Commerce media is no longer synonymous with retail, as delivery platforms, financial services, and travel companies build sophisticated advertising networks that rival traditional retailers in scale and effectiveness.

"Commerce media has fundamentally reshaped the way the advertising industry at large leverages and values first-party transaction data," said our analyst Sarah Marzano during a discussion at Cannes Lions.

• US commerce media ad spend is set to reach nearly one-quarter of all digital advertising spending by 2030, according to EMARKETER's June forecast.

Marzano discussed the evolution of commerce media with Kristi Argyilan, global head of advertising at Uber, who has pioneered retail and commerce media businesses at Target, Albertsons, and now Uber.

Growth rates normalize as channel matures

Commerce media's YoY growth rates once dwarfed those of other established digital advertising channels. By the end of the decade, they will settle into line with search, social, and connected TV (CTV).

"That's not because commerce media is weakening; we are still adding significant volume and ad spend to the tune of billions of dollars every year," Marzano said. "But what the growth trends suggest is that the reason for being excited about commerce media, the reason for investing in commerce media, are going to shift from getting in on a rapid hyper growth channel to getting into a channel that's going to provide better results."

The channel now exhibits top-line traits of mature advertising platforms, with slower launches of new networks and more normalized growth patterns.

Different verticals require different playbooks

Success in the next phase of commerce media will require ecosystem-specific strategies rather than copying Amazon's blueprint, Marzano's analysis suggests.

She said tier one retail media networks (RMNs), Amazon and Walmart, must expand beyond on-site saturation and innovate to sustain growth. Tier two networks need to use differentiated assets like physical stores or category expertise. Last-mile delivery platforms must embed themselves as essential retail and media partners.

Financial media networks face the challenge of building stronger commerce context around transaction data, while travel media networks must increase engagement frequency in their fragmented consumer journeys.

"We have to break all of these old-fashioned models and molds that we have as an advertising industry," Argyilan said. "We keep trying to jam everything into something that we've known for the last 20 years."

Measurement becomes the critical differentiator

Brands are drawing harder lines on commerce media investments, demanding proof of incrementality and new-to-brand metrics.

"Every conversation that I've had here, brands are sharing where they are in their retail media journey. They're still longing for all of them to show the new to brand, the incrementality," Argyilan said. "There now is a very clear expectation that if you cannot show incrementality or new to brand, we're going to reduce our spend."

Two years ago at Cannes, brands said they would limit investments to seven retail media networks. That never materialized. They're now spending across 20 to 50 networks. But the conversation is shifting as measurement capabilities improve.

Open APIs and transparent measurement that allows marketers to evaluate commerce media alongside all other channels will separate leaders from the rest of the market. Platforms must be willing to plug into marketers' existing measurement frameworks and stand up to direct comparison with social, search, and other established channels.

Real-life moments create new opportunities

Uber's research confirms that commerce media platforms drive consumer behavior beyond immediate transactions, including brick-and-mortar store visits, even when fulfillment happens digitally.

"We're not just about a transaction. We're starting to see that we're driving brick and mortar actions, even though that's not how we actually fulfill," Argyilan said. "Because we're inserting ourselves in a more brand-relevant way, the halo that we have more broadly in terms of consumer decisions that are being made is really strong."

This represents a shift from focusing solely on consumers actively shopping to connecting brands with consumers during real-life moments throughout their day.

The next phase of commerce media will focus on contextual relevance based on real-time signals about consumer movement and missions, rather than traditional reach and frequency metrics that date back to the 1800s.

A reckoning approaches

Not all commerce media networks will survive the next five years, both analysts agreed.

"The reckoning is coming," Argyilan said. "You're going to see this moment where a lot of companies cannot continue to invest in building a media network, given all that is required, especially to keep up."

However, mid- and long-tail may find opportunities through aggregation and outsourcing, allowing them to benefit from commerce media revenue without building sophisticated networks themselves.

Scale may matter less than differentiation going forward. "As long as I can find the 10 people who actually are going to buy, I don't have to buy a million to find those 10 anymore," Argyilan said. "The most sophisticated networks will be able to do that."

Watch the full conversation.

This was originally featured in the Commerce Media Weekly newsletter. For more marketing insights, statistics, and trends, subscribe here.