Retail Media's Fermi Paradox.

"Where is everybody?" asks Tim Urban in one of my favorite blog posts of all time.

For those not familiar with the Fermi Paradox, it goes something like this: a conservative estimate suggests there should be 1,000,000,000 habitable planets and 100,000 intelligent civilizations in our galaxy alone. So why haven't we seen any intelligent life?

The Fermi Paradox highlights the contradiction between the probability of extraterrestrial life and the lack of evidence of its existence. It centers on something called the great filter — and suggests a few potential reasons for the silence:

• No higher civilizations exist. Intelligent life on Earth is an infinitely improbable fluke. The move from single to multicellular organisms, for example, is rarely surpassed.
• The great filter is in our not-so-distant future. Most civilizations don't advance much beyond our point, either destroying themselves with the technologies they build, or falling to some other cataclysm.
• Other logical reasons. We might be too primitive to see it (like an ant on the side of a four-lane highway), or other civilizations may be content to stay where they are.

Now — to draw an unnecessary parallel to the much less consequential thing I spend most of my life on — I give you, Retail Media's Fermi Paradox.

Where is everybody?

A conservative estimate suggests that there are 95 retailers globally that carry predominantly national brands and generate over $10BN in revenues. If you assume an individual retailer can capture just 1% of its sales in retail media investments — why don't we have more $100M+ retail media businesses? Why don't we have more $50M+ retail media businesses?

Source: List of largest global retail companies.

The Retail Media Fermi Paradox highlights the contradiction between the value that many global retailers drive for their supplier base, and the lack of share capture of those suppliers' marketing investments.

You've probably seen Max Willens' and Sarah Marzano's charts: Amazon and Walmart will collectively capture about 90% of retail media investments in the U.S. market moving forward — up from their current dominance of 85%. Slightly less so for Europe, but still incredibly high.

Retail media is massive, but revenues are consolidated at the top. Drill into individual retailers and you often see category-dominant players losing retail media investments to Amazon despite having a disproportionate share of retail sales for their supplier base. Suppliers spend more in marketing on Amazon than on retailers who have an outsized impact on their revenues.

That's not cool.

In this week's Leapfrog Series — posts that help inspire next-generation retail media businesses to leapfrog incumbents — we're going to talk about the 11% of the pie (the non-Amazon-and-Walmart piece), why it is so small today, and how we can make it bigger.

To do that, we need to look at retail media's great filters.

Great Filter No. 01The Tactic Trap.

Amazon and Walmart own ~85% of the $70BN in retail media investments in the U.S. market. But what percentage of retail do they represent?

17%. Amazon and Walmart collectively capture about 17% of U.S. retail consumer spending. (Source)

I cannot make that number big enough. In fact, maybe it's just better to visualize it:

Zoom in and it tells a slightly different story: Amazon and Walmart capture roughly 50% of all U.S. retail consumer spending online. Guess where retail media ads predominantly show up?

According to data from Andreas Reiffen and Pentaleap, about 64% of ad spend in retail media comes from onsite product listing ads. Another 20% is onsite display. 84% of retail media ad investments happen on retailer websites.

Walmart followed suit, and the rest of the market has been chasing this ever since. Most retailers are attempting to win share against two players that dominate both the sales and the maturity of technology in the tactical areas where these ads appear. To put it plainly: Amazon and Walmart are really good at product listing ads, and they have a massively scaled ecosystem to support those efforts.

Great Filter No. 02The Investment Trap.

Kiri Masters has coined the next great filter. Writing in The Drum, she describes how mid-tier networks are caught in a "doom loop." Without revenue they can't invest in technology; without technology they can't attract revenue.

It's a vicious cycle that is entirely self-inflicted.

Growth is decelerating, too. According to EMARKETER, retail media spend growth has slowed from 26% YoY in 2024 to 17.9% YoY in 2026 — with rest-of-market growing at a slower percentage rate than Amazon and Walmart, despite their size. (Source: Amazon Q4 2025 earnings. Walmart FY2026 earnings. eMarketer H2 2025 US Retail Media Forecast.)

The retailers who were going to win on momentum or scale alone have already won. Everyone else is now competing on merit — and merit requires investment.

Which brings us to the real Great Filter No. 02: low to no investment in growth.

Amazon and Walmart invested hundreds of millions, if not billions, over the past 15 years. They invested in retail media independent of its growth at the time, in:

• Technology
• People
• Go-to-market
• Change management

And it clearly worked.

But many retailers have never made a strategic investment in this business. Many launched retail media networks in name only — with minimum viable investment, or investment pegged to a small percentage of retail media revenue.

The retailers failing aren't failing because the opportunity isn't real. They're failing because they're treating a transformation like a bolt-on revenue line.

Great Filter No. 03The Commodity Trap.

Most retailers have something genuinely valuable and unique: real purchase data at scale, tied to real audiences. It's the reason retail media exists at all. It's something most media companies can only extrapolate.

But, as I said in Pesach Lattin's report on retail media:

The thing that made retailer data different is suddenly accessible to anyone. And that ultimately leads to a commoditization of the value of retail media overall.

What makes it worse is the loss of a direct relationship with your advertiser — your suppliers. For retailers that own that direct relationship on the merchandising side, it might be unfathomable that you would outsource your buying, pricing, and even the visibility of outcomes to a third party. But that is what is happening in retail media.

Your data might not be co-mingled with other retailer data, but from a buying perspective, your signals are very similar to everyone else.

If you've already ceded the relationship, it will get incrementally harder to regain it as time goes on.

Great Filter No. 04The Fragmentation Trap.

