SAN FRANCISCO, CA – January 27, 2026 – Retail media ad spend grew 33% year-over-year in Q4 2025, marking the largest single-quarter increase in six years, as brands aggressively expanded full-funnel strategies during the holiday season. Skai, the leading omnichannel advertising platform for commerce media, today released its Q4 2025 Digital Marketing Quarterly Trends Report, revealing how retail media’s rapid expansion is reshaping performance dynamics across paid search and paid social, while AI-powered discovery accelerates changes in consumer shopping behavior.
Key findings
- Retail media ad spend rose 33% YoY, the largest single-quarter increase in six years, with clicks up 34% and CPCs down 1%
- Upper-funnel DSP investment increased 72% YoY, while costs fell 24%
- Paid search CPCs climbed 16% YoY as AI-driven discovery channels and retail media redirected lower-funnel demand
- Marketers’ use of AI shifted toward strategy, with planning queries reaching 35.5% of prompts during Q4
Retail media scales efficiently as brands embrace full-funnel strategies
Retail media spend rose 33% year-over-year during the holiday season, but the more notable signal was how efficiently it scaled. Despite intense competition, CPCs declined 1% while click-through rates increased 9%, indicating engagement growth outpaced investment. This efficiency was driven by rapid DSP adoption. Upper-funnel investment grew 72% YoY, while costs fell 24%. Half of Amazon advertisers now run DSP campaigns, and DSP’s share of total Amazon spend rose from 17.7% to 23.4%, underscoring that brands are moving beyond testing and scaling upper-funnel retail media aggressively.
Channel dynamics evolve as retail media captures demand earlier
As retail media expands into the upper funnel, its impact is increasingly visible across other performance channels. Paid social delivered strong results, with clicks up 23% YoY and CPMs down 6%, reflecting ongoing efficiency gains. TikTok reached 50% account adoption while maintaining a stable share of spend.
Paid search, however, showed signs of mounting pressure. CPCs increased 16% year over year as impressions and clicks declined, indicating intensifying competition for high-intent queries. This is occurring as AI-driven search and recommendations gained significant traction during the holidays. Adobe reported that traffic to U.S. retail sites from AI services jumped more than 800% on Black Friday, while Salesforce found that AI-referred shoppers converted nine times more often than those from social media and that retailers deploying AI agents saw 59% higher growth rates.
Marketers shift AI usage from creative tasks to strategic planning
As cross-channel orchestration grows more complex, marketers are increasingly turning to AI for decision-making support. Nearly two-thirds of advertisers now use generative AI within retail media programs, but usage patterns reveal a clear evolution. Analysis from Skai’s proprietary GenAI marketing agent found that strategy and planning queries accounted for 35.5% of prompts in Q4, while creative and messaging requests fell to just 3%. This indicates that marketers are moving AI beyond content generation toward the strategic decisions that matter most: budget allocation, channel prioritization, and cross-channel optimization.
“This is one of the most revealing trends reports we’ve published because it shows how dramatically marketing behavior has evolved in just a year,” said Michelle Urwin, Chief Marketing Officer at Skai. “Retail media is scaling rapidly into the upper funnel, omnichannel execution is now the norm, and GenAI is emerging both as a new, agentic channel shaping discovery and as a layer across existing channels like search and retail. At the same time, GenAI is changing how marketers make decisions. These are early signals of changes that began to take hold in Q4 and will continue to shape how commerce media operates throughout 2026.”
To access the full Q4 2025 report, visit skai.io/quarterly-trends-hub.
Methodology
Analysis is based on 972 billion impressions, 8.7 billion clicks, and $9.2 billion of Skai platform activity across retail media, paid search, and paid social advertising in Q4 2025 (October 1 – December 31). Data is aggregated and anonymized across Skai accounts, including many of the world’s leading consumer brands and agencies. Year-over-year comparisons reflect the same period in Q4 2024. Only advertisers active on the Skai platform for the full duration of both periods were included to ensure consistency.
About Skai
Skai is the leading omnichannel advertising platform for commerce media, combining advanced digital marketing capabilities with commerce insights and operations to drive growth for brands and agencies. Powered by unified data and proprietary GenAI, Skai delivers full-funnel media planning, optimization, and measurement, as well as insights and automation that help brands improve digital shelf performance, retail execution, and revenue recovery. This integrated approach maximizes sales, profitability, and market share across media and commerce touchpoints.
Trusted by over 8,000 brands and agencies, including PepsiCo, Sanofi, and Estée Lauder, Skai integrates with 300+ publishers and retail media networks such as Amazon Ads, Walmart Connect, Criteo, Google, Microsoft, Facebook, and TikTok. Headquartered in San Francisco with nine international offices, Skai empowers brands to connect media and commerce for measurable growth and efficiency. Visit skai.io for more information.