What is the difference between trade, shopper, and brand funds?

Trade funds are supplier monies that help drive the growth of a retailer — and indirectly the supplier. Shopper marketing funds are supplier monies that drive the growth of that individual supplier at that specific retailer. Brand funds are monies suppliers allocate to building their brand in the broader market, outside of retail — the budget that retail media networks tap into.

Are trade, shopper, and brand funds all one bucket of money?

Not truly. There is some fungibility — early retail media businesses often repurpose shopper dollars before they're sophisticated enough to capture true brand budgets. But the fact that a retailer must provide a different service to capture each bucket is the clearest indicator the money is not fully fungible. Capturing all three requires distinct tools, incentives, and measurement for each.

Why does Amazon capture about 80% of retail media spend?

Amazon built marketing tools and measurement that spoke the language of brand builders, not shopper marketers, so it could tap brand budgets no other retailer was capturing. Critically, Amazon created clear internal delineation between trade, shopper, and brand funds — separate incentives, tools, and tactics for each — which let it extract all three independently rather than letting teams fight over one shared pool.

How should retailers structure incentives to capture all three buckets?

The most overlooked move is to change internal incentive structures so teams aren't competing for the same dollars. When merchants, marketers, and media teams are incentivized on separate P&Ls without alignment, they fight over budgets and the retailer captures less overall. Aligning incentives so each team can capture its bucket without cannibalizing another is how a retailer maximizes total share.

Trade, Shopper, Brand: All One Big Bucket of Money?

Agree, disagree, tired of having this conversation? Read on — because we're going to go through a bit of a history lesson here, one that I bet you haven't heard before. And please put your thoughts in the comments.

In my final post in the Retail Leapfrog Series — posts that serve to help new and emerging retail businesses break into the space — we look at the age-ol' trade, shopper, brand argument. Are they all just one big bucket of money?

Distinct or not, all three of these buckets are incredibly valuable to the symbiotic relationship between a supplier, a retailer, and their customers. While this article is about maximizing share of funds from a retailer perspective, the ultimate purpose of that share capture has to be in support of the mutual growth of the supplier and the retailer. And it has to serve to benefit the customer by way of experiences and relevancy. If you miss that, you can't sustainably scale.

The challenge with these buckets is that everybody has a different interpretation of what these terms mean. So in order to really grasp the concept, we need to look back at the original intent. Travel back with me about 60 years, to the dawn of big box retail.

Bucket No. 01Trade funds.

When retailers started aggregating different brands into a single store at scale, they became accountable for driving the sales of those brands. Sure, they would make a bit of money off the sale of these products, but as competition increased, the retailer needed to market themselves more aggressively. And off their cut of the margins alone, they couldn't afford to do that.

Enter the original purpose of 'trade': suppliers and retailers jointly funding the growth of the retailer.

Two hands in business suits dropping silver coins onto two purple stacks of coins against a purple background — supplier and retailer jointly funding the retailer's growth. — Trade · supplier and retailer jointly funding the retailer's growth

These co-funding activities — directly or indirectly — took multiple formats, including innovation investments like new technology, price discounts, shelf space, and padding retail margins.

Trade dollars didn't necessarily have to promote or serve to grow the brands that were funding them. For example, trade dollars that P&G invested to drive the sale of Pampers might actually be used by the retailer to drive the sale of Huggies diapers. This is still true in retail today. The theory is that a rising tide lifts all boats.

I use P&G as an example because it was them that put their foot down and said no more. "If I'm giving you money to promote my products, you have to promote MY products."

Bucket No. 02Shopper marketing funds.

Enter shopper marketing: marketing with a retailer, funded by suppliers, for the purpose of driving that supplier's business at that retailer.

These activities were more marketing-centric and expanded the scale of the retailer's marketing, allowing them to both drive traffic and create exciting new customer experiences. In the early days these included in-store demos, signage, online banner ads, and even a few TV commercials. This also required the retailer to set up new teams internally to support the activation of these marketing activities.

But the biggest difference was that the monies hit a different P&L within the retailer. These new funds went directly to the retailer's marketing team instead of the merchant or trader. The reason was so that the supplier could open new budgets and delineate their spends internally. Suppliers were willing to invest more — incremental dollars — but only if those funds went into activities that served to drive their individual businesses.

