For the past five years, retail media has been one of the most talked-about developments in advertising, writes Alex Knapman, retail media lead at Halford’s and consultant at SG Retail.

And yet, for all the excitement, we are starting to hear sceptical voices argue that the revolution has been overhyped. Yes, they say, it’s growing quickly. Yes, they say, it’s generating meaningful revenue for some retailers. And yes, they say, it can deliver powerful outcomes for brands, but it won’t fundamentally reshape the world of advertising.

I think it will.

Common criticisms focus on surface-level issues: pricing, scale, measurement, and whether retail media can truly build brands, or whether it’s simply another performance channel.

These concerns have validity of course, but to some extent they miss the point.

Retail Media growth has slowed slightly, and temporarily, not because Retail Media doesn’t work, but because the systems that allocate advertising budgets were built for a different era. They have not yet caught up. But that will change.

The constraints are institutional, not technological. History shows us that the revolution is merely delayed. And history also shows us that if you want to reap the rewards, you need to prepare. Now.

Once you start looking at the ecosystem through this lens, the current moment in retail media starts to make a lot more sense. Let me explain why.

The passé debate: can retail media build brands?

According to the Ehrenberg Bass Institute, brands grow if you increase customer penetration by:

• Growing mental availability
• Building physical availability

Retail Media offers a wide array of formats with which to do this. In fact, it is fairly unique in this regard.

And when Retail Media Networks move beyond acting as publishers (owners of space/inventory) into the world of audience provision the toolkit broadens to an even wider range of formats. In fact, most media formats can be bought as retail media.

If a brand runs a CTV campaign using retailer audiences, that is retail media. If a retailer sells audience enriched TikTok videos or Instagram reels, then that too is retail media. Even DOOH can be sold as retail media.

The line between retail media and traditional formats becomes blurred. A lot of retail media is traditional media.

So retail media can build brands. But that’s not the right question.

It’s whether the systems that allocate the largest advertising budgets have been designed to buy it. And today, in many cases, they haven’t. Let’s look separately at agencies, retailers and brands.

Agencies: planning systems and the cost of execution

Most large advertising budgets are planned using sophisticated tools that model things like:

• Reach Curves
• Frequency
• Cost per reach point
• Media Effectiveness Benchmarks
• Attention-adjusted reach

These systems are designed to help planners allocate very large budgets efficiently across major channels with minimal complexity. Too often retail media doesn’t sit inside the agency planning tools which makes it much harder for planners to recommend inclusion at any kind of scale.

And to compound the issue, instead of one large buy, planners may need to coordinate across multiple retailers, each with their own formats, reporting structures, measurement methodologies and retail media terms.

Even if the media works well, it introduces operational overhead. And agencies are low-margin businesses.

For a planner running a £10m national campaign, a £250k retail media activation across a few retailers can feel like a disproportionate amount of work for a small slice of the budget.

So, Retail Media doesn’t struggle here because it lacks effectiveness. It struggles because it introduces complexity into systems that have been built for scale and efficiency.

Large agency groups are now deploying AI-driven planning platforms designed to optimise billions of dollars of advertising investment.

These platforms work by modelling large datasets to determine where budgets should go. They favour channels that have clean cost curves, high reach, standardised measurement and consistent formats.

As standards are rolled out (largely with the help of the IAB) and more retailers become integrated into agency platforms, the key increasingly becomes for retail media to become properly integrated into agency planning suites so that the AI does the heavy lifting, rather than a media planner. This is already starting to happen.

Retailers: the legacy of trade income

Many RMNs still behave like retailers monetising supplier relationships rather than media owners building a channel. Traditional media owners learned long ago that if they wanted budget at scale, they had to sell upstream to planners and strategists, educate the market, provide insight freely, and position their media within broader campaign objectives.

Too many retail media businesses are still playing a shorter-term game: monetising access, monetising data, and relying on existing supplier relationships rather than building the kind of sales maturity that would secure a more permanent role in media plans.

At the same time there are internal dynamics to manage. Commercial teams may be wary of retail media teams moving revenue into a different P&L. Customer experience teams may resist new ad formats because they believe advertising could harm the shopper journey.

Launching new propositions, and planning campaigns more holistically, often requires investment in people, technology, data infrastructure and measurement. In the short term, this can dilute margin.

So, retailers are trying to transition from something that resembled trade income extraction to something that looks more like a genuine media business.

This transition needs time, education, and senior sponsorship to create the necessary alignment.

Brands: budget silos and measurement bias

The third constraint sits inside brand organisations.

Most large companies don’t manage marketing budgets as a single pot. Instead, budgets are typically split across different functions:

• Brand marketing (TV, video, reach media)
• Shopper marketing and trade promotion
• Ecommerce and retail media

Each of those areas usually has different leadership, different KPIs and different planning frameworks.

Moving money between them can be politically difficult. And none of the teams has full ownership of retail media. It sits awkwardly between them all.

Brand teams are often focused on reach, salience and long-term brand growth.

Retail media is frequently perceived – rightly or wrongly – as lower-funnel activity designed to convert demand rather than create it.

There’s also a measurement paradox. Traditional brand channels are often evaluated using long-term modelling approaches such as marketing mix modelling or brand tracking. Retail media, by contrast, is frequently measured using immediate sales attribution. That creates an asymmetry.

Smart brands are evolving their approach. Slowly but surely.

Historical parallels

There’s a well-recognised pattern here.

History suggests that transformative technologies rarely fail because the technology is wrong. They lose momentum because the institutions around them were designed for an earlier era.

The internet was expected to transform commerce in the late 1990s. When the dot-com crash happened, many concluded the whole thing had been overhyped. In reality, the infrastructure – broadband, logistics networks, digital payments and smartphones – simply didn’t exist or hadn’t caught up yet.

Railways followed a similar pattern in the nineteenth century. Early enthusiasm was followed by financial crashes and scepticism before rail networks eventually consolidated and transformed economies.

Even within advertising, programmatic media went through the same cycle: early hype, messy execution, industry backlash and then gradual integration into the core planning infrastructure.

Retail Media is simply following the same trajectory. Institutional adaptation is slower than technological adoption.

How to win in Retail Media

Retail media will become more central to the structure of advertising. AI will accelerate this. Change rarely happens overnight, but nevertheless:

Agencies will produce planning systems and workflows that properly integrate retail media.
Retailers will transition from legacy trade income models to credible advertising propositions.
Brands will find ways to think about how they structure and integrate retail media into broader marketing planning and measurement frameworks.

As several agency leaders have pointed out, these are the same structural debates the industry had around digital, mobile, social and programmatic. The pattern is familiar: hype arrives first, then organisational resistance, then eventually a workable model emerges.

These changes are already happening. The winners will be those who adapt efficiently and professionalise the fastest. Some will rightly focus on measurement standardisation, others on full-funnel planning, and both will play a role, but having considered various historical examples my personal prediction is that the key success factor will be organisational design.

All this raises a practical question. If retail media does become the defining growth channel in advertising over the coming years, do you really want to be scrambling to play catch up while competitors move ahead?

Or do you want to have your house in order so that you can reap the rewards?

History suggests that when technology collides with institutional inertia, the technology usually wins – eventually.

The tracks have been laid, the trains have been built, so the real question is simply are you putting yourself in a position to start loading the goods when the boom arrives?

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