As retail media networks evolve, they encounter both opportunities and challenges. It’s a shift from onsite to offsite advertising channels and is preparing to change the basics of digital advertising.
Such expansion introduces complexities that require careful navigation, especially for retailers exploring new terrain. A dual-edged sword offers potential growth and profitability while also introducing risks related to transparency, financial margins, and operational expertise.
How retail media networks are breaking new ground in digital advertising
Retail media has rapidly become the go-to channel for digital advertising, outpacing other formats in growth. Brands are eager to capitalize on the rich first-party data that retailers hold, enabling precise targeting and improved performance marketing outcomes.
As privacy regulations tighten and third-party cookies phase out, using first-party data becomes even more important.
Brands are shifting their ad budgets towards retail media networks, seeing them as a reliable solution in a landscape where digital privacy concerns are reshaping consumer behavior.
Retail media ad spend is set to skyrocket, making it a central pillar in many brands’ marketing strategies. Connecting advertising directly with purchase data provides a level of accountability and performance measurement that other digital channels struggle to match.
From onsite to everywhere
Retail media networks are expanding beyond their own platforms into offsite channels like connected TV (CTV), social media, and open-web programmatic advertising, to extend their influence and capture more advertising dollars. It’s a transformative move, letting retailers use first-party data in broader contexts, reaching consumers wherever they are in their digital journey.
Modern shifts to offsite channels is driven by the need to diversify revenue streams and alleviate the pressure on limited onsite inventory.
As the digital advertising landscape continues to fragment, retail media networks see offsite channels as a way to stay competitive and relevant. The potential to reshape the digital advertising market requires a careful balancing act to make sure that offsite expansion benefits don’t come at the cost of transparency and control.
Unlocking new potential of retail media’s offsite expansion
Offsite advertising opens new horizons for retail media networks, allowing them to scale beyond the limitations of their own platforms. When moving into channels like CTV and social media, retailers can tap into larger audiences and diversify their ad offerings.
Expansion is particularly attractive to nonendemic advertisers, such as those in financial services and automotive sectors, who are looking for new ways to engage consumers.
Retail media networks can use their first-party data to deliver highly targeted ads across a range of digital channels, improving relevance and effectiveness. Such capabilities increase the value proposition for advertisers and positions retail media networks as key players in the broader digital advertising ecosystem.
Offsite channels to the rescue
As retail media networks mature, they face the challenge of limited onsite ad inventory. Running too many ads on a retailer’s website can detract from the user experience, leading to potential backlash from consumers.
Offsite channels provide virtually unlimited inventory, helping retailers grow their ad revenues without compromising the user experience on their own platforms.
It’s a shift that also addresses the competitive disadvantage faced by newer retail media networks that lack extensive onsite inventory. When expanding into offsite channels, these networks can level the playing field and offer advertisers a broader range of options.
Access to a larger pool of ad inventory is a big advantage, particularly in a market where demand for retail media advertising continues to outstrip supply.
Tapping into new revenue streams with offsite advertising
The financial potential of offsite advertising is immense. As traditional onsite ad spending begins to plateau, offsite channels offer a new avenue for growth. Ad spending on offsite programmatic retail media is projected to reach $20 billion in 2024, up from $7.5 billion in 2023.
For retailers, this expansion into offsite advertising will diversify their revenue streams and help with tapping into a market with significant growth potential. As more advertisers recognize the value of first-party data in driving performance across a range of digital channels, the demand for offsite retail media advertising is likely to continue its upward trajectory.
The two sides of offsite advertising
Moving into offsite advertising introduces a new layer of complexity for retail media networks. Integrating retail media data into third-party services, such as demand-side platforms (DSPs) and apps, complicates the advertising process and requires careful management to maintain transparency.
The risk of ad fraud and the prevalence of Made For Advertising (MFA) sites—clickbait content farms that prioritize ad loads over quality—pose significant challenges.
Retailers must understand these complexities carefully to avoid diminishing the value of their first-party data. Without proper safeguards, offsite advertising could exacerbate existing transparency issues in programmatic advertising, undermining the trust that advertisers place in retail media networks.
Making sure that ads are placed in high-quality environments and that performance metrics are accurately reported is essential to maintaining the integrity and effectiveness of offsite advertising.
The financial realities of offsite advertising
Offsite advertising, while promising in terms of scale and reach, comes with lower financial returns compared to onsite channels. Onsite advertising typically enjoys gross margins of 80% to 90%, while offsite margins can be as low as 20% to 40%.
Despite the lower margins, offsite advertising remains attractive to retailers, especially those operating in industries with even thinner margins. Additional revenue, even at lower profitability levels, is appealing in a highly competitive market.
Retailers must balance the pursuit of offsite opportunities with the need to maintain sustainable profit margins.
Overcoming talent shortages in the offsite ad space
The shift to offsite advertising also exposes a significant talent gap within retail media networks. Retailers are not traditionally experienced in managing complex digital advertising campaigns, and many lack the in-house expertise needed to navigate the intricacies of offsite channels.
A talent shortage can hinder the effectiveness of offsite advertising efforts and lead to suboptimal campaign performance.
