Retail media is gaining ground in search amid the AI wave. Can it last?
Illustration by Dave Cole & Christian Ray Blaza / Getty / The Current
Retail media is carving out a bigger piece of the overall search pie as brands grapple with dramatic shifts in consumer behavior.
But further adoption of AI could continue to shake up the search landscape and that of retail media networks.
On Tuesday, Judge Amit Mehta even made note of this possibility in the Google search remedies ruling, writing that AI technologies “may yet prove to be game changers” in search.
EMarketer projects that $3 out of every $10 spent on search advertising will go to retailer platforms through 2029. At the same time, AI search is also expected to grow “exponentially,” says Sarah Marzano, principal retail and e-commerce analyst at eMarketer.
“Like retail media search, this growth will come from a mix of incremental budgets and reallocation from existing search spending,” Marzano says. “At this stage, we expect some impact on overall retail media and traditional search growth, but it is too early to gauge the full extent.”
How is retail media benefiting from AI search?
In 2020, retail search accounted for 32.7% of global paid search revenue, while 67.3% was from traditional search, according to a recent PwC report. By 2024, retail’s share had grown to 38.7% globally, the report estimated.
A separate report by eMarketer estimated that 60% of marketers worldwide planned to increase retail media search spend this year.
Importantly, retail media offers brands “proximity to purchase and closed-loop sales attribution,” says Barry Thomas, senior thought leader for retail at Kantar.
In other words, when a consumer is searching on a retailer platform, it’s likely they already want to make a purchase.
Meanwhile, AI-generated answers in traditional search engines are quickly changing how people interact with the web, leading to fewer clicks.
If you’re an advertiser, where do you want your ad showing up?
“Marketers are noticing this, and they’re diversifying spend to places where conversion intent is clearer,” Thomas says.
Will AI influence retail media networks?
AI is reshaping the search landscape in retail media’s favor now. But what happens if AI plays a larger role in product discovery and commerce in the future?
That’s a key question for Marzano.
On one hand: “If transactions shift into GenAI interfaces, retailers risk being disintermediated from the purchase journey,” she says.
On the other: “As GenAI and machine learning mature, advertisers will be able to deliver even more tailored, context-aware ads, making retail platforms even stickier,” says Brad Herndon, marketing data and tech leader at PwC.
Herndon predicts that retail media networks will continue to grow through the rest of the decade and will keep expanding their ad offerings — but “will shift to leverage the differentiating potential of AI and changes to the way consumers will research and buy.”
At any rate, e-commerce customers will continue to be a coveted group for advertisers amid the seismic changes in both retail and search. Marzano projects e-commerce to drive nearly 20% of total retail sales by 2029.
“We can expect to see retail media’s share climb, AI enriching ad personalization and traditional search formats reshaping,” Herndon adds. “Together, this creates a more dynamic, outcome-driven ad ecosystem.”