Over the past few years, Retail Media Networks (RMNs) have grown exponentially. A new study of 300+ brands that use Keen’s optimization system shows RMN budgets ballooned from 21% of total marketing spend in 2021 to a projected 30% in 2023 and 2024. At face value, these channels deliver strong, closed-loop attribution and historically high ROI. But since 2022, the data has revealed a sharp dip in overall RMN profitability. Marketers, CFOs, and eComm leaders alike are starting to ask: Are we overspending—and is it eroding the long-term margins of our brand? Are we getting all of the brick & mortar credit from our online spend, I know there is a halo and can’t prove it.
In this post, we’ll break down the latest data, including detailed findings across Amazon, Walmart, Instacart, Target, and Kroger. We’ll also show how a portfolio approach—powered by solutions like Keen—can help you measure true incrementality, push back (or double down) with retailers more confidently, and protect your profitability.
1. RMN Budgets Keep Climbing…Perhaps Too Fast
- RMN Ad Spending is Exploding
Recent industry estimates project that U.S. retail media ad spend will approach $60 billion by 2024, making it the fastest-growing major advertising channel in the country (1). Globally, retail media was expected to account for about one-fifth of all digital advertising by 2024, up from just ~10% a few years ago(2). - 21% to 30% Budget Allocation (2021–2024)
Keen’s data shows this upward trend is consistent across a large set of brands. RMN allocations have soared from 21% to 30% of total marketing spend in just three years. Such rapid growth means budgets are being diverted from other channels—often at the expense of long-term brand building.
2. Retail Media ROI Dips Below Non-RMN Since 2022
- Historically Strong ROI
For a while, most brands saw higher returns on RMNs than other channels. A McKinsey report estimates that retail media ads can deliver ROAS 3–5x higher than traditional buys(3). This performance, plus the ability to tie ad exposure to actual purchases, attracted a significant budget. - Why the Recent Dip?
After a point, saturating search and sponsored product ads leads to higher bids and diminishing returns. Amazon, in particular, sees intense competition. Marketers who “flood the zone” end up paying more for each incremental conversion. In Keen’s analysis, the average next incremental dollar on Amazon’s Search with our analysis, only delivers $0.59 in profitable return—a clear sign that for many brands, they’ve gone past the optimal spend. This is the result of an obsession with ROAS vs incremental profit. - Funnel Imbalance
Many brands over-invest in bottom-funnel tactics at the expense of upper-funnel channels like TV, social, or even display within RMNs themselves. When brand-building is neglected, the pipeline of new consumers shrinks, affecting long-term growth and ROI.
3. Search: The Biggest Culprit in Overspending
- 72% of RMN Budgets in Search
Despite delivering an average ROI of $1.40, Search still commands nearly three-quarters of RMN budgets in Keen’s dataset. Amazon dominates here, capturing 39% of total RMN spend. Yet rising costs and a crowded environment erode incremental profitability. - Diversification Pays Off on the Next Dollar
Instacart and Walmart tend to see better marginal returns than Amazon on the next incremental dollar vs the current spend levels today, often up to $0.20 higher for each additional dollar spent. Kroger and Target also still have runway for profitable search growth(4). By balancing spend across these retailers, brands can avoid hitting Amazon’s diminishing-return ceiling too quickly.
4. Display & Video: Underused and More Profitable
- Higher Overall ROI
Display makes up 25% of RMN spend, yet it delivers an average ROI of $1.87—outperforming search at the current spend levels. Likewise, Video claims just 3% of budgets but delivers $1.54 in return. These stats suggest an untapped opportunity for brands to shift some dollars away from oversaturated search into more efficient placements. - Still Facing Diminishing Returns
Even though Amazon’s display channel can be quite effective, many brands spend past the point of optimal efficiency. They see solid overall ROI (1.87), but the marginal ROI on incremental spending can drop below 1.0 if they keep scaling without a strategic cap.
