AI promises to revolutionize retail media amidst challenges

In recent years, retail media has become one of the fastest-growing channels in advertising. However, this growth is reportedly beginning to slow, as indicated by new data. Brands are increasingly demanding standardization, sophisticated measurement capabilities, and better integration across platforms, prompting many to invest in artificial intelligence as a potential solution to these challenges. Despite evident pressures, retail giants push brands to increase their spending on retail media significantly, even though many companies express concerns over stagnant sales growth attributed to such investments. Several issues are hindering the effectiveness and attractiveness of retail media advertising. The lack of standardized measurement processes across various networks has made it challenging for advertisers to assess performance effectively and justify their financial commitments. While advertisers recognize the advantages of retail media, notably its proximity to the purchase point and closed-loop measurement capabilities, many are becoming selective in their spending, often re-evaluating their advertising strategies. According to the IAB's State of Data 2025 report, artificial intelligence offers a potential roadmap for addressing these growing pains in retail media. Experts suggest that the retail media industry is in a nascent phase, beginning to understand how AI can automate and enhance strategic planning. Advanced measurement frameworks, which integrate multi-touch attribution (MTA) and market mix modeling (MMM), offer a comprehensive view of performance across various channels. This is crucial as brands now demand stronger evidence of return on investment. However, the implementation of AI in retail media is fraught with challenges that are unique to this sector. Technical fragmentation and data privacy issues pose significant hurdles. Retailers are compelled to strike a balance between leveraging data for insights essential for AI and adhering to data privacy standards. Additionally, smaller networks must invest heavily in infrastructure to remain competitive, as highlighted by industry leaders. Ultimately, the successful integration of AI is forecasted to be essential for sustainable growth in retail media and for delivering measurable value to brands.