Brand Executives Cut Digital Budgets, Rebuild Around Community and AI Infrastructure

Quick Facts

Average ecommerce customer acquisition costs now range from $68 to $84, up 40% in two years, with Meta CPMs averaging $14.19 in 2026, up 20% from 2025.
One executive cut their digital ad budget in half and hired two community managers to run weekly in-store and external events.
89% of retailers are actively using or testing AI, with 58% at full deployment, up 16 points from the prior year, per NVIDIA’s 2026 survey.

Founders and C-suite executives at the Glossy and Modern Retail Brand Leaders Dinner, held in partnership with Global Payments, described a retail environment where digital advertising is losing ground and AI is no longer a test project. The dinner, held under Chatham House Rules, brought together leaders from fashion, beauty, and retail to speak candidly about what is reshaping their businesses.

The shift in tone around AI was immediate. Executives who attended a prior dinner in April described treating AI as a marketing experiment. By this gathering, several said they had moved AI into core business infrastructure.

Internal Platforms Replace Piecemeal Tools

One brand built an internal intelligence platform that connects fulfillment data, paid media performance, customer reviews, and conversations from platforms including Reddit. The goal is a single system of record that spans the full customer journey.

Executives also raised a structural question facing commerce teams: websites and product content now need to serve human shoppers, AI agents scanning on their behalf, and other automated systems simultaneously. “Your web has to be different, your chat has to be different, your documentation has to be different,” one attendee said.

On workforce concerns, one founder hired an HR consultant to interview employees about how they were already using AI and what worried them. The company then built internal guidance and workshops to help the team adopt the technology together. A sentiment echoed across the room: “Everyone thinks everyone else is more advanced in AI than they are.”

Digital Ad Costs Driving Budget Redirects

Meta and Google dominated the conversation on paid channels, and not favorably. Shopping ad cost-per-click on Google jumped 33.72% to $3.49. The average Meta CPM in 2026 ranges from $10 to $18 for ecommerce brands, with an industry-wide average of roughly $14.19, up 20% from $11.82 in 2025.

Several executives described the math as unsustainable. One called relying solely on digital advertising “a money suck.” Another said they cut their digital budget in half and used the savings to hire two community managers whose job is to run events every week, both in stores and at outside venues.

The numbers back the frustration. Average ecommerce CAC now sits between $68 and $84 across categories, up 40% in two years. Shopify’s Global Commerce Report found CAC rose from $274 to $318, a 16.1% jump, in a single reporting period.

Physical Stores Take on a New Role

The conversation about community was not nostalgic. Executives framed physical retail and live events as deliberate strategic moves in response to rising digital costs and eroding consumer trust in advertising. Stores are being repositioned from transaction centers to experience and connection hubs.

Barnes and Noble was cited as a reference point. The bookseller gave local managers authority to curate store selections and host community events, turning individual locations into cultural touchpoints. The strategy has driven increased visits and longer dwell times.

Brands are using AI to identify local consumer tastes and then building in-person programming around those findings. That programming ranges from community collaborations and food tastings to pop-ups. The model pairs data-driven targeting with human-led execution.

Discovery Is Fragmenting

Gen Z discovery does not follow a linear path. A product may surface in a TikTok video, generate discussion on Reddit, earn a YouTube review, and convert through TikTok Shop, a creator storefront, or a brand site. Over 60% of Gen Z discovers new brands on Instagram and TikTok, making social presence a baseline requirement rather than a growth lever.

AI agents are entering the discovery path as well. Commerce teams now face a dual audience: human shoppers and the automated systems searching on their behalf. How brands structure product information, reviews, and content will determine whether AI agents surface them or skip them entirely.

McKinsey estimates agentic commerce could represent up to $1 trillion in U.S. business-to-consumer retail revenue by 2030, a figure that makes the infrastructure decisions executives are making now consequential at scale.