Retail media vs search ads: which drives better UK ecommerce sales?

What to take away

What each channel is actually selling

Search advertising sells access to a query. You bid against other advertisers for a slot on a results page, and the auction sets the price of the click.

Google Ads and Microsoft Advertising both work this way, with a product feed supplying the creative. Google Shopping needs a Merchant Center feed, and Microsoft Advertising runs the same auction on Bing and partner sites.

Retail media sells access to a shopper inside a retailer's own property. The retail media category covers sponsored products on a retailer's search page, off-site display bought with the retailer's shopper data, and screens in a physical store.

Amazon Ads runs sponsored products on amazon.co.uk, open to sellers with a Seller Central or Vendor Central account. Tesco Media and Insight Platform sells on-site placements built on Clubcard data, reported at around 20 million UK households. Sainsbury's Nectar360 covers Sainsbury's and Argos, with Nectar reported at roughly 18 million accounts.

Boots Media Group sells sponsored products on boots.com against an Advantage Card base reported at about 17 million members. Ocado Ads sells self-serve sponsored placements to suppliers on ocado.com. eBay Ads runs promoted listings on a cost per click auction for sellers of any size.

The bigger difference is who holds the record. In search, you keep query-level reporting and your own conversion tag. In retail media, the retailer holds the shopper record and you see the summary it chooses to publish.

Both channels can sell the same shopper twice in one purchase journey. A single reported return figure will not settle the comparison, so the verdict rests on incremental sales per pound.

Which channel drives better UK sales

Judge both channels on incremental sales per pound, measured with a holdout and one conversion definition. Reported return on ad spend cannot do that job, because each platform counts a different event.

Paid search wins on demand you already own. Brand clicks on Google Ads are typically the cheapest in the account, and they reach shoppers who typed your name or product.

Retail media wins on discovery. Amazon Ads and Tesco Media placements reach shoppers browsing a category, which suits new flavours, impulse lines and products nobody searches for by name.

Where both chase the same query, Google Shopping and Amazon sponsored products are substitutes. Fund whichever shows the lower cost per incremental sale on a like-for-like test.

How the cost per click compares

A single cost per click figure hides the differences that matter. The table puts the same questions to both channels, with typical UK ranges where a public rate exists.

Google Ads sets the reference point: UK non-brand retail clicks typically cost £0.30 to £1.50, and brand terms often clear under £0.30 because few advertisers compete. Microsoft Advertising usually sells the same term for less, on a smaller audience.

Amazon Ads sponsored product clicks in the UK typically fall between £0.30 and £1.20, set by category and by the number of sellers bidding on the same ASIN.

Retailer networks sell on a mixed model. Tesco Media, Nectar360 and Boots Media Group usually quote on-site display per thousand impressions, typically £5 to £30 by placement and season. Sponsored product clicks on retailer search pages commonly run from £0.40 to £2.00.

Two cost figures are not comparable if one bills on a click and the other on a thousand impressions. Ask for the billing unit in writing before you build a model.

Attribution: why the two numbers do not line up

Paid search reports a click you paid for, then conversions your own tag recorded. Retail media reports sales the retailer matched to the placement. These are two different measurements, and neither includes a control group.

A retail media sale is an allocation of credit. A shopper who saw a sponsored product and then bought in store may be counted to that placement, while the same sale also appears in your search report.

Amazon Ads publishes attributed sales over a window it sets, commonly seven or 14 days for sponsored products. Tesco Media and Nectar360 can match a sale to a Clubcard or Nectar transaction, including in-store purchases.

Before treating a retail media return as proof, read the definitions behind it. Our guide to retail media return on investment explains how to label attribution as allocation and keep the arithmetic traceable.

A four-step test before you shift budget

Keep the first test small and reversible. Set the budget cap before you start, and write down the result that would make you stop.

Holdout design decides whether any of this means anything. Our walkthrough on running a retail media incrementality test sets out the split, the duration and the limits of what a single result can support.

Where the official retail data helps

ONS retail industry data gives you sales volumes and values by sector, not your campaign's effect. Use it to set a seasonal baseline and to record the release date you relied on.

The ONS publishes its retail sales estimate every month, usually a few weeks after the period ends, and revises it later.

If total retail sales are flat while your retail media spend doubles, the extra reported sales are more likely to be a shift between channels than new demand.

Common questions

Which is better for ecommerce, retail media or paid search?

Search ads usually win on incremental sales per pound for demand you already own, such as brand and category terms on Google Ads. Retail media wins for products with little search volume, where Amazon Ads or Tesco Media placements reach the shopper at the point of choice. Both numbers stay on different scales until the conversion definitions match.

Is retail media cheaper than Google Ads?

Not reliably. Retailer on-site display is usually sold per thousand impressions, typically £5 to £30, and sponsored product clicks commonly run from £0.40 to £2.00. Google Ads non-brand retail clicks typically cost £0.30 to £1.50. Compare cost per incremental sale instead.

Can I compare retail media return on ad spend with Google Ads return on ad spend?

Only if the attribution windows, conversion definitions and return handling match. Even then, the retail media figure includes sales that may have happened anyway.

Where does Google Shopping fit?

Google Shopping is paid search with a product feed attached. It competes for the same commercial queries as Amazon sponsored products and retailer placements, so treat the two as substitutes when splitting budget.