At America’s biggest retailers, the fastest-growing business is no longer selling products. It is selling advertising. In the most recent quarter covered by trade reporting, Walmart Connect sales grew 43 percent year over year, Target’s advertising revenue — primarily its Roundel network — rose 29 percent to $279 million, and Amazon’s advertising services revenue increased 26 percent to $19.8 billion. Set those figures beside the same companies’ merchandise performance — Walmart U.S. net sales up 3.5 percent, Target merchandise sales up about 5 percent, Amazon’s online stores growing roughly 15 percent — and the strategic picture snaps into focus.
The economics explain the enthusiasm. Merchandise retail runs on inventory, fulfillment networks and price competition, and earns thin margins for the effort. Advertising built on the traffic and transaction data a retailer already generates carries margins that analysts routinely estimate in the 70 to 80 percent range. Every shopper search, loyalty swipe and completed order both sells a product and produces the targeting and measurement data that makes the next ad more valuable. Retail media turns a cost center — the store and the website — into a profit engine with almost no incremental inventory.
That is why the category’s scale keeps surprising forecasters. U.S. retail media spend reached $60.32 billion in 2025 and is expected to hit about $71 billion in 2026, with Amazon holding roughly four-fifths of the market and Amazon and Walmart together absorbing close to nine-tenths of new spending. The growth is moving up the funnel, too: retailers are extending beyond sponsored product listings into display, video and connected TV, using their first-party data to sell reach as well as conversion.
Inside the retail P&L, this changes how advertising teams are treated. A media network that outgrows the core business by a factor of ten earns investment, senior talent and a seat in earnings calls — Walmart and Target both now cite advertising as a contributor to overall financial performance. It also changes negotiations with brands, for whom retail media is shifting from a discretionary test to a cost of distribution: shelf space used to be negotiated in trade terms; now the digital shelf is auctioned in media terms, often to the same manufacturers.
For brand marketers, the implication is budgetary honesty. Retail media is not a side project to be funded from whatever remains after television and social; at its current growth rates it is becoming one of the largest lines in the plan, bought from the same companies that decide how your products are stocked and priced. Managing that dual relationship — customer and media owner in one — is the defining commercial skill of the next planning cycle.
Related reading: Advertising Passes $1 Trillion — But Two Forecasts Cannot Agree on the Number · Omnicom Swallows IPG and Retires DDB: Inside the Largest Agency Merger in History