5. Retailer Spotlight: Is Amazon’s Dominance Slipping?
- Amazon: 39% of RMN Spend
Amazon remains a titan, but its share of new retail media dollars is starting to shrink, as more brands turn to Walmart (16%), Instacart (7%), Target (6%), and Kroger (5%)(5). Many marketers have grown cautious about over-reliance on a single channel, especially as Walmart Connect, Target’s Roundel, and Kroger Precision Marketing improve their capabilities. - Incremental or Cannibalized Sales?
According to Forrester, some retail media platforms struggle with proving incrementality, instead redirecting existing trade budgets into digital ad formats(6). Keen helps isolate the truly incremental sales lifts from each retailer, including halo effects on brick-and-mortar. That means you see exactly which portion of your spend is driving new growth versus merely shifting sales from one channel to another.
POV of the eComm Leader: RMNs Still Matter
As an eComm channel head, you face internal pressure to defend Amazon Search and other RMNs. And you’re not wrong—retail media remains a strong lower-funnel lever:
- “In-Market” Audiences
RMNs deliver ads where shoppers are primed to buy, driving immediate conversions. - Halo Effects
Spending on Amazon often boosts brand searches across the web and can lift offline sales in big-box stores(7). - Closed-Loop Attribution
Linking clicks to purchases at scale gives you clarity few other channels can match.
But these positives don’t negate the reality of diminishing returns and potential margin erosion. Keen helps you prove the value of RMNs—while also calculating the optimal level of spend, channel mix, and funnel balance to protect profit.
Keen’s Portfolio Approach: Arm Yourself with Data
1. Holistic Measurement
We unify data from all your channels—Amazon, Walmart, Instacart, etc.—to show how each retailer’s ads drive incremental sales, both online and in physical stores.
2. Cross-Channel Optimization
Our system pinpoints the exact point of diminishing returns in RMNs, so you can confidently say, “We should invest $X in Amazon Search, $Y in Walmart Display, and shift the rest to brand-building or other performance channels.”
3. Future-Proofing
Keen’s scenario planning helps you forecast how changes in RMN fees or rising CPCs impact your bottom line. That way, you maintain the long-term health of your brand, not just short-term gains.
Prepare to Win Your Next Joint Business Planning Session
Retailers will push you to commit ever-larger budgets to their platforms, often showing selective data that highlights revenue (but not margin). You need hard evidence of diminishing returns and margin erosion if you want to protect profitability. Keen is your ally, giving you the clarity to:
- Push Back with Confidence
Show how overspending on Search yields less profit—and how shifting dollars can improve overall ROI. - Substantiate the eComm Case
Prove that RMNs remain an essential part of the mix by quantifying in-store halo effects and incremental eComm lifts. - Rebalance the Funnel
Combine brand-building tactics with more efficient display and video inventory within each RMN, ensuring you don’t lose future demand.
Ready to See Your Own Analysis?
Whether you’re a brand leader, CFO, or eComm leader, Keen can help you identify whether your retail media strategy is fueling profitable growth—or burning margin.
- Request a custom demo to see how Keen’s portfolio management solution quantifies your true incremental ROI across Amazon, Walmart, Instacart, and more.
- Try our free trial and benchmark your brand’s performance against industry peers.
- Download our high-level insights guide at keends.com to learn best practices for profitable retail media optimization.
Don’t let unchecked RMN spending compromise your bottom line. Arm yourself with the data to drive sustainable growth—and step into your next Joint Business Planning session prepared to push back (or move forward) with confidence.
Footnotes
- Insider Intelligence/eMarketer, “US Retail Media Forecast 2024.”
- Digiday, “How retail media is expanding globally to take a bigger slice of digital spend,” 2023.
- McKinsey & Company, “The Future of Retail Media: A $100 Billion Opportunity,” 2022.
- Modern Retail, “More brands find growth in non-Amazon retail media,” Q3 2023.
- Keen, “RMN Study of 300+ Brands,” 2021–2024 data analysis.
- Forrester, “How Retail Media Networks Are Evolving and What It Means for Brands,” 2023.
- Grocery Dive, “Retail media and the halo effect: Driving online and offline sales,” 2023.
