Are RMNs Holding the CPG Industry Hostage?

The meeting started pleasantly enough. Your retail partner talked about "deepening the partnership" and "unlocking mutual value." Then came the number: a threefold increase in retail media investment, on top of the 40% increase you'd already agreed to last year.

You asked about performance data from the previous spend. The response was vague. You requested incrementality metrics. The conversation pivoted to "strategic alignment" and the importance of maintaining shelf space. Nobody said the quiet part out loud, but the implication hung in the air: compliance was expected.

If this scenario sounds familiar, you're not alone. What was once positioned as a revolutionary advertising channel has evolved into something far more troubling: a mandatory cost of doing business where the rules are set by those who profit most from your compliance.

The language in retail media negotiations has become remarkably consistent across the industry. Retailers never explicitly threaten consequences for non-compliance. They don't need to.

As one anonymous agency executive told Digiday: "Retail media networks are asking brands to spend substantially more year over year. They're using that implication, that perception without actually saying straight up tit for tat, 'If you don't spend, you're going to suffer the consequences.' It's never written down, but some retailers are doing a very good job of creating the perception that there are gonna be negative consequences."

The Walmart relationship illustrates the dynamic most starkly. One anonymous CPG brand executive admitted: "The JBP [Joint Business Plan], we tried to kill it and then my sales team got scared. Because, like everyone else, 50% of my sales go through Walmart. This is the thing: We've got to call their bluff, but we have to do it as an industry."

“I've had two clients walk away from JBPs this year with Walmart because they felt that they got so shook down. — Anonymous Agency Executive, Digiday”

Boris Litvinov, President at Left Off Madison, captured the sentiment bluntly: "It feels like double dipping. You're getting a commission off the sale already and you're forcing me to pay for your ad tech, your ad campaigns for me to run my business through."

Perhaps the most damning indictment of retail media is not the pressure tactics but the fundamental inability to verify whether any of it works.

That statistic deserves a moment of reflection. In what other marketing channel would we accept 6% confidence in reported performance? Yet billions continue to flow into retail media networks based on metrics that the overwhelming majority of advertisers don't trust.

The attribution crisis runs deeper than scepticism. Only 8% of marketers worldwide use incrementality testing for their retail media spend, according to Skai. The remaining 92% are essentially flying blind, accepting platform-reported metrics that may bear little relationship to actual business impact.

NIQ's analysis in "Retail Media's Billion-Euro Mirage" delivered a stark warning: "The days of blind faith in inflated ROAS are numbered." For CPG marketers, those days should have ended already.

“Harvard Business Review found that suppliers describe RMN investments as 'a black box with a bill.' Consumer goods companies report being 'asked to increase spending with no data to validate past performance.'”

Here's the structural absurdity of the current retail media landscape: CPG brands are paying premium rates to access insights about their own customers.

Retailers hold the relationship with the consumer and limit the amount of customer data they share with CPG businesses. Whether you choose traditional retail or online platforms like Amazon, both are major hoarders of first-party data. The consumer who buys your product is known to the retailer but invisible to you.

This data asymmetry creates a perverse dynamic. CPGs are simultaneously funding the retail media infrastructure and paying elevated prices to access the customer intelligence that infrastructure generates. As one AdExchanger analysis noted: "Markups on their own audiences are astronomical in comparison to what we're used to buying."

The promise was always that retail media would unlock closed-loop attribution and purchase data unavailable elsewhere. The reality is that access comes with strings attached, limited transparency, and premium pricing that effectively taxes brands for insights derived from their own transactions.

The industry narrative positions retail media as incremental spend unlocking new capabilities. The budget reality tells a different story.

According to Digiday research, 36% of retail media investment comes from existing trade marketing budgets. Another 26% comes from shopper marketing. In Australia, IAB data shows 70% of retail media spend is diverted from other advertising budgets, with only 30% coming from trade retail budgets.

This matters because it exposes the fundamental tension. Rather than unlocking new growth, retail media often simply reallocates existing marketing and trade spend to channels controlled by retail partners, with diminished transparency and questionable incrementality.

Understanding the retailer perspective explains why the pressure will only intensify. Retail media functions less as a marketing service than as a margin transformation strategy.

Compare those margins to traditional grocery retail operating at low single digits. Retailers' RMN revenue now represents 7% of overall revenues, up from 1.5% in 2021, according to PubMatic. For Walmart, advertising accounts for almost one-third of their $6.7 billion operating income. At Tesco, retail media contributed to 10% profit growth, pushing profits to £1.56 billion in H1 2024.

The economics are irresistible for retailers. A Tesco executive noted that retail media achieved £3 billion in UK spend faster than social media (13 years) or search (17 years). When a channel grows this quickly with these margins, retailers have every incentive to maximise CPG participation, whether that participation is voluntary or not.

“One CPG executive characterised the dynamic bluntly: 'Typical retailers turn collaboration into coercion.' (Harvard Business Review)”

The complexity burden extends beyond any single retailer relationship. CPG marketers now navigate an increasingly fragmented landscape that multiplies operational costs and undermines strategic coherence.

NIQ identifies 149 retail media networks operating in EMEA alone. The global count exceeds 200. In the UK, major players include Tesco Media (22 million Clubcard households), Sainsbury's Nectar360 (17.5 million members), Boots Media Group, ASDA's LS Eleven (19.7 million annual households), Morrisons Media Group, and the Co-op's convenience retail network launched in 2024. Each operates proprietary systems, measurement methodologies, and commercial terms.

The ISBA/MediaSense study from July 2025 highlighted the operational reality: inconsistent measurement methodologies, fragmented data sources hindering holistic analysis, varying definitions requiring manual reconciliation, and limited transparency in viewability, attribution, and audience quality. Each network demands dedicated resources, distinct reporting frameworks, and separate commercial negotiations.

Dan Larden, Head of Media at ISBA, acknowledged: "The findings in our report give us a clear mandate from brands in the UK to continue our joint efforts with IAB Europe to educate the ecosystem on what constitutes sensible guardrails and standards within Retail Media."

The power imbalance is real, but it's not absolute. Forward-thinking CPG marketers are developing strategies to navigate the landscape without surrendering all leverage.

The CPG executive's observation about Walmart is instructive: "We've got to call their bluff, but we have to do it as an industry." The brands that negotiate individually will continue to face escalating demands. The brands that coordinate responses and share intelligence about actual performance create different dynamics.

UK retail media spend reached £4 billion in 2025 and is projected to approach £8.6 billion by 2030. The channel isn't going away. GroupM forecasts that retail media revenue will surpass total television revenue for the first time in 2025. This is now a structural feature of the CPG marketing landscape.

But structural importance doesn't justify uncritical compliance. The evidence is overwhelming: most brands don't trust the metrics, nearly half are reluctant buyers, and almost none are conducting rigorous incrementality testing. That's not a strategic investment framework. That's capitulation dressed as media planning.

“The question is not whether to invest in retail media but whether you're investing as a strategic partner or paying tribute as a dependent supplicant. The distinction determines whether retail media builds your brand or simply subsidises retailer margins.”

The CMOs who will navigate this landscape successfully are those who refuse to accept the current terms as permanent. They're demanding independent measurement before budget increases. They're building first-party data assets that reduce retailer dependence. They're coordinating with industry peers to establish standards that serve advertisers, not just platforms.

Your retail partners will always want more. That's their job. Your job is to ensure that every pound invested generates verifiable returns, not just preserved relationships. In a channel where 6% trust the metrics, the time for polite compliance has passed.

The ransom note is on your desk. The question is whether you'll pay it without reading the fine print.