• Some advertisers dislike how they're being asked by retailers to buy e-commerce ads.
• In a few cases, advertisers have threatened to pull spend to rework their deals with retailers.
• Walmart, Target, and Amazon have all tweaked their ad pitches in response.

The rise of retail advertising  — an industry expected to make $45 billion in the US this year, according to Insider Intelligence — has been a promising new revenue source for retailers like Walmart and Kroger. But advertisers are getting fed up because they don't like paying extra for digital ads. In some cases, they've threatened to pull spend. 

Brands already pay for ads through distribution deals called "joint business plans," which dictate things like what products a retailer will stock and how much sales growth the retailer will guarantee. Retailers also do in-store advertising for those products.

"I think that model is falling out of favor with brands," said Kiri Master, head of retail marketplace strategy at ad agency Acadia. 

Now, advertisers want digital advertising to be part of these JBPs, she said.

Retailers want to keep their retail media revenue separate from JBPs. Retailers have invested a lot of money in building their standalone retail media businesses, and want to keep it as a separate line of business, not incorporate it into an existing one, because advertising has high margins compared to retailers' other lines of business.

In order for retail media to continue its surge, retailers are rethinking their pitches so they can continue to attract ad spend.

Advertisers have threatened to pull spend

Some brands have already threatened to pull spend from retail media platforms like Amazon to negotiate better JBP terms, said Masters. 

She added that brands have other problems with Amazon as well. For instance, Amazon often under-orders products, so customers can't buy them, said Masters. Amazon is also charging merchants significantly higher fees than in the past, according to recent findings from research firm Marketplace Pulse.

Masters said Amazon is trying to entice sellers to buy ads by bundling a cloud-based ad product called Amazon Marketing Cloud into JBPs to smooth over some of sellers' frustrations. AMC lets advertisers measure if their digital ads drove sales.

Amazon declined to comment for this story.

Walmart and Target are also trying to entice advertisers to buy retail media separately from their JBPs, said Russ Dieringer, founder and CEO of Stratably, an e-commerce research and analyst firm. They are doing this by crediting retail media spend on programmatic advertising toward their JBPs, so advertisers can test new digital ad formats with their JBP budgets, he said.

Target confirmed that it offers this feature to advertisers, but declined to comment on specific details. Walmart said it offers benefits to brands that buy ads as part of their JBPs, but declined to comment on specific details.

Retail media threatens to make traditional joint business deals obsolete

While JBPs will continue to be important to both brands and retailers, especially for generating in-store sales, the emergence of retail media has made those deals look old fashioned.

The flexibility of retail media has made advertisers less interested in the rigidity of JBPs.

For instance, retailers like Walmart are building self-serve tools that let brands manage their own campaigns, Masters said. They can also choose how to spend their dollars across multiple retailers, she added.

Also, retail media has significant benefits and can lead to non-advertising perks, said Dieringer.

For instance, brands that buy ads from retailers may have first access to unique data and insights about shoppers.

"Retailers have a lot of silos, and these programs help give the brands more visibility across other areas, which can be a real difference maker — and the brands know it," said Todd Bowman, VP of services at e-commerce agency Momentum Commerce.

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