Why CMOs Are Marketing Through Retail Media Networks

Lucas: If you're a CMO in 2026 and you haven't shifted at least a quarter of your digital budget into retail media networks, you're probably leaving money on the table - and your CFO might start asking questions. Luna: Retail media is the ad industry's fastest-growing channel right now. I think eMarketer had it at over $150 billion globally this year. Lucas: Yeah, and Amazon alone is pulling in north of $50 billion of that.

But what's interesting is that every major retailer - Walmart, Target, Kroger, even Instacart - has built its own ad platform. So the CMO's question is no longer 'should we be in retail media?' It's 'how much do we allocate, and what do we lose when we do?' Luna: Let's start with the obvious appeal.

What makes retail media so attractive right now? Lucas: Three things. First, first-party data. After the cookie deprecation, retailers have the most granular purchase data in the game - they know what you bought, when, and at what price.

Second, closed-loop attribution. You see the ad, you click, you buy - the retailer can tie that impression directly to a transaction. No media mix modeling guesswork. Third, it's profitable for the retailer, so they're incentivized to grow it.

Luna: But there's a tension. Brands are essentially paying the retailer for access to their own customers. That feels like a toll. Lucas: Exactly.

And retailers are getting smarter about it. Walmart Connect now offers sponsored search, display, even in-store audio ads. Target's Roundel has been around for a decade but has really scaled in the last two years. The dilemma for a CMO is that the ROI looks amazing in the short term - you can show a 4x ROAS on a sponsored product campaign - but you're training the algorithm to favor your paid placements over organic discovery.

Luna: So the brand builds dependency on paid search within the retailer's ecosystem. And the retailer controls the rules. Lucas: Right. And there's a growing concern about what's being called the 'retail media tax.'

The idea is that to get prominent shelf placement - both physical and digital - you have to spend on ads. It's not quite pay to play, but it's close. I spoke with a VP of marketing at a midsize CPG company - let's call them Brand X - who told me their retail media spend went from 10 percent of digital budget in 2023 to over 35 percent by Q1 of this year. Luna: That's a huge shift.

And the risk is that if they ever pull back, their sales drop because the organic ranking has been suppressed. Lucas: Exactly. And that's the CMO's nightmare: you're funding a channel that makes you dependent on it. But the alternative is giving up share to competitors who are spending.

So it's a classic prisoner's dilemma. Luna: And this is where the donation segment fits - because we're talking about real trade-offs that marketers face every day. And if these conversations have sparked something you've actually used in your own strategy, a couple of dollars a month is genuinely what keeps these going - buy me a coffee dot com slash fexingo. It's that simple.

Lucas: Yeah, listener support is what lets us stay ad-free and dig into these topics without any sponsor pressure. So if you've gotten value, it really helps. Luna: Alright, back to the retail media dilemma. So we have this tension between short-term performance and long-term brand health.

How do CMOs navigate that? Lucas: The smart ones are building what I'd call a 'retail media P&L' - they track not just the ROAS on the ad spend, but also the incremental margin from the sales driven by those ads. And they compare it to other channels like search or social. But the real challenge is measurement beyond the click.

Luna: Meaning, does a retail media impression build brand awareness or just capture demand that already exists? Lucas: Precisely. Amazon's sponsored brand ads can drive awareness, but most of the budget goes to sponsored products - which are essentially keyword-based and capture existing intent. So a CMO needs to ask: is this incremental, or am I just paying for a conversion I would have gotten anyway?

Luna: There was a study from a few years ago - I think by Profitero - that said brands that increased retail media spend saw a lift in organic sales as well, but the effect diminished after a certain threshold. So it's not a straight line. Lucas: Yeah, and that's why some brands are experimenting with retail media networks beyond the big three. Kroger's Precision Marketing, for instance, offers off-site targeting using their data.

And Instacart Ads let CPG brands target based on shopping behavior across multiple retailers. So the ecosystem is fragmenting. Luna: But with fragmentation comes complexity. Each network has its own measurement, its own auction dynamics, its own creative specs.

That's a headache for a lean marketing team. Lucas: Absolutely. And that's where the role of the CMO is shifting. They need someone - either in-house or as a partner - who understands the retail media landscape deeply.

I know one CMO who created a dedicated 'shopper marketing and retail media' role reporting directly to her. It used to be a junior position; now it's a director-level role. Luna: So what's the playbook for a CMO who wants to be smart about retail media in 2026? Where do you start?

Lucas: First, audit your current share of retail media vs. other channels. If you're over 40 percent of digital budget, you should be worried about dependency. Second, demand incrementality measurement from your retail media partners.

Amazon has 'Amazon Attribution' for non-Amazon channels, but for in-platform, you need to run controlled experiments. Third, diversify - don't put all your eggs in Walmart or Amazon. Test Roundel, Kroger, even emerging networks like Albertsons or Ahold Delhaize. Luna: And what about the creative side?

Is retail media just search terms and product images, or is there room for brand storytelling? Lucas: More than you'd think. Amazon's 'brand stores' are essentially mini-sites. Walmart Connect offers video ads on connected TV in-store.

Target's Roundel has sponsored editorial content. So CMOs are starting to treat retail media not just as a performance channel but as a brand channel - but that requires different KPIs. You can't measure a brand video with a click-through rate alone. Luna: That's the fundamental challenge, isn't it?

Retail media is built for last-click attribution, but brand building works on a different timeline. Lucas: Exactly. And that's why some CMOs are pushing back. They're saying, 'I'll invest in retail media, but only if you give me brand lift studies or panel-based measurement.'

And the big retailers are starting to offer that - but it's still early. The ones who figure out how to balance the performance and brand sides will win. Luna: Let me ask a final question. For a DTC brand that's thinking about selling through retailers for the first time - what's the retail media advice?

Lucas: Start small. Pick one retailer - maybe Amazon if it's a mass market product, or Target if it's premium. Allocate a modest budget - say 15 percent of your digital spend - and run a test for three months. Measure not just sales but also the cost of acquisition compared to your DTC channels.

And be very clear about your margin structure. Retail media works best when you have healthy margins to absorb the ad cost. If you're already thin, it can be a loss leader. Luna: And if the test works?

Lucas: Then scale carefully. Don't let it become more than 30 percent of your digital budget without a clear strategy for brand equity. And always keep an eye on the retailer's data - because once you're in, it's hard to leave.