spending by 2027, up from $813 million in 2024.

Retail data monetization through insights and analytics

Retailers earn money by packaging combined shopper insights into analytics products for brands. CPG companies and manufacturers use these tools to improve everything from product launches to promotional strategies.

Common analytics offerings include:

Category insights showing market share and purchase patterns across categories
Reports that reveal how shoppers move toward purchase.
Analytics measures how well promotions work.
Analysis showing which products work well together.

Brands can make informed decisions about product development, merchandising, and marketing spend with these insights. All this happens without sharing individual customer data.

Subscription-based access to dashboards and APIs

Subscriptions create steady revenue for retailers who monetize their first-party data. Retailers give brands ongoing access to consumer behavior and performance metrics through self-service dashboards and direct API access.

These subscriptions typically include:

Self-service dashboards built on loyalty program data
Custom research for specific audience groups
Product testing with small customer groups
API access to anonymous shopper insights

CPG companies find great value in these subscriptions. They can collect valuable first-party data about shopping behaviors and delivery priorities. CPGs then use machine learning to improve their supply chains based on individual insights rather than broad patterns.

These four approaches help marketplaces turn their first-party data into various revenue streams. They build stronger brand partnerships and create better shopping experiences at the same time.

Building the Retail Data Stack for Monetization

A powerful retail media stack needs smart data architecture that turns raw customer data into valuable assets. This setup helps retail media networks deliver value while you retain control of privacy and measure actual results.

Data collection from POS, eCommerce, and apps

The path to making money from retail data starts with collecting data from every customer touchpoint [link_1]. Retailers get valuable insights about buying patterns, frequency, and timing from their point-of-sale systems, websites, mobile apps, and loyalty programs. They track transaction records, browsing behavior, search patterns, and loyalty engagement across channels. POS systems excel at tracking immediate sales data, which leads to better decisions and inventory management.

Identity resolution and privacy compliance

Identity resolution connects scattered data points into complete customer profiles. The system links various identifiers like emails, device IDs, and loyalty numbers into lasting profiles that make personalization possible. Data breaches cost $4.45 million on average per incident [link_2], so strong privacy protection isn't optional. Clear privacy policies must outline how data is collected, used, and protected to meet GDPR and CCPA requirements.

Audience segmentation using CDPs and DMPs

Two key technologies work together for audience segmentation in retail media platforms:

Customer Data Platforms (CDPs) handle first-party authenticated data and create lasting customer profiles for building relationships. These platforms keep PII and allow longer data storage.
Data Management Platforms (DMPs) work with third-party anonymous data for short-term targeting (usually 90 days), which makes them perfect for finding new customers.

Most retail media networks use both systems—DMPs to find new customers and CDPs to strengthen existing relationships.

Activation across onsite, offsite, and in-store channels

A well-built retail data stack works smoothly across multiple touchpoints:

On-site: Customized website experiences and targeted product suggestions
Offsite: Broader reach through social platforms, programmatic display, and connected TV using first-party data
In-store: Digital displays, audio messages, and shelf-edge screens that blend physical and digital experiences

Closed-loop measurement and attribution

The biggest advantage of retail media networks is their closed-loop measurement that connects ad viewing directly to purchases. This system links digital campaigns to both online and offline sales, showing which tactics bring in revenue. Unlike traditional tracking that relies on click-through rates, closed-loop coverage shows actual sales results. Marketers can keep improving their campaigns and prove ROI—especially important now that privacy changes affect traditional measurement methods.

Real-World Use Cases from Leading Retailers

Major retailers in a variety of industries have built successful retail media networks. Each network has its own way to make money from data. These real-life examples show how ideas turn into profitable business models.

Target's Roundel: Off-site reach with first-party data

Target's Roundel shows how retailers can grow their media presence beyond their own properties. The retail media network teams up with over 2,000 vendors to create customized ad campaigns that appeal to Target's audience. The network now brings nearly $2 billion in value to Target.

Roundel stands out with its off-site strategy. About 30% of partner media spending happens outside Target's platforms, which expands reach through social, streaming and other digital channels. The network works with premium publishers like The New York Times, AMC Networks, Hearst, BuzzFeed and USA Today.

Roundel launched Precision Plus in 2024. This AI-powered tool helps advertisers utilize Target's first-party data and live shopping behavior to make campaigns better across platforms like Google, Meta, Pinterest, and The Trade Desk.

Wayfair's self-serve ad platform for home brands

Wayfair Media Solutions gives home brands a complete self-service advertising platform. Their tools feature sponsored products that increase search visibility, sponsored shops with banner ads, and display advertising that shows product ads throughout the site.

The platform gets results. Partners using sponsored products have seen 715% more views and 520% more orders for their items. A plumbing brand that used Sponsored Shops gained 13% more market share and 15% more product views.