Merchants or traders, however, saw these new funds as an opportunity — a new bucket to improve the profitability of their individual P&Ls, an incentivized priority to this day. As a result, they both enforced the continued investment in trade over other initiatives, and found creative ways of extracting dollars to maintain profitability in their P&L. This might include things like allowing for supplier-specific signage at the shelf. Essentially, merchants provided shopper marketing opportunities to suppliers so that they could capture shopper marketing funds on their own P&L.

A purple branded retail shelf display filled with personal-care products, supplier signage and shelf talkers — shopper marketing opportunities sold to suppliers at the shelf. — Shopper · supplier-funded support at the shelf

From a supplier perspective, these funds were separate — but they didn't really care how the retailer was accounting for the funds internally, so long as they were getting what they paid for. This behavior did four things:

Muddied the waters between trade and shopper.
Created in-fighting within the retailer as to who could touch supplier funds.
Added additional work to the merchants or traders, who now had to set up their own shopper marketing support engines.
Resulted in retailers losing their share of the pie — because retailers would often enforce rules around 'all trade, no shopper.' (I have real data to back this up.)

And all of this came down to the biggest behavioural challenge within retail: separate P&Ls and misaligned incentives.

Now fast forward to the early days of Amazon, when they were starting to scale. Their model also required trade funding, but given the dominance of other retailers like Walmart, it was difficult for them to command enough trade or shopper monies to fund their growth. So they found a completely separate budget that no retailer was capturing at that time.

Bucket No. 03Brand funds.

Brand funds: monies dedicated to building a supplier's brand in the broader market, outside of retail. Enter retail media networks.

Amazon created marketing tools and measurement that spoke the language of brand builders, not shopper marketers. That meant Amazon was uniquely positioned to play in the arena of ad-supported TV networks, publishers, and companies like Google. These budgets sufficed for their initial growth — and once scaled, Amazon was able to go back and attract a greater share of trade and shopper funds as well.

But what Amazon got right in their approach was to create clear delineation between trade, shopper, and brand funds internally. They knew the waters between the three were muddied, but that in order to capture all of them, they needed a nuanced approach to each.

They created incentive structures, tools, and tactics that would allow for the extraction of all three, completely independent of each other. And it clearly worked in terms of their ability to maximize profitability, delight customers, and support the growth of their business.

~80%

of total retail media investment Amazon captures today (coming from brand funds) — plus a disproportionate share of trade and shopper

3 of 3

buckets captured — by refusing to let internal teams compete for the same dollars

Above all, this proved that if you're not competing internally for the dollars, there is more out there for you overall.

The NuanceFungibility between shopper and brand.

Sort-of. In the infancy of any retail media business, shopper marketing funds are typically repurposed to support the retail media business — what should be brand.

Why? Because most early retail media businesses aren't sophisticated enough to capture true 'brand' dollars. (Remember, you have to have offerings, technologies, and measurement in line with the best media companies out there — and that's hard to do at the start.) In that sense, your early days are more about a share shift internally vs. true incrementality. But as shopper marketing becomes more sophisticated, this becomes more about maintaining your 'fair share' — which is still important.

Summary.

First, a summary of the purpose of each bucket:

Trade funds: supplier monies that help drive the growth of a retailer — and indirectly the growth of the supplier.
Shopper marketing funds: supplier monies that help drive the growth of the individual supplier at that retailer.
Brand funds (retail media): monies that suppliers allocate to driving their brand in the broader market — and they've found value in doing that in a retail environment.

Are they truly separate? I suppose it depends on how you, as a retailer, look at it. But the fact that you need to provide different services to be able to capture those funds should be an indicator that the money is not totally fungible.

Trade, shopper, brand · three buckets, not one

Are trade, shopper, and brand all just one bucket of money? The fact that you need to provide different services to capture those funds should be an indicator that the money is not fungible.

And if it's important to your business to play in all three, the most important and overlooked approach is to change the incentive structures to support effective capture. Otherwise your teams will spend their time fighting for these separate budgets — and your business will get less as a result.

If you want to know more about the distinction between these budgets, or how to best architect your business with the right incentives, follow me on LinkedIn and shoot me a note.

Trade, shopper, brand. All one big bucket of money?