Walmart Connect, Walmart's U.S. retail media arm, experienced a 43% increase in revenue, signaling a powerful challenge to Amazon's long-held dominance in the sector. Walmart Connect's rapid expansion indicates a significant shift in advertiser priorities, as brands seek more diverse avenues to reach consumers beyond the established leader.
However, Amazon continues to generate tens of billions in ad revenue and holds nearly 80% of the U.S. retail media market. Despite this, a growing number of new players are entering the space, and advertisers are actively diversifying their spending. This tension between Amazon's massive scale and the emergence of agile competitors defines the current retail media environment.
The retail media market is poised for significant fragmentation and increased competition, likely leading to more diverse advertising options and pricing pressures for dominant players, while also increasing complexity for advertisers. This fragmentation suggests a future where specialized data insights and targeted reach will become increasingly valuable, challenging the reliance on transaction-focused models alone.
The Titans and Their Challengers
- $76 billion — Amazon's ad business generated this amount in the last 12 months, holding nearly 80% of the U.S. retail media market, according to ADWEEK. Amazon's ad business generated $76 billion in the last 12 months, underscoring its immense scale and its entrenched position as the primary destination for retail media spending.
- $6.4 billion — Walmart's advertising revenue reached this figure in 2025, representing a 46% year-over-year increase, as reported by ADWEEK. Walmart's advertising revenue reached $6.4 billion in 2025, representing a 46% year-over-year increase, highlighting its successful efforts to build a robust alternative to Amazon's digital-first platform, leveraging its extensive physical store footprint.
- $915 million — Target reported this amount in advertising revenue last year, a rise from $522 million two years prior, according to ADWEEK. Target reported $915 million in advertising revenue last year, a rise from $522 million two years prior, further demonstrating the rapid expansion of challenger retail media networks.
These figures emphasize the immense value and rapid expansion of retail media, driven primarily by Amazon but with other major retailers rapidly closing the gap. The rapid revenue growth of Walmart Connect (43% increase) and Target (from $522M to $915M) indicates that traditional retailers are successfully leveraging their physical footprint and shopper data to build compelling alternatives to Amazon's digital-first model. The rapid revenue growth of Walmart Connect (43% increase) and Target (from $522M to $915M) indicates that traditional retailers are successfully leveraging their physical footprint and shopper data to build compelling alternatives to Amazon's digital-first model, suggesting a strategic shift in advertiser investment, moving beyond simple budget expansion with Amazon to actively diversifying across multiple platforms.
Advertisers Diversify Beyond the Giant
Mid-sized brands grew their retail media network investment by 26% year over year, demonstrating a strong commitment to this advertising channel. This segment of advertisers is strategically re-evaluating where to deploy their budgets for maximum impact.
| Metric | Mid-sized Brands | Small Brands | Large Brands |
|---|---|---|---|
| RMN Investment Growth (YoY) | 26% | 8% | 24% |
| Allocation to Amazon | 46% | N/A | N/A |
| Average Amazon Ad Cost (2026) | $0.70-$1.20 CPC | $0.70-$1.20 CPC | $0.70-$1.20 CPC |
Data compiled from FoodNavigator and xneeti.
Despite Amazon holding nearly 80% of the U.S. retail media market, mid-sized brands are only allocating 46% of their retail media budgets to Amazon, indicating a much more fragmented and diversified spending pattern among a key advertiser segment than overall market share suggests. Mid-sized brands' significant growth and diversification of ad spend, coupled with rising costs on dominant platforms, indicates a strategic shift towards broader RMN engagement. Based on FoodNavigator.com's data, mid-sized brands are actively diversifying their RMN spending, allocating only 46% of their budgets to Amazon, suggesting that these agile companies are leading the charge in fragmenting Amazon's market share and seeking more cost-effective or data-rich alternatives.
New Players Offer Richer Data and Broader Reach
Commerce media companies including Home Depot, Albertsons, Instacart, Dollar General, PayPal, and Macy's made their first upfront presentations to pitch for ad dollars, signaling a new wave of competition. These companies are actively seeking to capture a share of the growing retail media market by leveraging their unique customer bases and transactional data.