Etsy's seller-funded advertising model

Etsy uses a unique seller-funded approach to retail media. Their Offsite Ads program buys advertising across social networks and search engines. Sellers pay an advertising fee only when these ads lead to sales.

The platform enrolls all sellers automatically. Etsy created a tiered structure where shops with over $10,000 in sales within any consecutive 365-day period must stay in the program forever. Smaller sellers can opt out. This model means Etsy pays only for ads that work and charges sellers after confirmed sales.

TripAdvisor's travel intent-based targeting

TripAdvisor makes good use of its position to monetize travel intent data. The company faces competition from AI search tools and has changed its strategy. It now positions itself as a starting point for travel planning instead of just a review site.

The company recently teamed up with Perplexity, an AI search startup. This partnership lets Perplexity tap into behavior and preference data that regular search engines can't usually access. Tripadvisor's curated hotel lists show up in Perplexity's summaries, which sends motivated users straight to booking opportunities.

Challenges and Strategic Considerations

Retail media platforms promise huge revenue, but retailers must overcome major hurdles as they build and scale these networks. Success depends on careful planning and implementation.

Data silos and integration issues

Fragmented data creates major roadblocks at the time retailers execute retail media strategies. Many retailers find it hard to work with disconnected systems—ASINs on Amazon, SKUs on Google Shopping, and separate data in Meta Advantage Plus. This makes it hard to arrange data and understand how products perform. The numbers are startling - approximately 60% of an organization's data stays unknown or unavailable to people who need it. Three main factors cause these silos: organizational culture, technology limitations, and company structure. Marketers struggle with inconsistent measurement and waste resources when customer data lives in separate systems. Their targeting capabilities suffer, too.

Balancing monetization with customer trust

Retailers often focus too much on monetizing digital space at the expense of customer experience. Their platforms chase ad revenue instead of user satisfaction, which puts long-term trust, loyalty, and customer lifetime value at risk. You can see this problem through slower websites, shoppers who leave because of irrelevant ads, and cluttered pages that hurt brand ROI. Trust remains shaky—less than half (48%) of consumers feel comfortable sharing their personal data with brands. In spite of that, successful platforms track both media revenue and its effect on key metrics like conversion rates and basket size.

Organizational readiness and media culture

Retail media brings together two very different business models. Traditional retail runs on low margins and heavy assets, selling lasting inventory to consumers without a sales team. Digital media, on the other hand, operates with high margins and light assets, selling ads that expire instantly through complex direct sales. Leaders must step up—82% of leading retailers choose mutually beneficial alliances rather than building platforms themselves. The best retail media leaders combine three key skills: commercial sense (62%), P&L management experience (62%), and marketing expertise (60%).

Privacy regulations and clean room adoption

Privacy concerns keep growing, and retailers must build reliable compliance systems. These networks need clear privacy rules about what personally identifiable information they collect, use, and share. Data clean rooms offer a key solution by enabling secure teamwork without compromising privacy. Traditional centralized clean rooms face issues with data centralization, a lack of audit trails, and limited growth potential. About 41% of organizations say fitting clean room technology into existing practices is their biggest challenge. New approaches using differential privacy and distributed ledger technologies look promising. They let data stay with its owner while still allowing joint processing.

Conclusion

Retail media networks have become powerful revenue engines for marketplaces and retailers worldwide. This piece explores how these platforms turn valuable first-party customer data into profit centers growing at an unprecedented 20% annual rate. Media services now generate between 2-5% of retailers' total revenue, with profit margins reaching 70-90%.

The phase-out of third-party cookies has sped up this transformation. As a result, 84% of US marketers are more likely to invest in retail media because of these privacy changes. This creates a great chance for retailers with reliable first-party data to fill the targeting gap.

Four main monetization strategies work well: on-site advertising with sponsored product listings, off-site audience extension across digital channels, analytics products that provide practical insights, and subscription-based access to dashboards and APIs. Each approach brings unique benefits and works with others to build detailed retail media ecosystems.

Target's Roundel, Wayfair Media Solutions, Etsy's seller-funded model, and Tripadvisor's travel intent-based targeting show how different industries adapt these concepts to their business models. These examples highlight retail media networks' versatility and profitability in a variety of market segments.

Major challenges still exist. Data silos make implementation harder, while finding the right balance between monetization and customer trust remains an ongoing challenge. The need for organizational readiness and compliance with changing privacy rules requires careful planning.

Marketplaces that build strong retail media strategies gain a big competitive edge. They create new high-margin revenue streams while making shopping better for customers, setting themselves up for future growth. As the digital world evolves, retail media networks are ready to capture more marketing budgets than traditional channels like television advertising.

Retail media is more than a passing trend—it marks a fundamental change in how brands connect with consumers and how retailers maximize their customer data's value. The future belongs to those who build these capabilities with care, balancing quick revenue wins with lasting customer relationships.