Retail media: how marketplaces earn from ads

Retail media is advertising sold on a platform that sells products. A brand pays the platform to put its product higher in search results, in a banner on the home page or in a sponsored slot inside a category. The shopper sees the ad while shopping, often one step from buying.

It is sometimes called marketplace advertising or sponsored listings. The idea comes from supermarkets, where brands paid for shelf space and end-of-aisle displays. On an app, the shelf is the search page, and each position can be sold separately. A live case: Myntra, the fashion platform owned by Flipkart, earns from marketplace, logistics and advertising services, and its operating revenue fell 13.5 per cent to ₹5,242 crore in FY26 according to its results story.

The most common product is the sponsored listing. A brand picks keywords or categories and bids for the right to appear on top. If a shopper clicks the ad, the brand pays. The platform runs the bidding automatically, like a mini search engine. Banners and videos on high-traffic pages are sold either for each thousand views or at a fixed price for a period.

Some platforms also sell ads that follow the shopper outside the app, using what the platform knows about their purchases. Platforms also offer reports that show brands how many sales an ad produced. That proof of sales is the main reason brands see retail media as more measurable than television or print.

The auction is the part most readers never see. Each time a shopper types a search, the platform runs a quick contest between brands that want that keyword. The winner is not always the highest bidder. Many platforms also weigh how likely the shopper is to click, so a relevant product can beat a better-funded rival. This keeps results useful and protects the platform from showing ads nobody wants.

• Sponsored search: a product placed at the top for chosen keywords.
• Banners and category takeovers: paid visibility on busy pages.
• Sponsored brand stores and videos: a larger space to tell a brand story.
• Off-platform ads: ads elsewhere, based on the platform's shopper data.

Selling a product earns a commission or a thin retail margin, and the platform also pays for delivery, returns and customer service. An ad costs almost nothing extra to show once the traffic exists. For that reason ad income often has a much higher margin than commission income, and it can turn a loss-making delivery or shopping business into one that makes money.

The limit is the shopper. If too many results are ads, search quality falls and customers lose trust. If brands pay more to win the top slot, the cost may end up in the product price. Platforms try to balance ad load against the customer's patience.

Large brands treat retail media as part of their marketing budget, moving money from television and print towards ads they can trace to sales. Small sellers use it to be found at all, since a new listing with no reviews rarely appears on its own. That makes ads a kind of entry fee for small sellers, and a source of complaints when costs rise.

Four measures show up in results and filings. They are easiest to read together, and each needs a clear definition. The sample numbers below are made up for illustration.

A brand sees return on ad spend: sales caused by the ad divided by what it paid. A platform sees ad income as a share of gross order value or of revenue, called ad intensity or ad take rate. A rising ad share can mean healthy demand from brands, or heavier use of ad slots on customers.

• Cost per click (CPC): what a brand pays each time a shopper clicks, for example ₹6.
• Cost per thousand views (CPM): the price of a thousand ad views, for example ₹150.
• Return on ad spend (ROAS): sales per rupee of ads, for example ₹4 of sales for every ₹1.
• Ad take rate: ad income as a share of order value, for example 2% if ₹2 of ads come with ₹100 of orders.

There is no single retail media law. Several rules apply. The Consumer Protection Act 2019 treats a misleading advertisement as an offence the Central Consumer Protection Authority (CCPA) can act on. The CCPA issued guidelines on misleading advertisements and endorsements in 2022, and Guidelines for Prevention and Regulation of Dark Patterns in 2023, which list 13 practices, including disguised advertising, where an ad is dressed up as an organic result. The Advertising Standards Council of India (ASCI) code also applies, and GST is charged on advertising services.

Reports in September 2026 say the government amended the Consumer Protection (E-Commerce) Rules 2020 to require sponsored listings to be clearly marked, with effect from 1 January 2027. The details come mainly from secondary coverage, so check the official notification. As of November 2026, labelling of ads on shopping apps is moving from guidelines towards a binding rule.

When a results story mentions advertising revenue, check the base. Ad revenue growth of 40 per cent on a small base is different from a large base. Check whether the platform reports ad income as part of operating revenue or nets it with other items. Check also whether ad growth came from more brands or from showing more ads per search.

Compare it with commission income and logistics income, which can fall when a company changes its fee model. Falling logistics income with steady ad income can change the mix without a change in demand. A drop in revenue can come from a mix shift, so read the notes.

Retail media is advertising owned by the shopping platform itself. Ad-tech companies, by contrast, build software that connects advertisers with many publishers and earn from the spread. A commission is a share of a sale, while an ad fee is paid whether or not a sale happens. A platform that earns from both gets paid on sales and on visibility. Anyone with a specific legal or tax question should check with a professional.