Simon Property Group has launched Simon Media Network, a retail media network designed to connect brands with consumers across its over 200 shopping centers, according to Modern Retail. Simon Property Group's expansion into physical retail environments offers advertisers distinct avenues for engagement, moving beyond purely online interactions.
Simon tracks consumer behavior through its Simon+ loyalty program, ShopSimon online marketplace, other digital channels, and third-party providers, aiming to offer advertisers a more comprehensive view of consumer behavior than networks based solely on individual transactions, as detailed by Modern Retail. Simon's approach emphasizes understanding the full shopper journey, from initial browsing to in-store purchases and beyond, offering richer insights for targeted campaigns. New RMNs are leveraging unique, comprehensive consumer data and diverse physical and digital footprints to offer advertisers more targeted engagement opportunities. Simon Property Group's launch of Simon Media Network, as detailed by Modern Retail, marks a critical shift: the next frontier in retail media isn't just transaction data, but comprehensive consumer behavior insights that Amazon's current model may struggle to replicate.
Regulatory Scrutiny and Market Impact
The Federal Trade Commission and 22 states sued Amazon, alleging the company manipulated its advertising auctions to drive up prices for advertisers. This legal action introduces a layer of uncertainty and potential operational changes for Amazon's advertising business. The allegations suggest practices that could impact the fairness and transparency of ad placements on the platform.
Despite these significant legal challenges, Amazon's advertising business brought in $19.8 billion in Q2 2026, according to xneeti. Amazon's advertising business brought in $19.8 billion in Q2 2026, highlighting the continued reliance of advertisers on its platform, even in the face of regulatory scrutiny. The sheer volume of transactions and audience reach on Amazon likely compels brands to maintain their presence, balancing potential risks with perceived market necessity.
While Amazon faces significant regulatory challenges regarding its advertising practices, its ad business continues to generate substantial revenue, highlighting its entrenched market position even amidst scrutiny. While Amazon faces significant regulatory challenges regarding its advertising practices, its ad business continues to generate substantial revenue, highlighting its entrenched market position even amidst scrutiny, implying that despite serious allegations of anti-competitive practices, advertisers may feel locked into Amazon's extensive ecosystem, or the perceived benefits and reach still outweigh the risks and costs associated with its platform. The ongoing legal battle could, however, influence future advertising practices and market dynamics, potentially leading to increased transparency or new operational guidelines.
The Future of Retail Media: Fragmentation and Innovation
The shift in advertiser spending patterns suggests a future where diverse retail media networks will compete on unique data offerings and audience reach.
- Mid-sized brands are allocating only 46% of their retail media budgets to Amazon, actively seeking alternatives, according to FoodNavigator.
- New networks like Simon Media Network are focusing on comprehensive consumer behavior insights across physical and digital touchpoints, as detailed by Modern Retail.
This increasing fragmentation and innovation in retail media will likely lead to a more complex but potentially more effective advertising environment, demanding greater strategic agility from brands to navigate diverse platforms. Advertisers will need to evaluate platforms based on the depth of their consumer insights and the specific audience segments they can reach, moving beyond simple transaction data. The ability to connect with consumers across various touchpoints, both online and offline, will become a key differentiator for successful retail media networks, pushing innovation in data aggregation and activation.
Actionable Insights for Advertisers
Advertisers should strategically diversify their retail media investments beyond singular platforms to capitalize on emerging opportunities.
- Mid-sized brands lead diversification, allocating only 46% of their retail media budgets to Amazon, signaling a broader market shift towards multi-platform strategies.
- Walmart Connect's 43% revenue increase demonstrates the growing viability and competitive strength of challenger retail media networks.
- New networks are emphasizing comprehensive consumer behavior data, offering a richer understanding of shopper journeys than transaction-focused models.
Advertisers must proactively evaluate and diversify their retail media strategies to capitalize on emerging opportunities, mitigate risks associated with market concentration, and leverage unique data insights for optimized campaign performance. By 2027, brands that have diversified their retail media strategies will be well-positioned. successfully diversified their retail media spend across multiple platforms are likely to see improved ROI and reduced dependency on any single ad ecosystem, fostering a more resilient and adaptable advertising approach.