At Shoptalk this year, Christine Foster said: "There is still a lot of friction in scale and interoperability — marketers want to reach audiences wherever they are, and that's not always easy to do."

I concur.

The retail media tech stack is impossibly complex, and it's creating a lot of decision fatigue for procurement teams. More importantly, it means that today:

• Retail media is really hard to buy.
• Retail media is really hard to operate.
• Retail media is really hard to measure.

RMIQ and Skai have some sobering data on this:

Growth today often only comes from throwing people at the problem. And unfortunately, in most retail organizations today, that is no longer an option.

This challenge isn't just an oversight. I love Mark Williamson's transparency here in a recent Kiri Masters article:

To me, this says that technology has not always been at the forefront of what we're building here — and that the leaders in our space are often playing catch-up as it relates to how to stitch this all together.

Breaking past the great filters.

Is there scale out there for rest of market?

Absolutely. I've seen it show up in a bunch of ways, but there are too many nuances to properly capture in this article. For the sake of simplicity, I'd suggest four key moves to break the filters today.

Move No. 01 · Orchestrate outcomes (breaks the Tactic & Fragmentation Traps)

The Tactic Trap and the Fragmentation Trap share a root cause: retailers building reactively, one piece at a time, chasing what Amazon built rather than building what only they can.

The answer to both isn't a new tactic. It's a new architecture.

Orchestrating outcomes means building retail media omni-channel by default — not as an aspiration, but as a baseline design principle. Unified front-end. Single planning workflow. Measurability built in from day one. Ad formats that work together. Buying that's as easy for your supplier as it is for your operations team to run. All jobs-to-be-done, all in one place.

The important nuance is that most efforts in orchestration go only part way, leaving retailers and brands to manage efforts in multiple systems even if the initial planning functions are consolidated.

This isn't about adding more tools. It's about collapsing and connecting them.

Move No. 02 · Own your moat (breaks the Commodity Trap)

First-party purchase data — or more specifically, the ability to connect ad views with purchases in the places where people shop — is the reason retail media exists. Direct supplier relationships are the reason it compounds.

Don't give either away.

Owning your moat means keeping your data inside your own environment, or in a structure that allows you to keep control of the outcomes and usage. And it means maintaining a direct commercial relationship with your advertising partners — because the moment someone else manages that relationship, they become the retailer.

Costco's approach here is strong. Mark Williamson set three non-negotiables from day one: own the data, minimize data movement, minimize data copying.

The window to reclaim this is open. But every quarter you cede the relationship, it gets harder to earn back.

Move No. 03 · Invest in growth (breaks the Investment Trap)

Strategic investment in retail media isn't a line item inside retail media revenue. It's a capital allocation decision — the same kind of decision made for a new store, a new distribution centre, or a new ERP. Technology. People. Go-to-market. Change management.

A while back I wrote an article called The Economics of Waiting about the compounding effects of inaction. What I framed there was part of the business case — one centred on the IRR and NPV value of the business, among other things. Essentially: how do you talk to your CFO about retail media investments against all other retail priorities?

Amazon and Walmart didn't build billion-dollar retail media businesses by growing at market pace. They invested ahead of the curve — in infrastructure and talent that made scale possible. The compounding effect of that investment is exactly what makes the rest of market's position harder every quarter.

This is not a side business for retail anymore. It is a strategic priority.

Move No. 04 · Chase mutual value (breaks the Investment Trap, again)

Stefanie Jay — the visionary behind Walmart Connect's meteoric acceleration — used to say:

It sounds obvious, but it isn't always practiced.

The commercial model that chases extraction — treating retail media as a fee for access or a profitability lever to be pulled — will always underperform the model that chases mutual value. And advertisers can tell the difference. They've been trained by Amazon to expect something in return for investment.

I've written before about the shift from Trade to Retail Media as moving from defence to offence. Trade asks: what will you give me for access? Retail Media asks: what will you give me for growth?

The retailers that understand this distinction — and build their commercial model around it — are the ones whose supplier relationships compound over time. More trust. More investment. More data shared. The retail media flywheel.

The ones that don't keep waking up to the same conversation: why are our suppliers spending more with Amazon?

Because Amazon proved it was worth it.

Mutual value isn't just a philosophy — it's an operating model. It means joint planning with your suppliers, not just selling them inventory. It means measurement that proves incrementality, or some other intrinsic value shared with your suppliers. It means your retail media team and your merchant team sharing goals, not competing for the same budget.

When retail media is truly mutual, it stops being a media business and starts being a growth business. For everyone.

That's the leapfrog.

Closing.

The Fermi Paradox offers a grim hypothesis: most civilizations don't make it through the great filter. But the reasons for this are often outside of any civilization's control (unless they build technology that reaches the singularity — but no one is crazy enough to do that).

In Retail Media's Fermi Paradox, the great filters are almost entirely behavioural. And behaviour can change.

The 11% that isn't Amazon and Walmart doesn't have to stay 11%. The audiences are there. The purchase data is there. The supplier relationships are there. The technology to orchestrate it all — to own your data, build unified infrastructure, and invest for mutual growth — exists today in a way it simply didn't five years ago.

The leap is possible. We know because we've seen it happen. The retailers that invested ahead of the curve, protected their moat, and treated retail media like the business it is are winning.

That's what the Leapfrog Series is about. The path has been walked. The lessons are documented. The question is whether you'll run the playbook while the window is still open.

If you're sitting inside one of these filters right now — I'd love to hear from you and would be more than happy to chat through it.

Subscribe to the series. Share this if it resonated. And as always — comment, debate, push back. That's how we all get smarter.