Sponsored first, organic later: Is retail media crowding the digital shelf?

Search for a specific product on an e-commerce or quick-commerce app and there is a fair chance the first thing you see is not necessarily the product you went looking for. It could be a sponsored rival, a promoted substitute or several paid listings occupying the most valuable real estate on the screen.

Internet users have learnt this behaviour elsewhere. For years, the little act of vigilance on Google Search was checking the first few links for the “Sponsored” label before deciding whether to scroll down to an organic result. AI Overviews have since made the search page far more complicated, but not less commercial. Google now allows ads above and below AI Overviews and, in India, within them as well.

Retail media takes that logic closer to the transaction. Here, the advertising does not sit beside the shelf. Increasingly, it is part of the shelf itself.

That is where Taranjeet Singh, Chief Commercial Officer at Ecosystm, sees the central tension. Sponsored discovery can be useful when it helps shoppers find relevant products, he says, but the balance changes when monetisation begins to dominate the experience.

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“The product isn't just the advertising inventory; the product is the shopping experience,” Singh says. “If consumers start feeling that the best result is simply the result that someone paid for, trust in the platform can erode.”

There is increasingly good reason for platforms to test that balance.

According to the dentsu-e4m Digital Advertising Report 2026, advertising spends on e-retail platforms reached Rs 17,601 crore in 2025, up 55.86% year on year and accounting for 24.58% of India’s total digital media spend. WPP Media’s June 2026 midyear forecast uses a broader commerce advertising definition, but points in the same direction: commerce advertising revenue in India is projected at $3.9 billion this year, up 29%, while retail media ad revenue itself is expected to grow around 30%.

Globally, the issue is already shifting from whether retail media can grow to how much inventory shopping environments can absorb.

The incentive for retailers is straightforward. They own the search environment, the consumer data and the moment of purchase. Advertising creates an additional high-margin revenue stream from the same journey.

The question is what happens when paid visibility begins crowding out organic discovery.

Push or pull?

India’s upcoming Consumer Protection (E-Commerce) (Amendment) Rules, 2026 address one part of that question. From January 1, 2027, sponsored listings must be clearly and prominently identified, while marketplaces will have to disclose the principal parameters determining product and seller rankings and their relative importance.

But disclosure only tells consumers why something is appearing. It does not determine how much of the shelf should be sponsored in the first place.

For advertisers, the same pressure manifests differently. Prashant Puri, Co-founder and CEO of AdLift, argues that once organic visibility becomes sufficiently difficult to retain, part of retail-media spending stops behaving like growth marketing altogether.

“A lot of retail media is no longer growth spend. It is just digital shelf rent to stay visible, and brands need to accept it as a cost of doing business,” he says. “As apps crowd search pages with ads, top spots can't be earned organically.”

The idea of defensive spending is important because retail media’s biggest advantage can also complicate how its effectiveness is judged. A platform sees the advertisement and the transaction. If a shopper searches for a product or even a particular brand, clicks the sponsored result and checks out, the platform can attribute the purchase to media despite much of the buying intent already existing.

Madhu Sudhan, Co-founder of ShelfRadar, says marketers therefore need to distinguish between money used to defend existing visibility and spending intended to capture genuinely new demand.

“There is a portion of business/spend that operates on a defensive mode, which you could call cost of doing business, to stay visible on your own searches,” he says. “The second is where we are aiming to acquire part of category and new searches, more oriented towards growth.”

The pressure is particularly visible in quick commerce, he adds, because competition is rising for comparatively limited shelf space without the long tail available on larger marketplaces.

This is also why headline ROAS can be a deceptive comfort metric.

Who pays, wins?

Mihir Mehta, Managing Partner at 0101.Today, says retail media has to be judged on incrementality rather than attributed sales alone. A shopper already searching for detergent, breakfast cereal or skincare has demonstrated category intent before encountering the sponsored listing.

“The closer advertising moves to the point of purchase, the easier it becomes to attribute a sale to media, but attribution and incrementality are not the same thing,” he says.

That distinction is becoming a wider industry priority. IAB and IAB Europe’s guidelines for incremental measurement in commerce media explicitly focus on establishing credible counterfactuals, essentially asking what would have happened without the advertising, and recommend approaches ranging from experiments and econometric models to hybrid methods.

For brands, the answer increasingly lies in looking beyond visibility itself.

Brand Speak

Dhruv Kohli, CEO and founder of Boba Bhai, says his company tracks new customer acquisition, conversion, repeat purchase, order value and overall return, while comparing performance across campaigns and platforms.

“Simply appearing higher on a digital shelf does not necessarily translate into incremental growth,” Kohli says. “The objective is to identify placements and campaigns that improve discoverability, drive conversion and ultimately contribute to sustainable customer acquisition.”

Cumin Co. takes a similar approach. Co-founder Niharik Joshi says defensive expenditure can still serve a legitimate purpose, particularly when competitors are bidding aggressively, but should be labelled for what it is.

“Sometimes you need to invest just to stay visible when competitors are bidding aggressively,” he says. “That is important for protecting the business, but it should not be confused with incremental growth.”

That does not mean sponsored listings are necessarily taking value away from shoppers or advertisers. Retail media’s rapid expansion has happened precisely because it can combine high purchase intent with rich first-party commerce data and closed-loop measurement in ways most other advertising environments cannot.

Sujay K Kar, Co-Founder and MD, Strategy & Commerce at Commix Global, argues that marketers should judge sponsored media across a much wider set of commercial outcomes.

“The strongest way to evaluate sponsored media is through three lenses: new-to-brand acquisition, category expansion and post-purchase value,” he says, pointing to new customer cohorts, category entry, new-product trials, basket expansion and repeat purchases as better indicators than clicks or ROAS alone.

That may ultimately be the distinction that determines whether expanding retail media remains sustainable.

Platforms have every reason to create more advertising inventory. Brands have every reason to compete for the first screen. And well-targeted sponsored discovery can genuinely help a shopper find something useful.

But each additional paid placement also changes what the shelf represents.

Singh suggests retailers therefore need guardrails around the balance between sponsored and organic discovery, relevance and consumer value, and the impact advertising has on retention rather than only immediate ad revenue.

TL;DR
For years, digital advertising taught consumers to distinguish the ad from the content around it. Retail media complicates that bargain because the advertisement, the recommendation and the shop shelf can now occupy exactly the same space.

The challenge for retail media is therefore not whether platforms can sell more of that space. Judging by current growth rates, they almost certainly can.

It is how much of the shelf can be sold before shoppers start wondering whether they are still seeing the products most relevant to them, or simply the products that paid most to be seen.