Retailers Stumbled Into the Ad Business by Fixing Their Supply Chains
The measurement infrastructure advertisers needed was built by operations teams who just wanted to know where the products were
I’ve been watching retailers for 15 years, and the most interesting thing happening right now isn’t what anyone’s marketing department planned. Retailers built measurement systems because they were tired of not knowing what they had in stock. Then they realized: wait, brands will pay us for this data.
Walmart just finished rolling out battery-free Bluetooth sensors across hundreds of locations. By next year, they’ll be in every store and distribution center. These things cost less than a dollar each. They capture temperature, motion, and location data without batteries 90 million sensors: Walmart’s bold move in logistics, just harvesting energy from the environment.
The reason isn’t advertising. It’s that Walmart got sick of associates scanning things manually and still not really knowing what was where. Now systems can make decisions in real-time because they actually have current information.
But here’s where it gets interesting: once you have that infrastructure, you’ve accidentally built what advertisers have been begging for. With third-party cookies declining, advertisers need alternative ways to target and measure performance, and retailers can provide purchase and behavior data on logged-in customers Retail Media Networks 2025: Maximize ROI & Advertising | Improvado.
How Operations Became an Ad Platform
Five years ago, retail media meant Amazon showing sponsored products in search results. The pitch was simple targeting: we know what people search for and buy, so ads are relevant.
What changed wasn’t targeting getting better. What changed was closed-loop measurement becoming possible. When your operations systems actually work, you can tell an advertiser: this person saw your ad, clicked it, bought your product, and - the new part - the product was sitting on the shelf when they came to get it.
That last piece is the one everyone ignored for too long. I’ve seen too many campaign post-mortems where a brand ran perfect targeting and great creative, drove tons of traffic, and then discovered half the stores were out of stock. You can’t measure your way around an empty shelf.
Gartner lists agentic AI and ambient invisible intelligence as top priorities for supply chain leaders Gartner’s 2025 Supply Chain Tech Trends; CPG & Retail’s Roadmap & Roadblocks | Consumer Goods Technology. Strip away the jargon and it’s: know what you have, know where it is, move it where it needs to go. The retailers who got that right are now dominating the ad business.
Amazon and Walmart captured 84.2% of retail media digital ad spending this year What advertisers and retailers need to know about retail media heading into 2025. They didn’t win on targeting sophistication. They won because their supply chains actually work. When operations are tight, advertising measurement is clean. When measurement is clean, brands spend more.
The Stuff Nobody Planned
Matthew Guiste at Zebra said something that stuck with me. Most retailers don’t even realize how much RFID infrastructure they already have. Suppliers started tagging products without being asked because the tags got cheap enough. Retailers bought readers almost as an afterthought. Now those readers feed data into systems running dynamic pricing, inventory alerts, and increasingly, ad measurement.
Kroger put IoT sensors in shelves to monitor inventory and handle dynamic pricing, ensuring accurate pricing and timely restocking 5 Retail Supply Chain Technology Trends in 2025 - Solvoyo. They built it for operations. Then someone realized: hey, this is exactly what advertisers need to track campaign effectiveness.
Think about what that enables. A CPG brand runs a campaign, sees who engaged, tracks whether those people bought the product, and - critically - knows whether the product was available when they showed up. If it wasn’t there, they know that too. They can adjust spend, change distribution, fix the actual problem.
Instacart and Walmart showed CPCs around $0.84 and $0.93 in 2024 Trends & Networks Shaping Retail Media in 2025 - Blue Wheel, while premium retailers with shakier operations paid more. That gap is operational, not creative. When fulfillment works, advertising costs less to run.
Why Everyone Wants In
Advertising accounts for almost a third of Walmart’s operating income now With every company entering the ad business, here’s what to expect from retail media networks in 2025. Not revenue - profit. A third of what Walmart makes comes from selling ads, not products.
Chase Bank launched a retail media network last year. United Airlines has one. Re/Max just announced theirs. This isn’t companies getting distracted from their core business. It’s companies realizing they built valuable ad infrastructure just by running operations well.
You have logged-in customers. You have transaction data. You have digital properties people visit. Congratulations, you can sell ads. But the ones that actually work - where brands keep increasing spend - have the operational fundamentals right.
Media buyers now focus on total commerce strategies, full-funnel measurement and transparency across platforms Retail media’s mid-2025 reality: Why advertisers are going all in on full-funnel. That only works if you can actually deliver on what you promise, which means having inventory where you say you have it.
I’ve watched smaller retail media networks launch with solid targeting capabilities and then plateau on revenue. The problem is usually simple: operations aren’t tight enough to close the measurement loop. Brands need to know if campaigns drove sales. If they didn’t, was it bad creative or bad inventory management? You have to be able to answer that question.
Where Investment Matters
Three in 10 retail executives plan significant technology investments to modernize supply chains 2025 US Retail Industry Outlook | Deloitte Insights, according to Deloitte. These aren’t supply chain people talking. These are executives who connected the dots between operational efficiency and ad revenue.
Look at Lowe’s. They rebranded their ad business this year and added four new channels: email, in-store audio, paid search, direct mail. All of it ties back to inventory management systems fed by real-time operational data. The ad channels only work because the operational data feeds them accurately.
Target’s app ranks among the top shopping apps, supporting millions of daily users. About half their peak digital sales come from Drive Up orders - someone orders online, drives to the store, and an associate brings it to their car in minutes. That model requires knowing exactly what’s in the building, where it is, and being able to locate it fast. The same infrastructure powering that experience powers their advertising measurement.
What Matters Going Forward
The retailers investing in operational tech now are building the ad platforms that’ll matter in three years. Walmart is the only major retailer expected to grow retail media share What advertisers and retailers need to know about retail media heading into 2025, and it’s not because they’re better at ad sales. It’s because their operations are better.
Over 80% of digital advertisers allocated budgets for retail media Retail Media Market Outlook 2025: Key Data And Growth Forecast | Adtelligent this year, but that spend will concentrate where measurement actually works. Measurement works where operations work. Operations work where you’ve invested in boring infrastructure: sensors, tags, readers, data systems that process everything in real-time.
The path forward isn’t better targeting algorithms. It’s tighter operations that enable better measurement. Brands will spend where they can prove ROI. They can prove ROI where the infrastructure tracks the full funnel from impression to purchase, including whether the product was actually there.
Retail media became an ad business by accident, by solving operations problems first. The retailers who get that connection - who invest in operations to support advertising rather than treating them separately - will capture the spend.
Everyone else is just hoping brands don’t notice the gap between showing an ad and having the product available to buy.