Q1 Earnings Season: Retail Media Winners and Laggards Emerge as Ad Spend Scrutiny Intensifies

Retail media advertising revenue is becoming one of the clearest dividing lines between retailers that beat first-quarter expectations and those that fell short, according to a roundup of Q1 earnings results published by Modern Retail.

Advertising Revenue as a Bellwether

Across the retail landscape, companies with mature retail media networks — offering advertisers closed-loop measurement and large first-party audiences — tended to report stronger-than-expected top-line results. For these players, advertising income provided a high-margin revenue stream that helped offset continued pressure on core merchandise margins. Retailers still in early stages of monetizing their audience data, by contrast, struggled to point to advertising as a meaningful earnings contributor.

Where the Misses Landed

Several mid-tier and specialty retailers reported softer quarterly results, citing cautious consumer spending and limited ability to grow advertising yield from their digital properties. Analysts have noted that without scale — both in shopper traffic and in the technology infrastructure to serve and measure ads — smaller retail media networks face an increasingly difficult path to attracting national brand budgets that are consolidating around a handful of dominant platforms.

Macro Pressures Add Complexity

The earnings period also unfolded against a backdrop of tariff uncertainty and shifting consumer confidence, factors that prompted some brands to pull back or delay upfront retail media commitments. That dynamic added another variable for retail media teams trying to forecast ad revenue for the remainder of the year, even as demand for performance-based formats such as sponsored search and offsite display remained relatively resilient.

Why It Matters

Q1 results underscore that retail media is no longer a peripheral revenue line — it is increasingly central to how Wall Street evaluates retailer health and margin trajectory. The growing gap between scaled networks and emerging ones suggests further consolidation of advertiser budgets is likely through 2026. For brands, the earnings data reinforces the importance of evaluating whether a retail media partner has the audience depth and measurement tools to justify incremental investment.