PayPal’s SMB Ad Play Changes How You’ll Negotiate Commissions

PayPal's launch of Ads Manager in early 2026 represents more than another fintech expansion—it signals a fundamental redistribution of advertising inventory that could reshape how affiliate marketers identify and cultivate partnerships. When tens of millions of small businesses suddenly gain the ability to monetise their website traffic through retail media networks, the entire partnership ecosystem must recalibrate.

The recent announcement positions PayPal Ads Manager as a tool enabling small businesses to establish their own retail media networks with no upfront cost or minimum commitment. Businesses can integrate a software development kit within minutes, set advertising preferences, and begin serving ads automatically through their PayPal Merchant Portal. The platform will initially launch in the United States, with the United Kingdom and Germany following shortly after.

Mark Grether, Senior Vice President and General Manager of PayPal Ads, framed the development bluntly: “Small businesses are the backbone of our economy, but they've been locked out of the retail media revolution that's transforming how major retailers generate revenue.”

That statement carries weight for partnership professionals. The retail media market has reached substantial scale—as Affiverse reported, retail media networks generated $53.7 billion in advertising revenue in 2024, representing a 23% year-over-year increase. Until now, that growth has been concentrated amongst major retailers with substantial traffic and technical resources. PayPal's move democratises access to this revenue stream, but it also fragments what was becoming an increasingly consolidated advertising landscape.

Your Merchants Just Got a New Revenue Stream—And It Competes With You

The immediate question for affiliate marketers isn't whether PayPal's tool will succeed—it's how this development changes the partnership negotiation landscape. When SMBs gain an alternative revenue stream from their website traffic, traditional affiliate commission structures come under fresh scrutiny.

Consider the mathematics: a small e-commerce business currently paying 8-10% affiliate commissions now has the option to monetise that same traffic through retail media advertising. PayPal's platform leverages the company's 25-year transaction graph, cross-merchant purchase insights, and closed-loop attribution to target actual buying behaviour rather than browsing history. This creates advertising inventory that brands may value more highly than traditional affiliate placements.

The tension between retail media and traditional affiliate marketing isn't hypothetical. Affiliate marketers have already reported commission rates declining from 10% to 5-7% as brands redirect funds to retail media initiatives. PayPal's entry accelerates this trend by making retail media accessible to businesses that previously relied entirely on affiliate partnerships for performance marketing revenue.

The strategic response shouldn't be defensive. Affiliates who view this development as pure competition miss the larger opportunity. As industry analysis has shown, retail media networks and affiliate marketing serve complementary roles in the customer journey. Retail media excels at point-of-purchase advertising; affiliates continue to provide trusted guidance through the research and consideration phases.

For eCommerce Brands: The Partnership Program Just Got More Complicated (And More Interesting)

If you're an eCommerce brand managing affiliate programs, PayPal's launch fundamentally changes what “partnership” means. The traditional binary—you either pay affiliates commissions or you don't—has dissolved into something far more nuanced.

Brands now face merchants who are simultaneously potential partners and competitors for the same customers. That small boutique fashion retailer you've recruited as an affiliate? They can now run competing brand ads on their site through PayPal. The speciality food merchant in your program? They're about to receive pitches from brands wanting to advertise directly on their storefront.

This creates both friction and opportunity. The friction is obvious: your affiliate partners may deprioritise your products in favour of brands paying for retail media placements. The opportunity is less apparent but potentially more valuable—your brand can now access advertising inventory on thousands of small merchant sites that were never available before.

Think beyond the traditional content publisher or cashback affiliate. PayPal's platform opens partnership possibilities with:

Complementary Product Merchants: A coffee brand could advertise on the sites of independent bakeries and breakfast restaurants. A fitness apparel brand could place ads on yoga studio booking platforms. These aren't traditional affiliates—they're merchants in adjacent categories who now have monetisable inventory.

Supply Chain Partners: Brands could negotiate retail media placements with their own distributors or retailers as part of broader partnership agreements. Rather than pure wholesale relationships, these evolve into multi-faceted partnerships combining product placement, retail media advertising, and commission structures.

