Retail Media and the Illusion of Incrementality
When Defensive Spend Is Mistaken for Growth
Retail media dashboards have a way of making certain decisions feel obvious. Branded campaigns produce strong conversion rates, high return on ad spend, and clean attribution. On paper, they appear to be the safest dollars a marketer can deploy. It is no surprise that simple guardrails emerge in response — percentage caps on branded spend, tidy benchmarks, mechanical rules meant to keep budgets in check.
The appeal of those rules is understandable. They promise clarity in a landscape that often feels opaque. But is retail media allocation a percentage problem, or a strategic intent problem? The moment we reduce it to ratios; we risk confusing efficiency with growth.
At its core, retail media spend performs two fundamentally different functions. One protects demand that already exists. The other creates demand that does not yet exist. When those purposes blur, dashboards begin telling incomplete stories, and brands optimize toward what looks strong rather than what builds forward momentum.
Two Functions, One Budget
The first function is defensive. Defensive spend protects existing intent. When a shopper searches for a brand by name, the purchase decision is largely formed. Branded bidding and sponsored shelf placement ensure that intent is captured rather than intercepted. In digital retail environments where substitution is frictionless, that protection matters. Defensive spend preserves value the brand has already earned through awareness, distribution, and customer experience.
The second function is incremental. Incremental spend extends beyond existing loyalty. It introduces brands to shoppers who were not actively searching for them. It captures category demand and creates trial opportunities. This is where growth originates, not because it’s always immediately efficient, but because it expands the future pool of intent.
In my experience, most organizations blend these two objectives within the same budget. Few explicitly separate them. That ambiguity is where optimization shifts from strategic to reactive.
When Efficiency Is Not Expansion
Defensive campaigns often generate exceptional ROAS precisely because they harvest demand that already exists. Conversion rates are high because shopper intent was pre-formed. The efficiency is real, but it is not incremental.
When capture efficiency is misinterpreted as growth, budgets begin concentrating around protection. Dashboards glow green, and momentum appears intact. That said, true expansion may be stagnant.
This is the illusion of incrementality: performance metrics that reward the capture of existing demand while masking the absence of new demand creation.
Context Matters More Than Ratios
Lifecycle and market position fundamentally change the equation. A challenger brand building awareness operates under different constraints than an established brand defending a large share of branded search volume. A category leader may treat defensive spend as structural insurance within platform ecosystems that reward paid visibility. None of these postures are right or wrong - they are contextual. What becomes problematic is the application of universal thresholds divorced from strategic purpose.
Retail media discipline is not about keeping branded spend under a tidy percentage. If you really think about it, It’s about understanding what problem that spend is solving.
Platforms Are Not Neutral
Retail media platforms are not passive channels. They shape visibility, substitution behavior, and algorithmic ranking. Sponsored placement influences competitive dynamics whether or not incremental lift is easily isolated.
In some ecosystems, defensive presence functions less like advertising and more like insurance. That may be rational. But insurance should not be mistaken for growth.
When brands fail to distinguish between the two, allocation decisions drift toward protection at the expense of expansion.
From Ratios to Intent
The more productive executive question is not whether branded spend exceeds a benchmark. It is whether the balance between defense and expansion is deliberate.
· What portion of the budget protects existing demand?
· What portion builds new demand?
· Is that mix aligned with long-term growth objectives?
Retail media maturity is not achieved by optimizing percentages. It is achieved by aligning spend with purpose.
Defensive spend protects what a brand has already earned. Incremental spend builds what comes next. Confusing the two is how high-performing dashboards quietly mask stagnant strategy.
In an ecosystem evolving as quickly as retail media, clarity of intent becomes a competitive advantage. The brands that win will not be those chasing perfect ratios. They will be the ones who understand what their spend is meant to accomplish, and allocate accordingly. Ultimately, this is less a media optimization issue and more a capital allocation decision, one that belongs firmly within the broader conversation about marketing’s relationship to the P&L.