Retailers Hit 99% Ad Coverage Without Killing User Experience, New Research Shows

It’s the old adage of ‘actions speak louder than words’ when it comes to consumer behavior.

Shoppers say they dislike ads. Yet new research from retail media tech provider Pentaleap finds that retailers like Amazon, Walmart and Home Depot already serve sponsored products on virtually every search result—97-99 % of queries—while maintaining shopper engagement (CTR and CVR) on par with organic listings.

With more retailers now increasing their depth of ad inventory, it’s proving that ads don’t necessarily detract from the retail experience.

The retail media balancing act

Pentaleap’s bi-annual benchmarking study reveals a clear segmentation in the market: leaders with nearly complete sponsored product coverage versus mid-tier retailers still scaling their programs. While Amazon (99%), Walmart (97%) and Home Depot (97%) approach universal coverage, others like Best Buy (80%), Staples (74%) and Macy’s (66%) represent a middle segment still expanding their sponsored product presence.

Among the fastest risers, Kroger stands out with a dramatic leap from 41% to 55% coverage since the previous report 6 months ago – signaling a focused effort to strengthen retail media capabilities in the grocery sector. Meanwhile, CVS and Lowe’s have each reached the 50% threshold, while Albertsons holds steady at 46%.

“Those who are leading the game in retail media are very, very strong with on-site [advertising],” Andreas Reiffen, CEO of Pentaleap, told me. “There’s a general misconception which is ‘ads are bad, we have to keep them short’ and still you want to make money selling ads. Those two things don’t really fit together.” (Disclosure, Pentaleap is a client of mine)

This disparity in sponsored product coverage directly correlates to retail media revenue potential.

“Search on a retailer’s site remains one of the highest-intent moments in the shopper journey,” says Sarah Marzano
 Principal Analyst – Retail, Ecommerce and Retail Media EMARKETER. “Yet across even mature retail media networks, a large share of that search inventory is still under-monetized.”

“If you don’t want to show lots of ads on-site, you will not build a substantial retail media business. It’s that simple,” Reiffen added.

Ad Relevance is the key

What prevents high ad coverage from degrading the user experience? The answer is relevance. The most successful retail media networks ensure their sponsored products maintain click-through rates comparable to organic listings.

“Your sponsored products’ relevance has to be in line with your organic product relevance,” Reiffen says. “The click-through rate is a proxy or KPI for relevance. If sponsored products fall below the organic CTR, and there’s a substantial gap, then it’s a very dangerous game.”

The data reveals why retailers like Amazon can show more ads without sacrificing user experience – they’ve developed sophisticated ad matching technologies that maintain relevance even at high coverage rates.

This approach mirrors what Google achieved in search advertising up until the pandemic. By increasing the available ad space on search results pages year after year, Google created a generous supply of advertising opportunities. This surplus inventory helped moderate price inflation while the sheer volume of available clicks drove overall revenue growth.

Reiffen confirms this same pattern is evident in Amazon’s approach. While Amazon’s CPCs have indeed risen over time, they’ve increased far less dramatically than would have occurred had the company maintained limited inventory. By expanding available ad placements across more search results and grid positions, Amazon has moderated price inflation while capturing greater overall advertising spend.

Grid Placement Evolves

The benchmark report highlights how leading retailers are evolving their grid placement strategies for sponsored products. Walmart, for instance, began adding ads to more rows of product search results in Q1 2025, pushing sponsored ad tiles deeper into the grid – a strategic approach to increase inventory while distributing ads throughout the shopping experience.

In contrast, Staples concentrates its ads in positions 5-8, distributing them evenly across the mid-grid. CVS takes an even lighter approach, anchoring ads mainly in positions 4 and 8 – showing that even within the mid-tier group, placement philosophies vary significantly.

What’s particularly striking is how these approaches can backfire when relevance isn’t maintained. “We’ve sometimes seen a gap where organic CTR is two or three times better than sponsored CTR,” Reiffen says. “In such an instance, you better stop running those sponsored products. It’s just damaging in every sense. You damage the retail business. You annoy people.”

Keyword vs Product based bidding options can extend coverage

The report also reveals how technical capabilities impact scaling sponsored product coverage, particularly for complex search queries. While Amazon, Walmart and Home Depot maintain high sponsored product coverage even for 5-, 6- and 7-word queries, others like Office Depot see coverage collapse on complex searches – indicating weaker targeting technology.

Two primary targeting methodologies shape these performance differences: keyword-based bidding, where the advertiser chooses specific keyword to bid on, and product-based bidding, where the retailer determines what placement and keyword to spend that bid on based on campaign objectives.

Jordan Witmer, head of retail media at agency Nectar First says that while product-based systems are simpler to operate for advertisers, but can result in large investments against ads they wouldn’t choose to buy. “These are ideal for retailers as they can tweak logic to maximize monetization,” he said in an article on LinkedIn.

The more mature retail media networks like Amazon offer both keyword and product based bidding. This allows them to maintain high sponsored product coverage across simple and complex searches alike, while platforms with less sophisticated targeting capabilities see coverage collapse as search complexity increases.

This technical distinction creates significant performance disparities: “If long-tail searches don’t trigger sponsored products, that’s a severe lack of sophistication on the tech side, which isn’t great.” Reiffen told me.

For the advertiser, the inability to bid on longer-tail keywords, which generally indicate higher purchase intent from the shopper, means their ad costs could be higher.

The Revenue Balancing Act

Despite the attractive ad revenue upside, Reiffen says that retailers are correct to be concerned about ramping up ad slots at the expense of shopper experience. “If the click-through rate of a sponsored product is only 30 percent of an organic product, you need a CPC of roundabout more than $2 just to break even and to make up for the damage on the retail side,” Reiffen explains.

This creates a clear decision framework: “If you go from zero ads to 10 sponsored products on a page and you track both the margin from your retail business and the margin from your ad sales – and in the scenario with 10 ads you make more money – that indicates you’re doing the right thing.”

Looking Ahead

For retailers, the report’s implications are clear: sponsored product coverage can be dramatically increased without harming user experience, provided the ads maintain relevance parity with organic listings. This approach can significantly expand retail media revenue while protecting the core shopping experience.

For retailers, this analysis addresses the knowledge gap around how retailers actually monetize Sponsored Products ads and how various approaches impacts advertising revenue.

As retail media continues to evolve from a nascent opportunity to a core profit center, these benchmarks provide a roadmap for retailers seeking to maximize revenue without compromising user experience. More ads aren’t necessarily bad ads – but irrelevant ads always are.