To bridge this gap, retailers may need to invest in talent acquisition and training or partner with external agencies and ad-tech firms that specialize in offsite advertising. Additional layers of complexity involved in offsite advertising, such as data integration and programmatic buying, require a deep understanding of digital media dynamics.
Retailers must make sure they have the right skill sets in place to maximize the potential of their offsite ad strategies.
The financial impact and market shifts in retail media
The retail media sector, while still growing, is experiencing a slowdown in its overall growth rate. Ad spending growth is expected to decelerate to 10.6% in 2025, compared to previous years. Slowdowns are largely due to the exhaustion of trade budgets and the realization that onsite ad inventory is not limitless.
Retailers who have previously relied on the rapid expansion of onsite ad placements are now facing the reality of finite resources. As a result, they must adjust their expectations and strategies to sustain growth in a more constrained environment.
The push into offsite channels is partly driven by the need to address the growing supply constraints in onsite advertising. Retail media networks that had previously operated under the assumption of unlimited onsite inventory are now finding themselves squeezed by the increasing demand for ad placements.
Supply crunches are forcing retailers to explore new avenues for expansion.
Offsite channels offer a solution by providing access to a much larger pool of inventory, allowing retailers to continue scaling their ad operations without the limitations imposed by onsite platforms.
New changes are not without challenges, as they require retailers to adapt to new advertising environments and manage the complexities of offsite ad placement. However, it is a necessary move to sustain growth in a market where demand consistently outpaces supply.
How retail giants are responding to offsite ad challenges
Leading retail media networks like Amazon and Walmart are doubling down on their investments and acquisitions to solidify their positions in the offsite advertising space. Walmart’s recent $2.3 billion acquisition of Vizio is a strategic move that bolsters its capabilities in the CTV arena, a rapidly growing segment of offsite advertising.
When acquiring Vizio, Walmart gains control over a significant piece of hardware in the CTV ecosystem and improves its ability to deliver targeted ads directly to consumers’ living rooms.
Walmart’s acquisition is part of a broader trend among retail giants to invest heavily in technology and media properties that can give them an edge in the increasingly competitive digital advertising market.
The power of partnerships and M&A in retail media
Partnerships and mergers and acquisitions (M&A) are becoming increasingly important strategies for retail media networks looking to expand their offsite capabilities. Best Buy’s partnership with CNet and Instacart’s collaboration with The New York Times Cooking are examples of how retailers are teaming up with established digital publishers to enhance their content offerings and reach new audiences.
With media company valuations currently depressed, there is a window of opportunity for retail media networks to acquire valuable assets at relatively low costs.
Partnerships and acquisitions can provide the technological infrastructure and audience reach that retail media networks need to compete in the offsite space. As retailers continue to expand their digital footprints, strategic collaborations will be key to staying ahead of the curve.
The hidden dangers in retail media’s offsite expansion
As retail media networks push into offsite advertising, there is a real concern that they may repeat the mistakes of previous “walled gardens.” Such past models were characterized by a lack of transparency, over-reliance on proprietary ecosystems, and restricted access to performance data.
Retail media networks must learn from these past experiences and prioritize openness and collaboration in their offsite strategies.
Transparency in ad placement, data usage, and performance metrics will be key to building and maintaining trust with advertisers. Failing to do so could result in a backlash similar to what has been seen with other walled gardens, undermining the growth potential of offsite retail media.
Advertisers’ mixed feelings about retail media
Advertisers have a complicated relationship with retail media networks. While they value the first-party data that these networks offer, many feel compelled to buy into retail media as part of broader marketing agreements, rather than out of genuine preference.
According to a survey by the Association of National Advertisers, nearly two-thirds of brands view retail media networks as a “have to buy” rather than a “want to buy” strategy.
Sentiments like these could become more pronounced as retail media networks expand into offsite channels. Advertisers may become increasingly wary of being locked into deals that require them to participate in offsite advertising, especially if the performance does not meet their expectations.
Retailers will need to address these concerns proactively to make sure that their offsite expansion does not alienate their advertising partners.
The risk of overpromising in offsite ads
The retail media industry faces a significant risk of overpromising on the benefits of offsite advertising. While the potential for scale, performance, and new revenue streams is real, there is a danger that the industry may oversell these advantages before the necessary infrastructure and capabilities are fully developed.
If the connected experience across channels—promised by offsite retail media—fails to materialize, advertisers may become disillusioned. It could lead to a loss of confidence in retail media networks and a reevaluation of ad spend allocation.
Retailers must be careful not to overextend themselves and make sure that their offsite offerings are ready to deliver on the promises made to advertisers.
Key takeaways
As your brand navigates the rapidly shifting digital market, the question is no longer whether to engage with retail media networks, but how to do so most effectively. Will you boldly expand into offsite channels and seize the new opportunities they present, or will you risk being left behind, clinging to outdated strategies?
Now is the time to critically assess whether your current approach is truly aligned with the dynamic needs of today’s market—or if a recalibration is in order to stay ahead of the curve. How will you position your brand to thrive?
