Retail Media = Tax, Not Investment

Executive Summary

Retail Media Networks (RMNs) are pitched as high-ROI investments, engines of growth, and the future of advertising. But for most brands, retail media functions less like an "investment" and more like a tax—a cost of doing business, required to maintain distribution and visibility. Recognizing this reality is critical for reframing how brands budget, measure, and negotiate with retailers.

The Myth of Retail Media as Investment

Retail media is marketed as a growth lever:

• Closed-loop reporting makes it appear efficient.
• High ROAS claims create the illusion of outsized returns.
• Retailer pressure frames spend as optional "support."

But in practice, retail media spend is rarely discretionary. For many categories, the choice is not whether to spend—but how much must be paid to stay on shelf and visible.

Why Retail Media Behaves Like a Tax

1. Mandatory Spend: Without media, products lose digital shelf visibility, risking distribution.
2. Pay-to-Play Algorithms: Search rankings and share of voice are contingent on bids.
3. Retailer Leverage: Media commitments are often baked into Joint Business Plans (JBPs).
4. Margin Erosion: Like slotting fees in brick & mortar, RMN spend is deducted before true profit realization.

This is the behavior of a tax, not an investment.

Market Insight: The "ROI Illusion"

Retailers and agencies celebrate 3×, 5×, 10× ROAS case studies. But behind closed doors:

• Budgets are mandated in JBPs.
• Distribution visibility is conditional on spend.
• CFOs see RMN budgets deducted like trade spend.

👉 The public story is "investment." The private reality is tax.

CFO Lens: Where It Belongs on the P&L

If RMN spend behaves like trade, then it should be treated as part of Cost to Serve, not "working media."

This shift reframes the debate: RMN spend isn't about "campaign ROI"—it's about channel profitability and margin sustainability.

Ownership Debate: Who Should Lead?

This is where organizational maturity lags.

• Brand/Media Teams: currently "own" retail media, optimizing to ROAS dashboards.
• Sales (NAMs/KAMs): own the JBP where media commitments are quietly embedded.
• CFOs/Finance: often left out, but see the margin drag in P&Ls.

In reality, retail media requires a joint operating model:

• Sales should negotiate RMN as part of JBPs (like trade spend).
• Marketing should ensure creative and targeting sophistication so dollars aren't wasted.
• Finance should evaluate margin impact and sufficiency (how much spend defends vs. grows).

Today, these conversations are fragmented—and buyers at retail often wield media as leverage without being challenged on brand growth outcomes.

The Strategic Reframe for Brands

If RMN is treated as a tax, then the playbook shifts:

• Budgeting: Move RMN into cost-to-serve lines, alongside trade.
• Measurement: Focus on incrementality and category momentum, not inflated ROAS.
• Negotiation: Elevate RMN into buyer conversations—frame it as a trade-off against promo depth, distribution, or assortment.
• Portfolio: Identify SKUs where media "tax" is worth paying—and where it isn't.

The Bottom Line

Retail media isn't going away. But the sooner brands stop romanticizing it as "investment" and start managing it as a tax, the better their decisions will be.

The winners will:

• Treat RMN spend as cost-to-serve, not working media.
• Put ownership where it belongs—Sales, Marketing, and Finance together, not in silos.
• Push media into JBP conversations with buyers, reframing it as part of brand growth negotiations.

Until then, brands will keep chasing inflated ROAS dashboards while their P&L quietly erodes.

"The sooner brands stop romanticizing retail media as 'investment' and start managing it as a tax, the better their decisions will be."