Tayab Hasan, GM Ads at Careem | Retail Media, Data Monetisation and Growth
I would like to talk about a topic no one is addressing—perhaps because it’s inconvenient and strikes at the heart of the commercial relationship between retailers and their most loyal CPG advertisers.
Here it is: Endemic CPG brands are passing on the cost of retail media to retailers and we just don’t know how much of it is being passed on.
The Illusion of Incrementality for Retailers
Retail media has sold itself on the promise of incremental growth to (endemic) supplier brands. “Spend with us, and we’ll grow your sales beyond what you were already going to get.”
Retailers love this pitch because it makes media revenue feel like bonus margin.
But here’s the catch: many CPG brands are pushing back the cost of this “incremental” growth in the following year.
Retailers are noticing that when brands are pushed particularly hard to spend, they notice brands clawing back that margin by coming hard on trade terms and price increases.
Brands are starting to reabsorb the cost they spent on media in Year 1 by asking for compensation in Year 2.
For retailers the revenue looks good on paper but it’s not truly incremental. It’s just redistributed margin.
This game of give-and-take erodes the long-term sustainability of endemic retail media investments. Don’t get me wrong, brands are not passing 100% of the increase, we’re just not sure how much of it is the media cost being passed back and only the brands know this.
And almost no one in the industry is publicly talking about it.
Diminishing Returns for Endemic Brands
Retailers keep expanding their retail media capabilities hoping that their core CPG brand partners will keep spending more each year. But there’s a ceiling.
Sure, so retail media is “incremental,” but there’s a critical nuance: well before a brand reaches the limit of its potential market share, there comes a point where the next dollar spent delivers less return than the last.
This is the point of diminishing returns
- A brand might go from 12% to 14% share in a category with aggressive media spend.
- But going from 14% to 15% may cost disproportionately more.
- Eventually, the return no longer justifies the spend.
And because retail media doesn’t create new category demand, it becomes harder for the brand to grow further without cannibalising itself. This is where endemic investment begins to plateau, even if the brand is still gaining share.
This is the part no one is talking about. We treat retail media spend as infinitely scalable. It’s not.
This creates a structural limitation. If the growth of retail media depends only on endemic brands and their performance spend, then we’re building a treadmill, not a flywheel.
Growth Will Come from Elsewhere
The path forward isn’t squeezing more out of the same brands in the name of performance. It’s about finding ways to:
- Provide endemic brands the right placements to deploy their upper funnel awareness budget.
- Invite non-endemic brands to the mix.
- Take the media offsite.
Non-endemic brands—those not sold on the retailer’s platform—are a largely untapped market. They’re willing to pay a premium for access to retail audiences (remember my previous article on first party data?), especially in high-intent or post-purchase moments. And since they don’t have margin negotiations to fall back on, their media spend is truly incremental for the retailer.
Similarly, offsite activation, where retailers allow their audience data to power media on the open web or social media.
A Final Thought
The challenges above are felt and addressed by the retailers on the higher maturity levels of retail media. If your retail media revenue is at 2-3% of sales (GMV) and growing – then you should be thinking about the above solutions.
As the retail media ecosystem matures, we must be honest about the limits and transparent about what’s truly incremental.
Retailers who recognise the structural headwinds in endemic partnerships—and pivot toward offsite and non-endemic growth—will be the ones who develop a true media company within a retailer.
You are in: Home » Retail Media » OPINION What no one’s telling you about retail media in grocery
OPINION What no one’s telling you about retail media in grocery
Colin Lewis
Tayab Hasan, GM Ads at Careem | Retail Media, Data Monetisation and Growth
I would like to talk about a topic no one is addressing—perhaps because it’s inconvenient and strikes at the heart of the commercial relationship between retailers and their most loyal CPG advertisers.
Here it is: Endemic CPG brands are passing on the cost of retail media to retailers and we just don’t know how much of it is being passed on.
The Illusion of Incrementality for Retailers
Retail media has sold itself on the promise of incremental growth to (endemic) supplier brands. “Spend with us, and we’ll grow your sales beyond what you were already going to get.”
Retailers love this pitch because it makes media revenue feel like bonus margin.
But here’s the catch: many CPG brands are pushing back the cost of this “incremental” growth in the following year.
Retailers are noticing that when brands are pushed particularly hard to spend, they notice brands clawing back that margin by coming hard on trade terms and price increases.
Brands are starting to reabsorb the cost they spent on media in Year 1 by asking for compensation in Year 2.
For retailers the revenue looks good on paper but it’s not truly incremental. It’s just redistributed margin.
This game of give-and-take erodes the long-term sustainability of endemic retail media investments. Don’t get me wrong, brands are not passing 100% of the increase, we’re just not sure how much of it is the media cost being passed back and only the brands know this.
And almost no one in the industry is publicly talking about it.
Diminishing Returns for Endemic Brands
Retailers keep expanding their retail media capabilities hoping that their core CPG brand partners will keep spending more each year. But there’s a ceiling.
Sure, so retail media is “incremental,” but there’s a critical nuance: well before a brand reaches the limit of its potential market share, there comes a point where the next dollar spent delivers less return than the last.
This is the point of diminishing returns
And because retail media doesn’t create new category demand, it becomes harder for the brand to grow further without cannibalising itself. This is where endemic investment begins to plateau, even if the brand is still gaining share.
This is the part no one is talking about. We treat retail media spend as infinitely scalable. It’s not.
This creates a structural limitation. If the growth of retail media depends only on endemic brands and their performance spend, then we’re building a treadmill, not a flywheel.
Growth Will Come from Elsewhere
The path forward isn’t squeezing more out of the same brands in the name of performance. It’s about finding ways to:
Non-endemic brands—those not sold on the retailer’s platform—are a largely untapped market. They’re willing to pay a premium for access to retail audiences (remember my previous article on first party data?), especially in high-intent or post-purchase moments. And since they don’t have margin negotiations to fall back on, their media spend is truly incremental for the retailer.
Similarly, offsite activation, where retailers allow their audience data to power media on the open web or social media.
A Final Thought
The challenges above are felt and addressed by the retailers on the higher maturity levels of retail media. If your retail media revenue is at 2-3% of sales (GMV) and growing – then you should be thinking about the above solutions.
As the retail media ecosystem matures, we must be honest about the limits and transparent about what’s truly incremental.
Retailers who recognise the structural headwinds in endemic partnerships—and pivot toward offsite and non-endemic growth—will be the ones who develop a true media company within a retailer.
Read More
You may also like
Subscribe to our email community