Making Sense of Retail Media Measurement
In today's competitive retail landscape, understanding the impact of your advertising efforts is essential for driving success and maximising return on investment. For brands embracing the rapidly evolving retail media space, it’s fair to say that measurement might be the most complicated aspect to grasp.
While there’s no ‘silver bullet’ way to eliminate all of the complexity involved in accurately assessing retail media investments, there are a handful of best practices that brands can adopt to simplify the task and make it easier for brands to more clearly understand the value that retail media delivers - but first, lets explore the reality today of retail media measurement…
…1. Hold Tight: This Is Likely To Get More Complicated
Not the most encouraging of headlines to start off with, however there’s no getting away from the rocket-fuelled growth seen in retail media, rapidly becoming a fundamental pillar of the digital advertising landscape. The rise of new retailers offering advertising placements and with it, the increase in these walled garden ad networks isn’t slowing down. Due to the almost non-existing interoperability of retailers 1st party data amongst one another, brands looking to measure their advertising investments holistically will need to understand each retailers reporting nuances and work within a fragmented view of their overall performance.
Expansion of retail media and access to 1st party shopper data into additional channels, such as Connected TV (CTV) is also on the rise. With this comes more options for customers to shop across more formats and platforms than ever before, making the already complicated ‘typical user journey’ that bit more complex.
2. Back To Basics: Define Clear Objectives
A fundamental step in any marketing plan, including retail media, and something we advise our clients to do is to take a step back and gain a clear understanding of your objectives. This process involves considering the broader business context and aligning the objectives with the appropriate key performance indicators (KPIs) that will accurately measure success.
By giving proper thought into the objectives, you can identify and apply the most suitable KPIs for your brand within the context of your business, products, NPD and audience. Let’s say for example that your brand is expanding into a new market and with that likely comes minimal awareness of the brand or product, it may be more beneficial to focus on objectives aimed at generating mass awareness and establishing market penetration within the category. This could be measured through metrics like glance views, rather than jumping straight into a return on ad spend (ROAS) goal.
This is also useful when evaluating the performance of your brands products with different market maturity. For instance, new product discovery (NPD) launches will usually start off with lower ROAS when compared against long time established products. However, you should also factor in metrics such as your new-to-brand % of sales when comparing new vs established products to better reflect on the more representative results that can highlight success when introducing new products to your portfolio.
With this in mind, we recommend fighting the urge to default into the natural tendency for marketing teams to focus straight away on ROI, ROAS or ACOS, and instead to take time and look at the context of your brand and what the primary purpose is of running paid advertising, more often than not it wont be pure sales, instead focus in growing brand recognition and market penetration.
3. Incrementality Is Key
Incremental ROAS involves measuring the effectiveness of your marketing expenditure by comparing the sales of an audience exposed to ads with the sales of a similar audience that was not exposed to ads. The objective is to demonstrate sales lift more accurately by filtering out sales influenced by other media, pricing discounts, brand loyalism, and other factors.
While incremental ROAS can provide valuable insights into the impact of your marketing investment, it is important to note its limitations within retail media. First, not all retailer platforms have the capability to report on incremental ROAS. Some platforms may not be able to measure sales lift at all, while others can only capture online sales lift. This becomes particularly challenging as the majority of consumer packaged goods (CPG) transactions, about 94%, still occur in physical retail stores. Even when online and offline sales can be measured, most platforms rely on extrapolation for sales made outside of credit card transactions.
Second, the methodologies used for measuring incremental ROAS can vary among different retailers. Some platforms conduct tests by excluding certain audiences from the outset of the campaign, while others exclude audiences during the reporting phase. These variations can impact a marketers ability to optimise budget reallocations during the campaign that would have the most significant impact.
4. Go Beyond In-Platform Attribution: Embrace Data Clean Rooms
In addition to using incremental ROAS and other measurement techniques, it's essential for brands to explore solutions that go beyond in-platform attribution to help build a fuller picture into not just ROI but in-depth measurement and visibility into the key channels or tactics that play a part in capturing attention and driving sales. A key solution to this is the embrace of data clean rooms, which provide a powerful means to gain a deeper understanding of the customer journey within Amazon's walled garden.
Most recently with the launch of Amazon's Marketing Cloud (AMC) now available to the public and their data clean room solutions, brands now have the opportunity to harness the full potential of their advertising data. Data clean rooms such as Amazon’s AMC allow brands to splice and manipulate their ads data using custom look-back attribution windows, ROI by frequency exposure, time to convert and cross channel user journey visibility. This access to granular level of reporting enables brands to paint a fuller picture of the customer journey from ad exposure to conversion, which can feed back into informed decisions when it comes to your media investment optimisations to maximise returns.
Custom look-back attribution windows provided by data clean rooms enable brands to tailor their measurement approach to their unique requirements. By defining attribution windows that suit their objectives, brands can accurately assess the impact of their advertising efforts, eliminating the limitations imposed by default attribution settings.
Embracing data clean rooms and utilising custom look-back attribution windows provide brands with a competitive advantage. It is worth noting however the initial complexity with using data cleanrooms such as AMC. These platforms require a relatively high barrier to entry to even pull the most basic reports, and using an experienced team is recommended to really maximise the potential of what these reports can deliver for your business.
