Why “More Retail Media” Isn’t the Answer

When retail media performance plateaus, the instinct is predictable: spend more.

It makes sense on the surface. If sponsored products are driving sales, why not scale the budget? If ROAS is positive, more investment should mean more returns. The math seems simple.

But it rarely works out that way. Brands that keep pushing budget into the same campaign structures often find diminishing returns—or worse, they hit a ceiling where more spend doesn’t move the needle at all.

The problem usually isn’t the budget. It’s how the budget is structured.

Key Takeaways

• • Scaling retail media spend without addressing structural issues leads to diminishing returns
• • Most performance plateaus stem from campaign structure, targeting, or content problems—not insufficient budget
• • Common structural issues include over-reliance on branded search, poor SKU prioritization, and disconnected media and content strategies
• • Incrementality matters more than ROAS—strong returns can mask spend that isn’t driving new sales
• • Before increasing investment, brands should audit campaign efficiency and fix structural gaps

Why Does Performance Plateau?

Retail media operates within constraints that make linear scaling difficult.

• • The first constraint is audience size. There are only so many shoppers actively searching for your category on any given platform. Once you’ve reached them, additional spend starts hitting the same people repeatedly—or reaching shoppers with lower purchase intent.
• • The second constraint is competition. As categories mature on retail media platforms, more brands enter the auction. CPCs rise. The efficiency you enjoyed as an early mover erodes as competitors bid up the same keywords and placements.
• • The third constraint is diminishing marginal returns. The first dollar of retail media spend typically captures the highest-intent shoppers—people already looking for your product. Each subsequent dollar reaches shoppers who are slightly less likely to convert. At some point, you’re paying more per acquisition than the customer is worth.

These dynamics mean that retail media doesn’t scale linearly. Doubling your budget won’t double your results. And if you’re already hitting structural limits, more spend just accelerates the inefficiency.

What Structural Issues Hold Campaigns Back?

When we audit retail media programs that have plateaued, we usually find one or more of these issues:

1. Over-reliance on branded search

Branded keywords are easy wins. Shoppers searching for your brand name have high intent, and conversion rates are strong. But branded search mostly captures demand that already exists—people who were going to buy your product anyway. We’ve seen brands allocate the majority of their retail media budget to branded terms, celebrating strong ROAS while wondering why market share isn’t growing. The efficiency looks good because you’re not doing much heavy lifting. But you’re also not expanding the customer base.

2. Underinvestment in category and competitor terms

This is the flip side. Category terms—generic searches like “protein bars” or “laundry detergent”—are more competitive and more expensive. But they’re also where you reach new customers who haven’t decided on a brand yet. Competitor conquesting is even more uncomfortable. It requires bidding on other brands’ terms, accepting lower conversion rates, and playing a longer game. Most brands under-invest here because the short-term metrics look worse. But it’s often where real share growth happens.

3. Poor SKU prioritization

Not every product deserves media support. We’ve covered this before: brands often push budget behind SKUs with low inventory, weak content, or poor ratings. But there’s a subtler version of this problem—allocating spend evenly across the portfolio rather than concentrating behind hero products that can drive the most volume. Strategic SKU prioritization means focusing media on products with the best combination of margin, inventory depth, content quality, and competitive positioning. It feels uncomfortable to “ignore” parts of your catalog, but spreading budget too thin dilutes impact.

4. Disconnected media and content

Retail media amplifies whatever’s on the product page. If you’re driving traffic to PDPs with thin content, low-quality images, or missing attributes, your conversion rates will suffer—and you’ll blame the media when the real problem is the destination. We regularly find brands where media and content are managed by separate teams with separate priorities. The media team is optimizing bids while the content team is focused on different SKUs entirely. Alignment between these functions is a structural fix that doesn’t cost additional media dollars.

How Do You Know If You Have a Structure Problem?

A few diagnostic questions:

• • What percentage of your retail media budget goes to branded vs. category vs. competitor terms? If branded is over 50%, you may be over-indexed on demand capture vs. demand creation.
• • Are your top-spending SKUs also your best-performing SKUs? If not, budget may be misallocated.
• • When you increased budget last quarter, did incremental sales increase proportionally? If not, you may be hitting diminishing returns.
• • Can you articulate the role of each campaign type in your portfolio? If everything is “driving sales,” you may lack strategic differentiation.
• • Is your content team aware of which SKUs are getting media support? If not, media and content are probably disconnected.
• • Honest answers to these questions often reveal that the path to better performance isn’t more spend—it’s restructuring how existing spend is deployed.

What Should You Do Before Scaling Budget?

Before asking for more retail media investment, do the work to ensure current investment is optimized:

• • Audit campaign efficiency: Look beyond topline ROAS. Examine performance by campaign type, keyword category, and SKU. Identify where efficiency is strong and where it’s breaking down. Cut or restructure underperforming campaigns before adding budget to the system.
• • Rebalance keyword strategy: Shift budget from branded terms toward category and competitor terms—especially if your brand is already well-known in the category. Accept that ROAS will look lower in the short term. Measure share of voice and new customer acquisition alongside conversion metrics.
• • Prioritize SKUs strategically: Concentrate media behind products that can actually win—strong content, sufficient inventory, competitive positioning, healthy margins. Don’t spread budget evenly across the catalog out of political convenience.
• • Align media and content: Ensure your content team knows which SKUs are getting media support. Audit those PDPs specifically. Fix content gaps before scaling media spend. This coordination costs nothing but delivers outsized returns.
• • Establish incrementality baselines: Before increasing budget, understand what portion of current sales are truly incremental vs. sales that would have happened anyway. This requires holdout tests or matched market analysis—it’s not easy, but it’s essential for making smart investment decisions.

The Bottom Line

More budget is the easy answer. It’s also usually the wrong one.

Retail media performance plateaus are rarely solved by spending more. They’re solved by spending smarter—restructuring campaigns, rebalancing keyword strategies, prioritizing the right SKUs, and aligning media with content.

The brands that scale retail media profitably aren’t the ones with the biggest budgets. They’re the ones that fix structural issues first—and then scale what’s working.

If your retail media performance has plateaued and you’re not sure why, we can help you find out.

Get in touch → commercemediaagency.co

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