“The way retail media has historically been built has been about setting up an advertising business on a retailer’s owned and operated digital channels,” said our analyst Sarah Marzano on an episode of The CPG Guys.

That early model allowed retailers to “do a lot with a little,” particularly when sponsored search and display ads unlocked fast revenue. But as retail media matures, those foundations are showing strain.

“Retailers are recognizing there’s only so far we can take monetizing our website, especially for the retailers who are, most of them, who do most of their business in physical stores,” said Marzano.

There’s a confidence gap between strategy and execution

Retail media leaders feel good about strategy, but less certain about execution, according to Marzano’s “Retail Media Networks: Trends, Benchmarks, and Leadership in 2025” report.

“What we found was that our respondents [on retail media teams] feel really confident about their overall strategy as well as their vision and product roadmap,” said Marzano. “But then that confidence took this major dive when it came to some of the more execution levers and capabilities.”

Weak spots include operating models, technology infrastructure, measurement, and reporting: Areas where retailers haven’t had to build expertise before.

“These are all new skill sets and new muscles for retailers to build, and that’s where the snags are really coming out,” explained Marzano.

Misaligned strategies threaten success

Measurement and KPIs remain a persistent pain point, but Marzano pointed to a deeper issue: Misaligned incentives across organizations.

“A lot of the revenue that funds retail media, especially at the beginning, isn’t actually new money… it’s repurposed money that used to sit in trade and shopper budgets,” she said.

When retail media teams are rewarded purely on ad revenue, and merchants are incentivized to move product and protect margin, friction is inevitable. This can lead to a “zero sum dynamic” where retail media success comes at the expense of the merchant team.

• Marzano argued that this can threaten the power of retail media.
• “What makes retail media so appealing is the strength that retailers have built around being able to have really well-curated assortments,” she said. “And when you have a media strategy that again operates sort of counter to your retailer strategy, that undermines the strength there.”

Measurement requires the right tools and talent

While frameworks around incrementality and in-store measurement are improving, Marzano emphasized that standards alone won’t solve the problem.

“You can’t fix measurement on its own. It kind of sits on top of everything else.”

Tech fragmentation, manual processes, and talent gaps compound the challenge, especially as brands demand more rigorous proof of performance.

“It’s not only about getting those shared frameworks and those shared definitions… but it’s about making sure that the retail media teams themselves are armed with the right talent, the right expertise and the right technology to then be able to deliver on this,” said Marzano.

The next phase of growth is offsite and in-store

Despite these challenges, Marzano sees clear opportunities ahead, particularly beyond onsite media. She pointed to physical stores and offsite media as critical growth levers, while cautioning against overhyping complexity.

• “There’s this vast variety of formats that in-store digital media can take… not all formats are right for all environments,” she said.
• As for offsite media, it’s an “opportunity for retailers to use the breadth of their first-party data without limiting it to… customers who are browsing their websites.”

Ultimately, retail media success relies less on quick wins and more on commitment.

“Retailers and their retail media teams need to start thinking about playing the long game.”

That means making tough organizational and investment decisions now before complexity, fragmentation, and advertiser fatigue force consolidation around the largest networks.

“Any failure to take action in these arenas is going to cost you both in the short term, but I think specifically in the long term as well,” Marzano said.

This was originally featured in the Commerce Media Weekly newsletter. For more marketing insights, statistics, and trends, subscribe here.