This trend is not speculative; traditional search engine volume is projected to decline significantly. "It’s a threat to how retail media networks operate as they are. They’re going to have to evolve,” Rita Steinberg, VP of Media at FUSE Create, told Digiday. The core issue: if shoppers spend less time on retailer sites, RMNs lose their primary mechanism for monetizing traffic.
This evolving dynamic is forcing a re-evaluation of strategies. For instance, The Trade Desk is actively testing how advertisers can build campaigns using generative AI on its platform, with CEO Jeff Green hinting at an "agentic AI framework" for partners in 2026, according to Adweek. Agentic AI, which can autonomously execute tasks like pricing and bidding without constant human oversight, presents a new layer of disruption, creating "uncatchable dealer advantages" for early adopters, as reported by Automotive News.
Retailers are responding strategically. Walmart has partnered with Google Gemini and OpenAI’s ChatGPT for AI-powered shopping experiences, and Target is collaborating with OpenAI for a specialized in-app experience. These partnerships acknowledge the AI shift while allowing retailers to maintain control over their valuable data ecosystems. Amazon has even secured a court order blocking Perplexity AI’s shopping bots from making purchases on its marketplace, underscoring the fierce competition for control over AI-driven commerce, as The Business of Fashion reports.
As retailers expand their ecosystems—even launching their own generative AI chatbots like Amazon's Rufus or Walmart's Sparky—their closed-loop attribution and end-to-end measurement capabilities give them significant leverage. This means the path to truly competing with RMNs will require LLMs to build out robust APIs, integrate seamlessly with transactional data, and offer comparable measurement insights. The ongoing consolidation within the retail media industry, with mergers and acquisitions aimed at streamlining tech stacks, further indicates a market adapting to these demands.
For Brands
Diversify your retail media strategy beyond traditional RMNs. Explore pilot programs for AI chatbot ads, but demand clear metrics and brand safety guarantees before committing significant budgets.
For Retailers
Leverage your first-party data advantage. Invest in your own AI-powered shopping tools and strategic partnerships to maintain control over the transaction funnel and offer advertisers superior attribution.
For Developers
Focus on building AI solutions that offer robust API integrations, granular measurement capabilities, and secure transactional data handling to bridge the gap between LLMs and e-commerce.
For Consumers
Expect increasingly personalized and efficient shopping experiences through AI. Be aware of how your data is used as discovery and purchasing become more delegated to AI assistants.
AI is disrupting the $38 billion retail media search ad market by integrating shopping and ad products into large language models (LLMs). This shift challenges traditional Retail Media Networks (RMNs) as consumers increasingly use AI chatbots for product research and purchases, potentially diverting ad dollars away from retailer websites.
AI chatbots are becoming primary search and shopping platforms because consumers are increasingly using them for product research and direct purchasing instead of going directly to retailer websites. This trend is projected to cause a 25% decline in traditional search engine volume this year, impacting how Retail Media Networks monetize traffic.
Advertisers have some concerns about using AI for advertising, including high costs, brand safety, and limited data transparency. Unlike Retail Media Networks, LLMs often lack the final point of sale data, measurement tools, and transactional data that retailers possess, making it difficult to prove the effectiveness of AI chatbot ads.
Retailers are strategically responding to the AI disruption by partnering with AI platforms to create AI-powered shopping experiences. For example, Walmart has partnered with Google Gemini and OpenAI’s ChatGPT, and Target is collaborating with OpenAI for a specialized in-app experience.
Retailers have advantages over AI platforms due to their control over transactional data and closed-loop attribution. This means retailers possess valuable final point of sale data and measurement tools that LLMs often lack, giving them a crucial edge in proving ad effectiveness and understanding consumer behavior.
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