Q4 2025 Retail Media Benchmark Report

Sponsored Brands made meaningful efficiency gains in Q4, narrowing the ROAS gap with Sponsored Products through higher conversion. These gains were driven by improved conversion rates and faster ROAS growth than Sponsored Products. While Sponsored Products continued to deliver slightly higher absolute ROAS, Sponsored Brands narrowed the performance gap over the course of the quarter. Importantly, these gains were not driven by larger basket sizes, but by improved conversion efficiency as shopper intent fluctuated across Q4.

Walmart ads delivered more efficient traffic in Q4, with higher engagement and stable-to-lower costs. In Q4, both Sponsored Brands and Sponsored Products on Walmart drove significantly higher engagement without an increase in cost per click, signaling improved ad relevance and a more efficient traffic environment. Sponsored Brands stood out, combining a sharp lift in CTR with materially lower CPC year over year. In a quarter that typically brings rising competition, this dynamic suggests Walmart (and Sponsored Brands specifically) allowed advertisers to capture more shopper attention without paying more for it.

Instacart Display delivered outsized efficiency gains in Q4, while Sponsored Products showed steady performance improvement. Instacart Display saw a sharp improvement in efficiency and returns in Q4, with materially lower ACOS and significantly higher ROAS both quarter-over-quarter and year-over-year. Sponsored Products also improved profitability, but at a more incremental pace, reinforcing its role as a steady performance format rather than a breakout efficiency driver. Together, these trends suggest that while Sponsored Products provided consistent returns, Display emerged as a stronger lever for efficiency gains on Instacart in 2025.

Target delivered stronger engagement and efficiency in Q4 while continuing to scale advertiser investment. In Q4 2025, Target advertising performance improved across key engagement and efficiency metrics, even as advertiser investment increased. CTR rose quarter over quarter, while CPC declined, easing cost pressure and signaling stronger ad engagement. At the same time, efficiency improved meaningfully, with lower ACOS and higher ROAS, indicating better returns on spend as brands scaled budgets into the quarter. Together, these trends point to a healthier balance between growth and performance in Q4 than in the prior quarter.

Categories with repeat or needs-based demand were structurally better positioned to convert Q4 traffic. In Q4 2025, categories tied to habitual or essential purchasing consistently delivered the highest conversion rates across Amazon. Grocery, Health & Household, Pet Supplies, Baby, and Beauty & Personal Care all converted materially better than discretionary categories such as Electronics and Home & Kitchen. This conversion advantage helped support steadier performance during the most competitive quarter of the year, even when returns were not the highest overall.