We meet Sarah Mackinnon, product marketing director, Pentaleap and Andrew Lipsman, founding advisor & strategist, Colosseum Strategy to discuss the opportunity of retail media, and hear about their latest research.

Tell us about your new retail media report and what you wanted to achieve

Sarah: Over the past year, we’ve been digging deep into RMNs to really understand how the leaders are driving value and where there’s room to grow. Retail media is evolving so quickly, and we saw a gap in terms of actionable insights — there’s a lot of activity, but not enough clarity.

Our goal with this report is to bring transparency to the space. We want to help brands and RMNs see what’s working, where the opportunities are, and how they can get more from their efforts. Retail media has so much untapped potential, and by sharing these insights, we hope to help everyone — brands, RMNs, and advertisers — level up their game.

Andrew: It’s important that RMNs understand the dynamics of on-site advertising and how they stacks up to the competition. There’s a misconception that most of the juice has already been squeezed from on-site advertising, when the reality is there’s still so much value to be unlocked. Once RMNs understand how others are monetising, they can devise strategies to improve their own. That could include reconfiguring existing ad slots, adding new formats, improving site experience, or driving more competition among brands. 

This report also sheds light on how product category and third-party marketplace dynamics influence RMN monetisation. These factors contribute to a wide disparity in the number of brands advertising on different RMNs, and advertiser diversification is something every RMN needs to consider as they look to scale revenues.

How are brands making the most of retail media offerings? What are their priorities in terms of placements, visibility etc?

Andrew: Right now, brands still overwhelmingly prioritising ponsored products (i.e. on-site search) while allocating more spend to sponsored brands (i.e. on-site display and video). Most of the dollars still concentrate on Sponsored Products because that’s where the highest concentration of conversions come from, though I would argue that many brands can get smarter with their strategies — for example, spending less on branded search terms and more on category and conquesting searches. The latter tactics are more expensive but do a better job of driving incremental sales.

Most brands should also be shifting even more budget into Sponsored Brands, because it’s effective at brand-building and introducing customers to new product SKUs. Again, these ad units are often more expensive and drive fewer clicks—which can scare off some brands—but the smart ones know these formats are incremental sales drivers.

You look at the concepts of 'fixed' and 'fluid' ad placements? What did the results tell you about what’s working across the industry?

Sarah: Fluid ad placements are quickly becoming a game-changer in retail media. These are placements which are be located dynamically around the grid, typically based on a balance of ad and organic relevancy. This flexibility makes them highly effective at driving engagement and results—our data shows that fluid placements can more than double click-through rates compared to static, fixed placements. Retailers preferring Fluid ads tend to then have more space available in the grid, and deliver more ads per page 

We’re seeing this trend take off across the industry. Retailers like Zalando, Amazon, and About You are already incorporating fluid strategies, while others are experimenting with a mix of fixed and dynamic approaches. For example, Staples has gone fully fluid, while Amazon is using a hybrid model that combines fluid and static placements. Best Buy, on the other hand, is sticking to traditional static formats.

When we compare the performance of fluid vs. static placements, the difference is clear. Fluid placements not only deliver higher click-through rates but also boost ROAS significantly by ensuring ads are relevant to the shopper’s context and behavior.

For retailers considering an ad server, look for solutions that can offer the best of both worlds—the ability to deliver fluid and static ads—because this will give you the most flexibility in your strategy.

How does search complexity impact retail media success?

Sarah: Search complexity plays a huge role in the success of sponsored products and, ultimately, in boosting retail media revenue—let’s break it down.

Think of Google: when you type a multi-word search, Google doesn’t just look for keywords. It parses the intent behind your query, delivering highly relevant results, even for something like “block heel, knee-high green leather boots.” Google’s search intelligence ensures you see sponsored products that closely match your need.

Retail media networks use similar sophisticated tech for organic products, combining keywords with contextual and behavioral data to ensure relevance. But here’s the issue: ads on these networks are often delivered through basic ad servers, detached from this advanced organic search tech. When a user enters a complex search, the ad server, relying solely on keywords, may miss relevant matches—resulting in lost ad revenue.

In our research, Albertsons illustrates this issue: their coverage drops by 20 percentage points when search queries go from one to two words and plummets by 60 points from one to four words. 

On the other hand, vendors like Amazon, Walmart, Staples, and The Home Depot maintain better coverage as searches grow more complex, leveraging their tech to meet shopper intent and boost monetisation.

How are the winners doing it? Our best guess is using ad serving tech that is informed by site search and personalisation intelligence.

How do you see the retail media space developing and evolving over the next 12 months?

Andrew: There are so many emerging segments of retail media right now – from off-site to streaming TV to in-store ads – that it’s easy to overlook on-site as biggest near-term opportunity for both RMNs and brands. RMNs need to make sure they’re effectively balancing ads and CX on their ecommerce websites and optimise their site experience around search ad relevance and high-impact ad units. On-site is both a relatively mature segment of retail media, and yet still ripe for innovation.

Beyond on-site advertising, there’s a lot to be excited about with performance TV – powered by retail media data – and in-store advertising. Both of these channels bring together the benefits of reach, high-impact creative, and performance, in ways that marketers have never experienced before. We are going to see the state of both TV and retail begin to change dramatically in the next 12 months.