It’s impossible to talk about the state of retail today without addressing the state of retail media.

Sponsored placements now show up frequently across retail sites — from search results to product listings and beyond — and budgets keep climbing. In the U.S. alone, advertisers are expected to spend more than $69 billion on retail media this year, up 18% from 2025.

As for the state of retail media? Shoppers aren’t nearly as enthusiastic as advertisers.

What the data shows

Data from Constructor and Shopify’s State of Ecommerce report, a survey of 1,500+ consumers, suggests there’s ample room for improvement in how retail media is delivered:

Nearly half of shoppers (47%) say they’re more skeptical of sponsored placements than organic ones.

More than a quarter (27%) call these ads “annoying” — often because they push better results too far down the page (35%), feel less relevant (34%), and clutter the shopping experience (33%).

Only 6% of shoppers say they actually like sponsored listings.

For anyone in retail media… that’s a tough read. But shoppers are making a fair point, and they’re the most important audience retailers and advertisers are ultimately here to serve.

Retail leaders who align technology, data, and execution will separate growth from noise and turn complexity into competitive advantage in 2026.

Where retail media misses the mark

Put yourself in the shopper’s shoes, and picture these all-too-common scenarios:

Intent mismatch: A male shopper searches for “dress shoes” on a retail site he shops with often. He expects men’s Oxfords, but the top sponsored result is a pair of women’s heels.

Filter fail: A shopper on a beauty site filters lipstick results by “red.” The sponsored listing that appears? A blue shade. Or if things get really off, the ad might not even load at all.

Sorting breakdown: An electronics shopper sorts headphones by price, low to high, only to see a premium pair jump to the top of the results because it’s sponsored. In other cases, the space where the ad should be is just… blank.

Duplicate listings: A sponsored cleaning product appears right next to the exact same SKU in the organic results, creating a confusing and redundant experience.

For shoppers, these moments add up to frustration and friction. And for retailers and their advertising partners, they represent missed opportunities — for engagement, trust-building and revenue. But it doesn’t have to work this way.

A better way forward

In the face of all of these challenges, retail media remains a nearly $70 billion business in the U.S. this year, and there’s a reason for the sustained growth. Nearly 1 in 3 shoppers (32%) have clicked on and purchased from a sponsored listing, a clear sign retail media strategies can work when done well. There’s plenty of room for improvement, though, and with it, better shopper experiences and more incremental ad revenue for retailers.

Where to get started? The first step is recognizing the biggest opportunities for improvement. Retail media’s core issue isn’t the ads, themselves: It’s that they often operate in isolation.

So, here’s what needs to change:

Add context and personalization. Take that “dress shoes” example. The retailer should already understand who’s searching — including that the shopper is male — and what he’s searching for, based on his prior purchases, recent clicks, add-to-carts, and other behavior across their channels. When that context is ignored, sponsored placements may be technically relevant (yes, they’re showing “dress shoes”) but still do more harm than good.

When sponsored results reflect the shopper behind the search and align with their intent, though, everyone wins: Shoppers see ads that help them find what they need; advertisers see improved performance, reaching more qualified audiences; and retailers unlock more retail media revenue, with the confidence to expand their retail media efforts across more of their site.

Prioritize relevance over bids. I recently spoke with an executive at a global consumer brand who described their current retail media set-up as feeling too heavy-handed, almost like a “walking billboard.” They were looking for a way to drive new, high-margin retail media revenue while continuing to build trust and deliver better outcomes for their shoppers.

That’s why quality matters. Sponsored placements should be held to the same relevance standards as organic listings. Rather than flood pages with irrelevant ads, incorporate them when they’re highly relevant and add real value. Remember, too, that more ads don’t automatically mean better outcomes. Retail media works best when placements reach the right shopper, in the right context, at the right time.

Make sure the left hand talks to the right. Those issues shoppers encounter — duplicate listings, misaligned results, ads that ignore filters, and so on — often point to a technology disconnect. Too often, retail media is powered by third-party ad platforms that exist in a vacuum, oblivious to what’s happening across the rest of the ecommerce tech stack, not to mention the broader shopper journey.

When systems don’t talk, and when ads are locked into fixed slots no matter the context, nobody’s asking what’s best for the shopper or the retailer’s bottom line. Then, sponsored placements can lead to wasted clicks that don’t convert and shoppers who abandon the site. The ads may even cannibalize retailers’ organic revenue, rather than complement it.

To address this, more retailers are embracing a dynamic and holistic approach to ad serving, one that evaluates each slot in real time and decides whether a sponsored or organic result makes more sense for the shopper and the business. That kind of coordinated intelligence is already delivering results for retail brands, including millions more in ad revenue, with organic performance preserved.

The future of retail media

Ultimately, improving retail media comes down to measurement — not just measuring ad revenue, but measuring how sponsored and organic placements work together to serve shoppers and drive results.

If retailers get this right, the next “State of Retail” conversation could look very different. Retail media won’t just be everywhere; it will be worth engaging with. And that makes shopping better for shoppers, while turning retail media into a more sustainable growth engine for retailers.