Debunking the Myth That Retailers Have a Demand Problem in Retail Media

Why It Matters

Retailers that strengthen sales alignment and merge trade‑media functions can capture untapped ad spend, driving higher margins and competitive advantage in a crowded marketplace.

Key Takeaways

• Retail media revenue mainly from endemic brands, not new advertisers
• Sales teams must convert existing supplier relationships into ad spend
• Integrating trade and media units drives higher retail media performance
• Long‑tail suppliers represent untapped ad spend, especially third‑party sellers
• No shortcut; success requires strategy, alignment, and operational excellence

Pulse Analysis

The prevailing myth that retailers suffer a demand shortage in retail media overlooks the core issue: sales execution. While early industry hype promised that simply installing an on‑site ad server would attract advertisers, real revenue continues to flow from brands already stocked on the shelves. These endemic partners already have commercial contracts and clear incentives to advertise, meaning the pipeline exists; the bottleneck is the retailer’s ability to translate those relationships into media spend. Companies that empower dedicated sales forces to pitch advertising alongside traditional trade terms see higher conversion rates and more predictable revenue streams.

A second, often‑ignored lever is the integration of trade and media teams. Historically, many retailers have kept these functions separate, creating misaligned incentives and fragmented messaging to suppliers. When trade negotiations and media offerings are coordinated, retailers can present a holistic value proposition that ties promotional discounts to ad placements, fostering deeper collaboration with suppliers. This unified approach not only streamlines internal processes but also delivers measurable lift in campaign performance, as evidenced by retailers that have merged these units and reported double‑digit growth in media revenue.

Finally, the untapped long‑tail of suppliers represents the next wave of opportunity. Third‑party sellers on platforms like Amazon spend significantly more on sponsored ads than large first‑party brands, yet they often lack agency representation and engage directly with retailer commercial teams. By training sales reps to identify and approach these smaller players, retailers can capture incremental spend without relying on external demand generators. Success, however, demands disciplined strategy, cross‑functional alignment, and operational rigor—there are no shortcuts to building a sustainable retail media business.