What Is Retail Media and How It Works in E-commerce Apps
When was the last time you opened a shopping app and saw a product at the top of the screen labeled “sponsored”? Or noticed a banner promoting a seasonal offer before you even searched for anything? That is retail media.
Retail media refers to advertising placed within a retailer’s own digital platforms. This includes websites, mobile apps, and other owned environments. In mobile e-commerce, retail media enables brands to advertise directly to shoppers as they browse or prepare to make a purchase.
Advertisers around the world spend roughly $169 billion on retail media in 2025, up 15.6% from last year. This rise is driven by a fact that retail media combines access to high-intent users with precise targeting. Advertisers reach potential buyers using first-party data collected by the retailer. At the same time, the retailer earns revenue from ad placements without disrupting the user experience.
Retail media in mobile apps is becoming a core strategy for both revenue generation and customer engagement. In-app formats like banners, product carousels, sponsored search results, and brand-funded push notifications make advertising more relevant and contextual.
This article explains how retail media works in mobile apps, where it appears, who benefits from it, and how it is enhanced through tools like in-app stories, gamification, and interactive messaging.
Defining Retail Media
Retail media is often understood too narrowly. In practice, it includes far more than just digital marketplaces or large e-commerce platforms. According to an overview published by RBK Trends, retail media should cover all businesses that operate their own customer-facing platforms — online or offline — and offer media inventory built on proprietary data, digital infrastructure, and measurable outcomes.
This includes marketplaces, e-commerce platforms, brick-and-mortar retailers with digital presence, service apps, aggregators, and classified ad services. What unites them is not just inventory, but their ability to deliver advertising directly to engaged users through formats and channels they fully control.
Retail media is not about outsourcing. Co-branded TV ads, outdoor banners, or placing retailer data on third-party websites do not qualify. Retail media is native, data-driven, and measurable within the retailer’s own digital framework.
What Is Retail Media in Mobile Apps
Retail media in mobile apps refers to advertising that takes place inside the app interface of a digital retailer. These ads are typically shown to users while they browse, search, or complete a purchase. Most ads are placed by brands that already sell their products through the platform. Common formats include:
- Sponsored product listings at the top of search results
- Featured products on the homepage or category pages
- Promotional banners on product detail screens
- Recommended add-ons shown during checkout
- Brand-funded push notifications for offers or reminders
These placements are powered by first-party data. That includes information about previous purchases, browsing behavior, and user segments. Because the app controls the data and the ad environment, it becomes easier to target users accurately and measure results.
Retail media is considered a closed-loop system. The same platform that displays the ad also completes the purchase. This allows advertisers to track performance without relying on third-party cookies or external tools.
Common Retail Media Formats
| Format | Placement Location | Purpose | Interaction Type |
|---|---|---|---|
| Sponsored Search Result | Search results | Product visibility | Tap to product |
| Homepage Banner | App homepage | Brand awareness | Tap to promotion |
| Product Carousel | Category pages | Targeted discovery | Tap to product |
| Checkout Add-on | Cart or payment screens | Increase average order value | Tap to add |
| Push Notification | Device lock screen | Retargeting, reactivation | Tap to open app |
| Brand Story or Spotlight | Story module or homepage card | Product launch, awareness | Swipe/tap |
Why Retail Media Works So Well in Mobile Apps
Retail media is effective because it aligns with user behavior in mobile commerce. Most users open a shopping app with a clear purpose. They are looking for something specific or browsing categories with a high likelihood of purchase. This context creates ideal conditions for relevant advertising. There are three key reasons why retail media performs well inside apps:
1. First-party data for precise targeting
Retailers collect detailed behavioral data directly through their apps. This includes searches, product views, cart activity, and purchase history. Because the app owns this data, it can be used to deliver highly personalized promotions without relying on third-party tracking. This level of targeting increases the relevance of ads and improves user response rates.
2. Closed-loop measurement
Retail media operates within a closed-loop environment. This means that the same app displays the ad, tracks user interaction, and completes the transaction. As a result, advertisers can clearly measure outcomes such as impressions, clicks, and conversions. This simplifies performance reporting and helps optimize future campaigns.
3. Contextual relevance and timing
Retail media ads appear during high-intent moments. For example, a promoted product may be shown right after a search or during checkout. The ad is seen in a relevant setting, close to the point of decision. This makes it more useful and less disruptive than ads shown on unrelated platforms.