Geographic and Niche Micro-Merchants: PayPal's platform makes it viable to work with merchants who were previously too small to consider. A regional outdoor gear brand could advertise across dozens of local outdoor activity providers. A speciality food brand could reach customers through independent grocers and farm shops across specific regions.

The strategic implication for eCommerce brands is straightforward: your partnership program needs to expand beyond recruiting content affiliates and managing coupon sites. You now need a retail media strategy that identifies which small merchant sites your customers visit, and how to access that inventory—whether through direct partnerships, hybrid affiliate-retail media arrangements, or pure paid placements through PayPal's platform.

What This Means for Different Partnership Types

Content Affiliates and Publishers

Traditional content affiliates face the most direct impact. When SMB merchants can generate revenue from retail media advertising, the value proposition for sending traffic through affiliate links becomes more complex. Publishers will need to articulate their unique contribution more precisely—emphasising editorial context, audience engagement, and content quality that retail media placements cannot replicate.

The opportunity lies in hybrid models. Rather than competing with retail media, sophisticated content affiliates could negotiate arrangements that combine traditional commission structures with traffic-driving bonuses. If an SMB merchant is earning retail media revenue from traffic an affiliate sends, that affiliate has grounds to negotiate for a share of both revenue streams.

Cashback and Loyalty Programs

Cashback sites and loyalty programs operate in particularly interesting territory. These platforms already monetise through commission arbitrage—taking a percentage of merchant commissions and passing a portion to consumers. When merchants have retail media revenue as an alternative, cashback platforms may find leverage for different partnership structures.

PayPal's closed-loop attribution capabilities also create potential alignment. Cashback programs that can demonstrate they're driving high-value, repeat customers may find merchants willing to structure hybrid deals that include both affiliate commissions and retail media ad placements.

Influencer and Creator Partnerships

As Button's entry into retail media demonstrated, the convergence of retail media and creator economies creates new partnership models. Influencers and content creators who currently work on affiliate commission structures may find opportunities to negotiate for retail media ad placements on their platforms or co-created content that combines both models.

The key differentiator remains authenticity. Retail media networks excel at automated, data-driven advertising, but they cannot replicate the genuine product recommendations that drive influencer conversions. Creators who understand this distinction can position themselves as complementary to, rather than replaceable by, retail media networks.

The Broader Strategic Picture

PayPal's move reflects a fundamental shift in how payment and commerce platforms view their role in the advertising ecosystem. The company joins JPMorgan Chase (which launched a financial media network in 2024) and Mastercard in leveraging transaction data for targeted advertising. This convergence of fintech and retail media creates a new competitive dynamic that extends beyond simple affiliate commission structures.

For program managers, the strategic imperative is clear: understand that your merchant partners now have more options for monetising their traffic and must evaluate those options dispassionately. Rather than defending traditional commission structures, forward-thinking program managers should position affiliate partnerships as complementary to retail media—addressing different customer journey stages and providing distinct value propositions.

The businesses that will thrive through this transition are those that view PayPal's entry not as a threat but as market validation. Retail media's explosive growth demonstrates that merchants want to monetise their traffic more effectively. The question isn't whether that will happen—it's how affiliate marketers position themselves within that evolving ecosystem.

Looking Ahead

PayPal Ads Manager won't launch until early 2026, but strategic planning should begin now. Partnership professionals who wait for the platform's full market impact before adjusting their approach will find themselves responding to merchant demands rather than shaping partnership evolution.

The fundamental insight is that traffic has become more valuable, not less. PayPal's platform simply makes that value more visible and accessible to SMB merchants. Affiliates who can demonstrate they drive better quality traffic, higher engagement, or more profitable customer relationships will find that their partnership value increases, not decreases, in this new environment.

The retailers and brands that succeed with PayPal Ads Manager won't be those abandoning affiliate partnerships—they'll be those building sophisticated multi-channel strategies that leverage both retail media and affiliate marketing for their distinct strengths. Position yourself to be part of those conversations, and this development becomes an opportunity rather than a challenge.

Ready to diversify your affiliate marketing strategy? Explore our training programs at https://www.affiversemedia.com/ampp/ and stay updated with the latest trends through our industry insights at https://www.affiversemedia.com/.