• by Sarah Mahoney , Yesterday

When you ask retail marketers how their budgets are holding up, nearly two-thirds will tell you they expect to spend more on retail media networks this year. Ask their planning software, and you get a different answer entirely.

That disconnect is one of the more telling findings from a new survey by Keen Decision Systems, which tracks actual marketing spend for some 450 brands. While 65% of respondents said they expected retail media budgets to increase, Keen's own planning data tells a different story, and finds that 58% of those same brands are actually running scenarios that assume cuts.

Brands have been burned often enough by mid-year budget slashes that many are now quietly planning for less, even when they're publicly projecting confidence, says Bradley Keefer, Keen's chief revenue officer.

The survey, which polled 120 brand and agency executives in February, also captured a significant shift in where retail media dollars are actually flowing. Brands still believe in retail media — they're just done funding every network that asks. Amazon, long the undisputed juggernaut of the category, saw its share of retail media spend fall from 56% to 46% in a single year. The beneficiaries weren't just the usual suspects. A catch-all bucket of smaller, more specialized networks jumped to 25% of total spend, up from 16%, suggesting brands are spreading dollars across more targeted platforms instead defaulting to the giants.

Walmart, meanwhile, is emerging as arguably the category's biggest winner. Keefer singles out Walmart Connect's streaming TV offering as "outperforming everything else in the retail media space right now," with year-over-year gains outpacing Amazon's comparable CTV product.

On AI, the survey found more hype than action. Nearly 40% of respondents are taking a cautious approach to advertising within generative AI interfaces, and only about 20% are actively spending there. Keefer was blunt about the gap between talk and behavior: "Everybody feels like they have to say their organization is on the cutting edge. But when you ask what they are actually doing with this powerful technology, it turns out they're just doing some little thing to make their spreadsheet a little better."

And only 22% are experimenting with ads within ChatGPT. “It’s just a huge unknown, and there are many potential governance issues,” he tells Marketing Daily.

The bottom line is that retail media has hit a plateau in its share of overall budgets — hovering just under 22% — after years of steady growth, he notes. It seems the gold rush is giving way to something more disciplined.

On metrics, Keefer was equally blunt. The industry's long reliance on return on ad spend — ROAS — is producing a false sense of performance, he argues, because it ignores execution costs and margin. His preferred alternative is net present value, a metric he says gets closest to measuring true incremental profitability by factoring in execution costs and margins, not just revenue.

"If you're not focused on earnings in an environment like this, you're going to get burned," he says. "Your costs are going up, your margins are coming down, your budgets are getting cut." The industry is beginning to hear the message — marketing mix modeling is gaining ground — but Keefer thinks most brands are still stopping short of what actually matters to a CFO.