Retail media takes advantage of the fact that users are already engaged. It adds value rather than distraction. For both retailers and advertisers, this makes mobile apps one of the most effective environments for digital advertising.
Examples of Retail Media Formats in Mobile Apps
Retail media in mobile apps can take different forms depending on the design of the app and the goals of the advertiser. Some formats are subtle and integrated. Others are more prominent and visible from the first screen. Each one plays a role in promoting products within the shopping experience. Here are the most common examples:
1. Sponsored search results
When a user types a keyword into the search bar, sponsored products often appear at the top of the results. These placements are sold to brands who want visibility for specific queries. This format is effective because it targets users who are actively searching for that type of product.
2. Homepage banners
Retailers often display rotating banners on the main screen of their app. These may promote limited-time offers, brand campaigns, or seasonal collections. Banners are typically visual and clickable. They are suited for awareness-building or re-engaging existing customers.
3. Featured carousels
Carousels that display product tiles with labels such as "Sponsored" or "Recommended for You" often include paid placements. Brands can promote their products within these sections to appear next to organic listings.
4. Checkout recommendations
Before completing a purchase, users may see suggestions like "You may also like" or "Add this to your cart." These placements are often funded by brands looking to increase order value. Because they appear just before purchase, they have a high likelihood of conversion.
5. Sponsored push notifications
Some apps allow advertisers to send targeted push notifications. These may include personalized offers, restock alerts, or reminders. While push messages must follow user permissions and platform policies, they can be a powerful way to re-engage inactive users.
6. Brand storefronts
Some large retail apps offer custom pages for specific brands. These storefronts act like microsites within the app, allowing the brand to display a curated selection of products, videos, and promotions.
Each of these formats is integrated into the app experience. They are designed to deliver value without disrupting the shopping flow. When combined with first-party data, these formats help brands connect with the right user at the right time.
Enhancing Retail Media with Stories, Gamification, and In-App Messaging
Retail media inside mobile apps becomes more effective when combined with user-friendly and interactive content formats. Traditional banners and sponsored placements still play a role, but dynamic formats such as in-app stories, gamification, and direct messaging offer additional value. These tools make promotional content more engaging and allow for better user interaction.
In-app stories
In-app stories are short, tap-through content modules placed inside mobile apps. Similar in format to stories on social media platforms, they are often used for onboarding, education, or engagement. In retail apps, stories can highlight special offers, launch new product lines, or feature brand-sponsored promotions.
Because stories are immersive and mobile-first, they are well-suited for brand messaging. Advertisers can show products in use, share limited-time deals, or present seasonal campaigns. For users, stories provide information in a quick and familiar format. When linked to retail media placements, stories support both product discovery and conversion.
Gamification
Gamified content in mobile apps increases user attention and time spent in the app. This includes mechanics such as quizzes, spin-to-win promotions, challenges, or digital scratch cards. Brands can sponsor these experiences as part of retail media campaigns.
For example, a brand may fund a prize wheel that rewards users with coupons or sample products. This increases brand exposure while offering value to users. Retailers benefit by driving repeat engagement and building loyalty. When linked to product placements or shopping rewards, gamification strengthens the performance of retail media strategies.
In-app messaging
In-app messages are direct communications shown inside the app during user sessions. These may appear as full-screen messages, banners, or bottom sheets. Retailers use them to announce deals, highlight brand offers, or respond to user actions in real time.
When combined with retail media, in-app messages serve two purposes. They promote specific products or campaigns, and they guide the user to take the next step. For example, a message may remind a user to complete a purchase or inform them of a brand-funded discount based on the items in their cart.
By using these interactive tools, retail apps create advertising experiences that feel integrated and helpful. They improve the visibility of brand campaigns without reducing the quality of the user journey.
Conclusion
The success of retail media depends not only on ad placement, but also on the format and quality of user interaction. Tools such as in-app stories, gamification, and direct messaging enhance these campaigns. They improve engagement, increase time spent in the app, and help build long-term customer relationships.
Looking ahead, retail media is expected to grow across mobile platforms. As privacy rules limit third-party tracking, the value of owned environments and first-party data will continue to rise. Retailers who offer flexible and interactive ad formats will be in a strong position to attract brand partners and improve user retention.
Retail media is a shift in how digital advertising is delivered, measured, and experienced. In mobile commerce, it plays a central role in shaping both revenue models and user journeys.