We’ve all heard the phrase “you have to spend money to make money”—but when it comes to retail media, too many brands are still playing budget limbo. How low can we go? isn’t a strategy. It’s a gamble.
So here’s a radical idea (that really shouldn’t be radical at all):
What if retail media budgets started with a percentage of Cost of Goods Sold (COGs)?
Not tacked on at the end. Not squeezed in after everyone’s had their turn. Built in from the start.
Why Start With COGs?
Because retail media is no longer optional. It’s not a “nice to have” add-on at the end of your brand plan. It’s the engine that fuels conversion, trial, and repeat. And just like trade spend or slotting fees, it deserves a seat at the financial planning table.
COGs already define so much—margins, pricing, promotional strategy. Aligning your retail media budget to a set percentage of COGs:
- Creates consistency across SKUs, categories, and retailers
- Ties media investment to product-level profitability
- Helps you evaluate which products can support more spend—and where to scale back
- Removes guesswork from annual planning
The Goldilocks Zone: Not Too Much, Not Too Little
We’re not saying every brand needs to throw 20% of COGs into digital screens and shoppable display (though call us if you’re feeling bold). But let’s look at what other marketing tactics claim:
- Traditional trade spend? 15–25% of COGs
- Shopper marketing? 8–15%
- Retail media? Often… 1–3% (if that)
See the disconnect?
Retail media directly influences purchase. It closes the loop. Yet it’s often the last in line for funding—despite being one of the most measurable levers in your toolkit.
Setting a baseline percentage of COGs for retail media forces the conversation around true profitability and planned performance, not just leftovers from the brand budget.
A Smarter Framework for Smarter Spending
Let’s say your average COGs on a top-selling product is $2.00. Setting aside 5% of that ($0.10 per unit) for retail media gives you a working model to scale with velocity. That spend can now be directly attributed to the product it supports, not lumped into a vague “awareness” line.
Suddenly, you’re not just asking, Did the ad work?
You’re asking, Did it work at a sustainable cost per unit sold?
And that’s where things get really powerful.
TL;DR: COGs-Based Budgeting Isn’t Just Smart. It’s Sustainable.
It anchors your retail media investment in reality. It scales with your business. And it ensures your media dollars are proportionate to the product they support—without constantly fighting for scraps.
Because if retail media is expected to drive real results (and it is), it’s time we start treating it like a real investment.
Not an afterthought.
Not a tax.
But a line item backed by logic.