How Retailers Use Retail Media to Offset Rising CAC

The uncomfortable truth is, customer acquisition costs have been quietly getting out of hand for a while now. Over the last five years, CAC across digital channels has climbed relentlessly as Meta, Google, and TikTok auctions get more crowded, more competitive, and far less forgiving. 

Retailers today are paying significantly more to acquire the same shopper they could reach far more cheaply just a few years ago. And here’s the thing: the solution isn’t another optimization hack or a bigger paid media budget. 

But what’s changed is how leading retailers respond…

Instead of treating retail media purely as a revenue add-on, forward-looking teams are using it as a counterweight to rising acquisition costs. Not by spending more, but by changing who pays.  What started as an on-site monetization layer has evolved into something far more strategic over the years. When designed correctly, retail media generates ad revenue while also actively offsets customer acquisition costs, often without the retailer spending a single extra dollar.

1. The Real Problem: CAC Is Rising Faster Than Retail Margins

Retailers don’t need another report to tell them CAC is rising, they feel it every quarter. Across categories, the same pattern keeps showing up:

• CPMs and CPCs on paid social and search continue to inflate
• Broad upper-funnel campaigns are delivering weaker returns
• More brands are bidding on the same audiences, driving auction pressure

In many verticals, CAC has increased 30–50% over just a few years, while conversion rates have remained mostly flat. That mismatch is dangerous. It means growth now costs more, but doesn’t necessarily convert better.

Relying solely on retailer-funded acquisition is no longer sustainable. This is precisely where retail media introduces a structural advantage, one that traditional performance marketing simply cannot replicate.

2. Offsite Retail Media: Where Brands Pay for Retailer Growth

Most conversations around retail media stop at onsite ads. That’s where the real opportunity gets missed. The most powerful CAC offset lives offsite. Here’s how modern offsite retail media actually works:

• Retailers allow brands to activate first-party retailer audiences across external channels
• These audiences are deployed on platforms like Meta, Google, TikTok, CTV, and programmatic environments
• The brand funds the media spend, not the retailer
• Traffic is driven back to the retailer’s platform

The outcome is simple but profound:

• Brands acquire shoppers for the retailer
• Retailers acquire customers at zero CAC
• GMV increases without expanding the retailer’s own marketing budget

This is not theoretical. This is brand-funded customer acquisition, enabled by a retail media platform that extends beyond onsite inventory and moves towards a full-fledged ad marketplace.

3. Why Brands Are Willing to Pay for Retailer Traffic

From a brand’s perspective, offsite retail media solves problems that Meta and Google alone cannot. Brands get access to:

• Deterministic, purchase-based targeting
• Commerce signals unavailable on open platforms
• Closed-loop measurement tied directly to sales
• Stronger new-to-brand and new-to-category discovery

But there’s another driver that matters just as much: retention. Brands are increasingly focused on:

• Reactivating lapsed customers
• Bringing back shoppers inactive for 60–90+ days
• Defending category share against competitors
• Influencing conversion on the retailer’s platform, where intent already exists

Retailers can offer segments brands simply can’t build elsewhere:

• “Lapsed customers (90+ days)”
• “High-frequency category buyers”
• “Discount-driven value shoppers”
• “Customers who purchased Brand A but not Brand B”

Brands are willing to pay for this access because the targeting is precise, measurable, and tied to real commerce outcomes. Retailers benefit because those shoppers return to their ecosystem, without increasing their own CAC. This is retail media operating as infrastructure, and not just inventory.

4. Exclusion Logic: The Quiet Power Move

Offsite retail media becomes significantly more efficient when paired with smart exclusions, a capability many retailers underutilize. With proper audience controls, retailers can:

• Exclude customers who purchased in the last 30, 60, or 90 days
• Exclude loyalty members already actively shopping
• Exclude users recently exposed to campaigns
• Exclude shoppers currently browsing onsite

Why does this matter?

Because it ensures brands are paying only to reach customers the retailer actually wants to reacquire, not shoppers who would have come back organically anyway.

Brands happily fund:

• Reactivation campaigns
• Rediscovery journeys
• Cross-category expansion
• New-to-category acquisition

Retailers capture the downstream value: Returning users convert, drive GMV, and re-enter retention loops, without adding to CAC. This is where a mature retail media platform quietly outperforms traditional paid acquisition.

5. When Retail Media Becomes a CAC Flywheel

When implemented correctly, offsite retail media fundamentally rewires acquisition economics. Retailers here gain:

• Brand-funded customer acquisition
• Increased repeat traffic
• Higher GMV without expanding budgets
• Reduced dependence on Meta and Google
• Lower blended CAC

And brands gain:

• High-fidelity first-party targeting
• Closed-loop attribution
• Better conversion rates than standalone social
• Transparent post-campaign insights

Marketing teams gain something equally valuable: breathing room. Budgets can shift toward loyalty, experience, and retention instead of being swallowed by rising acquisition costs.

The equation flips from retailer-funded acquisition to brand-funded acquisition This is no longer just monetization. This is retail media acting as a growth engine inside an ad marketplace model.

6. Why This Matters More in a Tight Economy

Margin pressure, inflation, and cautious consumer spending have made CAC reduction a board-level priority. Offsite retail media acts as a stabilizer as:

• It avoids saturated auctions
• It subsidizes acquisition using brand budgets
• It reactivates dormant shoppers
• It improves profitability per order
• It creates recurring revenue through the retail media ecosystem

Retailers who treat retail media strategically don’t see CAC as an uncontrollable expense. They treat it as a shared investment with brand partners, enabled by data, audience intelligence, and platform design. 

This is exactly where solutions like Osmos come into play, helping retailers operationalize offsite activation across categories like grocery retailers, fashion and beauty retailers, and restaurant aggregators; all while keeping measurement, exclusions, and optimization tightly integrated within the retail media platform.

Conclusion: Retail Media Changes the Cost of Growth

Retail media has long been positioned as a monetization layer. In reality, it’s something bigger. In 2025 and beyond, retail media is also a customer acquisition strategy, one where brands fund growth, retailers control the audience, and CAC stops spiraling out of control.

Retailers that integrate offsite activation into their playbook can:

• Dramatically reduce their own CAC
• Let brands finance reactivation and traffic
• Maintain growth without scaling paid media budgets
• Strengthen long-term supplier relationships
• Stabilize margins even in volatile markets

If you’re evaluating how retail media can offset CAC, get a demo with Osmos to see how it works in practice.

As retail media matures, the most advanced retailers won’t just earn ad revenue. They’ll use their retail media platform to fund, optimize, and offset the entire cost of customer acquisition, turning their ad marketplace into one of the most valuable growth assets they own.

For examples of how this looks in practice, explore real-world implementations across Osmos powered retail media categories in our success stories.