40% of agency executives see retail media as a full-funnel solution

Retail media ad investment, projected to surpass $200 billion by 2027, is forecast to overtake combined linear and connected TV spend next year. According to The 'Future of Commerce Media 2025' report from WARC Media, retail media ad spend for technology and electronics brands, the largest category, is forecast to reach $32.2bn globally in 2026, up 15.4% year-on-year.  

Alex Brownsell, head of content, WARC Media, says, “Retail media has evolved from a US and China-driven trend into a global phenomenon, with European spend now growing at double the rate of the broader digital advertising market. As the sector expands beyond traditional sponsored search into visual display, audio, social, and television partnerships, it has never been more important for advertisers to have clarity on the scale and the suitability of the commerce media opportunity.” 

According to their latest forecast, worldwide investment with retail media networks (RMNs) is set to reach $174.9 billion this year, up 13.7% year-on-year, before rising a further 12.4% in 2026 to reach $196.7 billion, representing 16% of all ad spend. 

The report found that quick commerce is a key area of expansion, especially in Asian markets. Instacart, Uber, Delivery Hero and DoorDash each boast annual ad businesses worth more than $1 billion. 

It also predicted that future growth is likely to come from display and off-site. In the first half of 2025, UK advertiser investment with display retail media increased 41.6% year-on-year, compared to a 35.6% rise in search retail media ad spend, the report said.

Is the gold rush waning?

WARC said the spending growth from endemic brands (i.e. advertised products which are sold directly by a retailer) is decelerating and brands are becoming more discerning about where to place commerce media investments. Topline growth rates are steadily slowing towards single-digit levels – from 38.6% in 2021 to a forecast growth rate of 11.6% in 2027 – it found.

As brands consolidate their ad spend across fewer retail media networks and sponsored search growth slows, retailers must reinvent themselves as ‘full-funnel’ platforms offering granular display and off-site solutions, whilst preparing for the impacts of agentic commerce and AI. 

James McDonald, director of data, intelligence and forecasting at WARC, shared, “Retail media is rapidly evolving from a lower-funnel, search-dominated channel into a full-funnel proposition. Display advertising currently represents less than 30% of total on-site retail media spends, however, this balance is poised to shift as retail media becomes more integrated with brand digital budgets. Much may depend on the adoption of agentic AI, which threatens the high human traffic volumes that have monetised the retail media networks to date.” 

A full-funnel proposition

Commerce media is emerging as a full-funnel solution, with more ad formats and channels to complement granular first-party data. A recent survey by ad-tech company Infillion found that two in five (40%) of agency-side executives who buy retail media see it as a full-funnel solution, and another 7% agreed it is an upper-funnel opportunity. 

But new strategies and definitions of success will be needed to help this channel escape from a tight focus on narrow, lower-funnel conversion and from relying on siloed metrics like ROAS. 

There are a growing number of retail media channels and ad formats that can support truly full-funnel strategies. CTV, off-site, digital out-of-home, and in-store advertising can enable brands to execute full-funnel strategies that bridge digital and physical shopping experiences. 

Best practices from other channels, especially around the need to use more media options and run longer campaigns, also apply to retail media. 

The dawn of agentic AI commerce 

Agentic AI commerce – shopping powered by AI agents – is generating significant hype as the future of online shopping. The total addressable market for agentic commerce has an estimated value of $136 billion in 2025 and has been forecast to grow to a potential $1.7 trillion by 2030, according to global strategy consulting firm Edgar, Dunn & Company. 

The WARC report recommended that test-and-learn strategies could be useful, but it will be essential to meet real consumer needs, not just develop new tech tools with no strategic purpose. Learnings from adapting to past innovations could be helpful in determining how, when and where to potentially deploy agentic commerce, it said.

Results from agentic tools have to be viewed holistically, the report cautioned. Whilst it could be tempting to over-credit AI tools for sales, inputs from brand equity to emotion-led creative and seasonality also have a role to play. 

Amazon, the world’s largest commerce media seller, continues to dominate the commerce media landscape, maintaining 15% year-on-year growth, per WARC Media, through its full-funnel expansion and strategic demand-side-platform (DSP) partnerships. Amazon claims its ad-supported monthly reach in the US has tipped over 300 million, while eight in 10 UK households can be reached with Amazon DSP. 

Research by Skai found that more than 20% of all ad investment with Amazon is now allocated to its demand-side-platform (DSP) – double the share recorded two years ago – as advertisers look for greater efficiency.