What Is Retail Media and Why Every CPG Brand Needs a Strategy in 2025
Walk into any major grocery ormass-market retailer today and you're navigating two stores at once. There'sthe physical one — endcaps, shelf placement, floor signage — and then there'sthe invisible one, the digital layer of sponsored placements, targeted displayads, and first-party data pipelines that runs quietly underneath every purchasedecision.
That digital layer is retailmedia. And if your brand doesn't have a strategy for it in 2025, you're alreadya step behind the brands that do.
This isn't hyperbole. Over 70%of marketers reported increasing their retail media ad spend last year, and thenumber of retail media networks in the U.S. has grown to more than 80. FromWalmart Connect and Instacart Ads to Roundel at Target and Kroger PrecisionMarketing, every major retailer now operates its own ad platform — and they'reactively courting your media dollars.
So what exactly is retailmedia, and why should it be a core pillar of your CPG marketing strategy? Let'sbreak it down without the jargon.
At its core, retail media isadvertising that runs within a retailer's owned ecosystem — their website, app,in-store digital screens, and increasingly their off-site media extensions.Unlike traditional display or social advertising, retail media runs closest tothe actual moment of purchase. A shopper is already on a retailer's site,searching for your category. A well-placed sponsored listing can tip themtoward your product rather than a competitor's.
What makes retail mediagenuinely different from other channels isn't just the placement — it's thedata behind it. Retailers have something no other ad platform can replicate:transactional first-party data. They know who actually bought what, how often,at what price point, and in combination with what other products. That's alevel of behavioral intelligence that makes demographic targeting look blunt bycomparison.
In a world where third-partycookies are disappearing and privacy regulations are tightening, that dataasset becomes enormously valuable. Retail media doesn't rely on probabilisticguesses about who someone is. It uses verified purchase history to reach actualbuyers — or the people most likely to become them.
Retail media has been around insome form for years, but several converging forces are making 2025 the yearwhen having no strategy becomes a real competitive liability.
For decades, CPG brands haveallocated significant portions of their budget to trade promotions — slottingfees, co-op advertising, price reductions to drive velocity. Those dollars areincreasingly flowing toward retail media instead, because retail media offerssomething trade spend historically couldn't: measurable, attributable return.
When you fund a retailer'scircular ad, you get a vague sense of whether it moved volume. When you run asponsored product campaign on Walmart Connect and tie it to sales data, you getactual lift numbers — by SKU, by store cluster, by audience segment. Financeteams love that. CMOs love that. And it's changing where brand dollars go.
The physical shelf is finite.The digital shelf is not. And increasingly, shopper decisions are being shapedbefore anyone walks into a store. A consumer searching for "electrolytedrink" on Instacart isn't just browsing — they're at the bottom of thefunnel, credit card one tap away. Being absent from that moment is the digitalequivalent of having no shelf space.
eCommerce grocery in the U.S.continues to grow, with Instacart, Walmart+, and Amazon Fresh capturing more ofthe weekly shop each year. For food, beverage, and health brands especially,retail media on these platforms isn't supplementary spend — it's table stakes.
The retail media land grab ishappening in real time. Brands that moved early into Instacart's preferredpartner programs and Roundel's early access periods are generating learnings —about audiences, about creative, about bid strategies — that compounds intocompetitive advantage over time. Every month without a retail media presence isa month where competitors are learning at your expense.
Strategy in retail media isn'tjust about which networks to activate. It's about knowing how each fits into acoherent commerce plan. Here's a simplified framework:
Identify your key retail partners and where yourshoppers actually shop — not where you wish they shopped.
Define goals by network: is this about trial and acquisition,winning back lapsed buyers, or defending your existing buyer base fromcompetitive conquest?
Map audience segments to the right placements —sponsored search for intent capture, display for awareness, off-siteprogrammatic for broader reach.
Set up attribution properly before you spend, notafter. Determine whether you're measuring on sales lift, ROAS, new-to-brandshoppers, or some combination.
Test, optimize, and document learnings acrosscampaigns. The brands winning in retail media treat each campaign as a datacollection exercise, not just a media activation.
With over 80 retail medianetworks in the U.S., it can feel overwhelming to know where to start. For mostCPG brands in food, beverage, and health, the core networks to understand are:
• Instacart Ads — Dominant in online grocery, strong forbrands with high basket velocity. First-party purchase data is unmatched in thegrocery vertical.
• Walmart Connect — Critical for mass-market brands givenWalmart's scale and their growing digital audience. Especially powerful forhousehold and health categories.
• Roundel (Target) — Strong performance for beauty,household, and premium food brands. Solid off-site extension capabilities.
• Kroger Precision Marketing — Excellent first-partydata, particularly useful for endemic food and beverage brands.
• Criteo Commerce Max — An off-site extension layer thatlets you reach retail audiences beyond the retailer's own properties.
The right mix depends on yourdistribution, category, and growth objectives — not on which network has thebest sales pitch.
Most brands entering retailmedia make the same few errors. Knowing them in advance saves both money andtime.
• Treating retail media like a direct-response channelwith no brand thinking. Creative still matters — a sponsored listing withgeneric copy and a low-resolution image will underperform regardless of bidstrategy.
• Running the same campaign across every network withoutcustomizing for audience or retail context. What works on Instacart doesn'ttranslate directly to Walmart Connect.
• Ignoring incrementality. A campaign might show strongROAS but mostly capture sales that would have happened anyway. Set up holdouttests to understand true lift.
• Siloing retail media from the rest of your commerceplan. The best results come when retail media, shopper marketing, and brandmedia work as an integrated system — not three separate line items.
Retail media is not a trendthat peaked and will fade. It's the structural evolution of how commerceadvertising works in a world where purchase data is king and the physical anddigital shelf are increasingly one and the same.
For CPG brands in 2025, thequestion is no longer whether to have a retail media strategy. It's whetheryour current one is sophisticated enough to compete.
If you're still in the earlystages — or if your current approach feels more like testing the water thanbuilding a real capability — the time to build that foundation is now, beforethe networks get more crowded and the cost of entry gets higher.
AgencyFive Eighty builds retail media strategies for brands in the Bev-Alc, Food& Beverage, and Health & Beauty categories — from network selection andaudience development to campaign activation and attribution. If you're ready toturn your retail media investment into a measurable growth engine, let's talk.