Empowering retailers: The rise of in-house retail media

During the pandemic, retailers faced shrinking margins from rising last-mile costs and turned to retail media—building advertising businesses on their ecommerce platforms—as a high-margin profit source, with margins around 75% compared to 5% for traditional trade.
For a retailer with a $10B ecommerce channel that breaks even, a retail media business generating 2% of GMV could add $200M in profit.
However, retail media is fundamentally different from traditional retail: it's a B2B enterprise business involving complex digital assets, requiring distinct people, data, technology, and operating models.
Many retailers lacking these capabilities outsourced their entire retail media operations, including ad sales, ad serving, and even supplier relationships, to third parties.
This outsourcing disintermediated the long-standing retailer-supplier relationship, creating confusion when both retailer buyers and outsourced vendors communicated with suppliers.
The author, who helped start Walmart's ad business (WMX), notes they outsourced everything except measurement and targeting built on sales data, enabling rapid scaling.
Now, as retail media becomes a $125B market, retailers are ready to reclaim control.
Companies like Kroger and Home Depot are bringing ad sales, operations, and technology in-house, hiring hundreds of new roles, and adopting white-labeled tech solutions rather than building their own.
This shift allows retailers to better integrate retail media with joint business planning and upfronts, strengthening supplier relationships and establishing retail media as a core, internally managed business.