Retail media can give ecommerce retailers a high-margin revenue stream from an audience they have already paid to attract.
Merchandise sales — online or in brick-and-mortar stores — typically produce gross margins near 50%, contribution margins around 25%, and net profit approaching 12%.
Retail media margins can look far higher because merchants have already absorbed much of the cost of attracting shoppers. On top of that, the ad buyers are often the store’s own suppliers.
Products vs. Ads
Here is a direct comparison.
Selling a $100 product might leave $25 after cost of goods sold, fulfillment, payment processing, shipping, and other variable costs — a 25% contribution margin.
A $1,000 newsletter sponsorship carries no comparable cost of goods or return risk. Ancillary expenses such as sales commissions, creative, and technology may total $250, leaving $750 before general overhead — a 75% contribution margin.
Large retail media networks have reported similarly attractive economics. In 2022 both McKinsey & Company and Boston Consulting Group estimated operating margins from those networks at 70% and above.
Existing Audience
Conceptually, retail media works much like advertising in the publishing industry.
A publisher attracts readers with articles, newsletters, videos, or other content, then sells advertisers access to that audience.
An ecommerce merchant attracts shoppers with products and services. Retail media monetizes the audience a retailer already has.
Take a specialty retailer that sends four monthly newsletters to 40,000 subscribers.
A supplier agrees to pay $1,500 per month for a recurring sponsorship, hoping to drive 400 additional product sales. Selling and producing the sponsorship costs $300 per month. The placement then contributes about $1,200 before general overhead — an 80% contribution margin.
The merchant emails its existing subscriber base.
The same logic applies to search results pages, category pages, buying guides, and other sections.
Purchase Intent
A retailer’s audience can be more valuable to advertisers than a mainstream publisher’s because shoppers are closer to a purchase.
A publisher might know only that a visitor reads hiking articles. An outdoor retailer, by contrast, knows that same person searched for waterproof hiking boots, viewed several pairs, and bought hiking socks six months ago.
That difference matters to advertisers, who are buying access to shoppers with commercial intent.
Supplier Buyers
Supplier-funded advertising is nothing new in retail. Co-operative programs from suppliers have long subsidized ads that promote their products.
Retail media extends that relationship. Rather than sharing the cost of external ads, suppliers can pay the retailer directly for access to its audience.
For ecommerce merchants, that’s potentially a new revenue source from companies they already know and work with.
A 2025 TransUnion study reported that 70% of retail media spending was incremental to suppliers’ broader trade budgets — meaning retail media generates new money rather than shifting it from one bucket to another.
Double-Dip
One final point: when the retail media buyer is a supplier, the ecommerce shop earns twice — once from ad revenue and again from higher merchandise sales.
The setup echoes co-op campaigns. The supplier wants to sell through the retail channel and doesn’t mind investing in advertising, even when the retailer gets to double-dip on profit.
