Retail Media: What It Is and How It Works

What is retail media

Retail media is digital advertising displayed within e-commerce platforms and retailers, using shoppers' first-party data to target ads. Instead of showing a generic ad on Google or Instagram, brands pay to appear exactly where consumers are buying: Amazon, Mercado Libre, Walmart, Carrefour, or any marketplace with ad inventory.

The concept is not new (premium shelf placement in supermarkets is physical retail media), but the digital version has exploded thanks to one key factor: data. Retailers know what their users search for, what they buy, and what they abandon. That information enables targeting that neither Google nor Meta can match.

Why retail media is growing

Three factors explain the exponential growth of retail media:

1. End of third-party cookies. With the progressive disappearance of cross-site tracking, retailers' first-party data becomes more valuable. Amazon knows a user searched for "running shoes" three days ago and did not buy. That data is gold for a footwear brand.

2. Proximity to the point of purchase. Retail media ads appear when the user already has active purchase intent. The funnel is shorter: you do not need to drive the user to your site — they are already in buying mode inside the marketplace.

3. Direct attribution. Unlike social media advertising, where attribution is complex, retail media lets you measure exactly how many sales each campaign generated because the purchase happens on the same platform.

Types of formats

Sponsored Products

The most common format. Your product appears in prominent positions within the marketplace's search results. It works on a CPC (cost per click) model and is the most accessible entry point.

In-marketplace display

Banners and visual ads shown on category pages, competitor product pages, or the marketplace homepage. Greater visibility but lower purchase intent than Sponsored Products.

Off-site retail media

Retailers extend their data beyond their own platform. Amazon DSP, for example, lets you show ads on external websites using targeting based on Amazon purchase data. You combine the reach of programmatic display with the precision of retail data.

In-store retail media

The physical version: digital screens in stores, personalized coupons at the POS, and promotions in the retailer's app when the user is near the store. It closes the loop between digital and physical.

Main platforms

Platform	Market	Formats	Model
Amazon Advertising	Global	Sponsored Products, DSP, Video	CPC, CPM
Mercado Ads	LATAM	Sponsored Products, Display	CPC
Walmart Connect	USA, MX	Sponsored Products, Display	CPC, CPM
Carrefour Links	Europe	Display, In-store	CPM
Criteo Retail Media	Multi-retailer	Sponsored Products	CPC
CitrusAd	Multi-retailer	Sponsored Products	CPC

Retail media and conversion

From a CRO perspective, retail media has a structural advantage: the user is already in a buying environment. You do not need to convince them to visit a store — only to choose your product over the competition.

The keys to maximizing conversion in retail media:

• Flawless product listing. The ad only takes the user to your listing. If the images are poor, reviews are negative, or the price is not competitive, the click is wasted.
• Reviews as a deciding factor. On Amazon, a product with 4.5 stars and 500 reviews converts significantly more than one with 4 stars and 50 reviews. Invest in generating legitimate reviews.
• Competitive pricing. In a marketplace, price comparison is instant. If your product appears next to cheaper alternatives, you need a clear value proposition.

Key metrics

• ROAS (Return on Ad Spend): revenue generated for every dollar invested in advertising.
• ACOS (Advertising Cost of Sales): percentage of sales spent on advertising. The inverse of ROAS.
• Share of Voice: percentage of impressions your brand captures in your category.
• New-to-brand: percentage of purchases made by customers who had not bought your brand before.

Conclusion

Retail media is the third major pillar of digital advertising, alongside search and social. For brands selling on marketplaces, it is not optional — it is the advertising infrastructure that determines visibility and sales.

If you want to optimize your conversion funnels both on your website and on the marketplaces where you sell, at Boost we help brands maximize every digital touchpoint. Audit your website for free with Scan&Boost.

Adrià Vidal — Boost