Inside Chewy’s push to build a pet-focused retail media network

“Chewy wants to sell more pet food to our pet parents. Purina wants to sell more pet food to our pet parents. How can we truly work together and build a platform that serves both?” said Chewy’s head of ads, Frank Mulcahy. “To be able to have come from where we were starting off in 2022, to where we are now in mid-2026 … is the thing that I think we’re proudest of.”

Chewy doesn’t share how much its retail media business has generated in terms of dollars. But company executives said on its latest earnings call that sponsored ads growth was the main driver of gross margin improvement for fiscal year 2025, which was 29.8% over the prior year. Like other retail media networks, Chewy Ads runs sponsored products, brands and video sections, as well as co-branded marketing displays and content sponsorships. Offsite, Chewy Ads can be used across Meta, TikTok and Google, and it’s piloting connected TV options.

The growth at Chewy Ads also points to the surging opportunity in retail media overall. A Forrester report from October shows that retail media spending will hit $312 billion by 2030, up from $184 billion in 2025.

Chewy’s Mulcahy said the company is still in the early stages of building out its network. It was on a separate third-party platform for the first year or so before being converted to an in-house platform that has allowed brand vendors to do more sophisticated targeting, he said.

This March, Chewy debuted Chewy Max, which has more AI-powered targeting tools. That includes the ability to target for lifetime value return on ad spend. The secret sauce powering those tools is Chewy’s wealth of first-party data. With over 20 million active customers and about 84% of sales coming from auto-shipped orders, Chewy Ads has the added value of being able to target specific audiences with a high intent to purchase.

“How do I talk about pet parents that are [shopping] in food who might not know about our therapeutic and health vertical, or our hard goods or equine?” he said. “We can use all the signals Chewy has, with 15 years’ worth of data, in an ad tech framework and be laser focused on what we’re trying to deliver.”

From the brand point of view, Mulcahy said Chewy Ads focuses on being transparent with its data and measurements. The Chewy Ads dashboards show users the LTV ROAS for each campaign, as well as how many customers have signed up for autoship orders. On average, the company says its advertisers generate at least $7 in LTV sales for every $1 invested. All users can also see iROAS, or incremental return on ad spending, which shows net new revenue.

“It’s very important for any Chewy vendor to know what the true value of an acquired customer is at Chewy,” he said.

Mulcahy said the Chewy Max tools had been in development in-house for at least 18 months prior to launch. The Chewy Ads team includes digital marketers who have previously worked on ad networks, he said, giving the company in-house experience to draw from.

“We built this because we’re in a competitive enough situation to have the technological product and engineering horsepower to be able to deliver it, and that’s a position of strength that we’re really proud of.”

Andrew Lipsman, an independent retail media analyst, said category-specific marketplaces have a strong role to play in the retail media space. Amazon and Walmart have accounted for as much as 85% of retail media spend, per research from the platform Zitcha. But the remaining 15% in a market of $184 billion is still a major get for other retailers, Lipsman said.

“There is absolutely a strong place for every retailer that’s a leader in specialty categories,” he said. “Best Buy has an almost billion-dollar business. Home Depot probably isn’t far behind that. There’s Lowe’s, Ulta, Sephora — all the big players that lead their respective categories, and Chewy is one of those.”

Chewy’s focus on helping brands measure for and gain lifetime value is also a smart play, Lipsman said. Some ad formats may prioritize short-term ROAS at the expense of future sales, he said. “For Chewy, if you can provide visibility into the likely lifetime value of a customer, the brand’s willingness to increase its customer acquisition [investment] goes way up.”

One challenge companies can face is internally getting parties aligned with the idea of more ads. But shoppers on purely online retailers like Chewy are expected to see ads, he said, and even be relieved to get product suggestions that feel native and expected.

“A lot of these retailers actively resisted [retail media networks] because they didn’t want to disrupt the customer experience,” he said. “People really have an expectation of broader types of brands on an e-commerce site. When you’re surfacing these brands, it’s because the consumers want them.”

Chewy’s Mulcahy, a longtime digital ad executive who previously worked at Wayfair, said it’s not uncommon for there to be a tension between ad businesses and merchandisers. They may have different ideas about where vendor dollars can be best spent. But he said Chewy has approached its retail media network with the mentality of everyone wanting to move more products to the pet parents who can use them, and making sure customers have a good experience.

“I don’t want to be the Chewy RMN. We want to be the pet media company,” he said. “We’re not distracted by other things. We exist to serve pet parents, let them get the product they want at the right price, and to experience and see new things.”