Retail Media in a Tariff-Impacted Economy: How to Perform, Prove and Partner
Rising tariffs are reshaping the commercial reality for both brands and retailers.
For manufacturers, the impact is immediate: Increased cost of goods, compressed margins and growing complexity in pricing and promotion strategies. Retailers face their own pressures as higher sourcing costs, inventory risk and pricing volatility cut into contribution profit.
Across both sides of the value chain, profitability is under strain, and that is leading to sharper discipline around where and how budgets are deployed.
At Dentsu, we expect this pressure to translate into a broader slowdown in ad spend. Our 2025 forecast still anticipates growth in retail media, but we have revised our expectations down from 21.9% to 15%.
The message is clear. Growth will continue, but only for those investments that can prove commercial value. Retail media remains critical, but its role is shifting from broad exposure to measurable performance.
For manufacturers, inflation is compressing margins and making pricing decisions more complex. Raising prices risks losing share, but absorbing costs squeezes profitability. These tradeoffs are driving new scrutiny around marketing and retail media budgets.
Retailers are facing their own challenges. Higher sourcing costs and tighter category margins impact their ability to fund promotions and manage inventory. They increasingly rely on brand partnerships to close the gap.
Both sides are navigating increased pressure on profitability. Budgets are not disappearing, but they are being reassessed through a different lens. Retail media must now contribute to margin recovery, accelerate demand in priority categories or support strategic pricing and merchandising decisions. It's not just a marketing tool. It's a lever for business performance.
Retail media is still growing. But that growth is no longer unconditional. Brands and retailers that adapt to this reality by aligning on performance, flexibility and financial impact will be the ones who succeed in the new market conditions.
The Economic Pressures Reshaping Retail Media
Retail media sits at the intersection of multiple cost and investment pressures. Brands and retailers are both navigating operational uncertainty, with five primary forces shaping how decisions get made:
- Margin compression is forcing brands to cut lower-performing retail media network (RMN) investments and reassess test budgets. Profitability is under pressure, and media must justify its place on the P&L.
- Pricing pressure is delaying co-investment. As brands push through cost increases, retailers are pushing back, leading to standoffs over trade funding and campaign timing.
- Portfolio optimization means fewer SKUs receive support. Media dollars are being concentrated on core products, margin accretive categories and proven performers.
- Trade spend reallocation is moving dollars away from media and toward price protection, retailer promotions and volume incentives.
- Cost inflation is hitting both sides of the retail equation. Brands face higher input, packaging and logistics costs. Retailers see higher procurement costs, reduced flexibility on pricing and increased inventory risk.
Together, these forces are reshaping what retail media is expected to do. It is no longer just a way to drive traffic or share of voice. It is a lever for recovering margin, accelerating demand and delivering measurable commercial outcomes. Budgets are still flowing, but with one core condition: Prove performance or lose investment.
What CPGs Are Doing vs. What They Should Do
Across our clients, we are seeing a clear pivot away from broad awareness tactics and toward precision-based performance planning. Incrementality is becoming a baseline requirement for investment. Media must demonstrate that it drove results that would not have happened otherwise. Similarly, contribution to profit is now essential. Campaigns must support high-cost SKUs, improve velocity on core items or help protect margin in high-volume categories.
Brands that succeed in this environment are not reactive. They are taking disciplined, high-impact actions:
| Challenge | Default Reaction | Strategic Response |
| Budget pressure | Cut media entirely | Reprioritize efficient formats and test pilots. Align KPIs to incrementality and profit contribution. |
| Trade spend shift | Move funds out of media | Tie media to key categories and performance-based incentives. |
| Portfolio cuts | Cancel campaigns | Focus spend on core SKUs or halo categories with high return potential. |
| Innovation delays | Pause product launches | Run co-funded, low-risk pilots with priority retailers. |
| Internal friction | Stall campaign decisions | Use retail media as a forcing function to align brand, shopper and finance teams. |
Brands that elevate performance measurement, especially through clean room testing and audience analysis, are more likely to retain support even in constrained budget cycles.
How Retail Media Networks Can Stay Essential
Retailers operating RMNs are being held to higher expectations. Brands are asking not just for reach or shelf presence, but for proof that campaigns create incremental value. Networks that do not evolve are at risk of being deprioritized.
This requires investment in measurement, flexibility in planning and tighter integration with retail business strategy. Media must now tie directly to merchandising goals, pricing strategy and margin recovery.
| Challenge | Default Reaction | Strategic Response |
| Budget cuts | Push standard packages | Offer modular, performance-based media products with adjustable tiers. |
| Approval delays | Enforce rigid flight timelines | Build agile planning processes and accelerate test-to-launch speed. |
| Innovation freezes | Pause capability investments | Prioritize low-effort, high-impact improvements and co-funded experimentation. |
| Portfolio shrinkage | Stick to SKU-specific campaigns | Recommend category-wide or multi-brand solutions tied to shared objectives. |
| ROI pressure | Deliver standard metrics | Provide new-to-brand analysis, incrementality reporting and basket performance. |
RMNs that deliver outcomes — not just impressions — are the ones retaining spend, deepening relationships and capturing a greater share of co-investment.
How We Win Together
This is a moment that rewards clarity, partnership and shared accountability. The goal is not to spend more. It is to spend smarter. The strongest retail media strategies are the ones that help both brands and retailers win under pressure.
| Cooperative Move | Benefit to CPG | Benefit to RMN |
| Flexible media packaging | Maintains presence under cost constraints | Keeps brands active and engaged |
| Shared KPIs for outcomes | Improves internal justification of media spend | Builds long-term trust and renewals |
| SKU and category alignment | Focuses spend on high-priority initiatives | Improves storytelling and sales impact |
| Incrementality and new to brand insights | Enables better planning and media optimization | Elevates analytics and proves value to brands |
| Scenario testing and planning | Supports agile decisions in uncertain markets | Builds confidence and future pipeline |
Retail media continues to be one of the most powerful tools in the commerce playbook. But in a margin-sensitive market it has to do more than deliver reach. It has to deliver proof of performance and value to the business.
The networks and brands that align on outcomes, improve flexibility and collaborate through uncertainty will not only protect investment. They will redefine what partnership looks like in the next phase of retail media growth.
About the Author
Jeffrey Bustos is the SVP of Retail Media Analytics at Merkle, where he works with brands and retailers to define what success looks like and build measurement frameworks that drive decisions. He led the development of industry retail media measurement standards and continues to advance industry transparency and comparability.
Bustos' work focuses on data monetization, machine learning and incrementality testing to help partners make smarter media and commerce decisions.
