Advertising sold by retailers on their own properties expanded from a minor line into a major channel within a few years. The speed of that growth comes from three advantages arriving at once.
The data is transactional rather than inferred
Most advertising targeting relies on inferred interest assembled from browsing behaviour, which is indirect and frequently wrong.
A retailer knows what people actually bought, how often and in what combinations, recorded as a business transaction rather than estimated from signals.
That difference in data quality allows targeting that does not depend on the third-party identifiers other channels were losing at the same time.
Measurement closes inside one environment
Exposure and purchase occur on the same property, so the retailer can connect an advertisement to a sale without any cross-site tracking.
This produces a reported return that is directly attributable and easy to present internally, which removes the usual argument about attribution.
The closed loop is also its weakness, since it credits the channel with purchases that would have occurred anyway from customers already in a buying session.
The margin economics are unusually attractive
Retail is a low-margin business, and advertising revenue arrives with very high margin against infrastructure the retailer already operates.
A modest advertising line can therefore contribute a disproportionate share of profit, which explains the speed with which retailers built these operations.
The same logic has spread to other businesses holding transactional relationships, including travel operators, delivery services and financial providers.
Budgets came from more than one place
Part of the funding was existing display spending redirected, and part came from trade budgets historically used for shelf position and in-store promotion.
That second source is why retail media grew without an equivalent contraction elsewhere in the advertising market.
It also explains why negotiations often involve commercial teams rather than media teams, since the money was previously part of a supplier arrangement.
Fragmentation is now the constraint
Each retailer operates its own platform with its own metrics, formats and reporting definitions, and comparison between them is difficult.
Advertisers selling through many retailers must therefore run many separate operations, which erodes the efficiency the channel offered.
Standardisation efforts exist, and progress is slow because consistent definitions would make performance directly comparable, which is not obviously in each operator's interest.
Until that resolves, the practical cost of the channel includes the staff time required to run several incompatible platforms, and that overhead falls hardest on brands too small to justify dedicated specialists for each retailer they sell through.