Incrementality, ROAS, and third-party cookies: How Home Depot overcomes its retail media measurement challenges

Incrementality has always been the holy grail of retail media, said Zach Darkow, senior director, marketing activation and measurement at The Home Depot. But as the digital advertising landscape grows more complex, incrementality has become more important than ever.

“More forms of attribution and measurement are popping up as advertisers look across different platforms and channels,” he said. “It’s not apples to apples, so that’s pushing the industry to try and understand the back end of things, which is where incrementality comes into play.”

Multitouch attribution (MTA) or marketing mix modeling (MMM) models help marketers measure incrementality. But marketers without as much MTA or MMM experience can use A/B or match market testing to achieve similar results, said Darkow.

• “These are proven ways to measure incrementality that people can trust and get behind,” he said.
• However, these methods aren’t as easily scalable as MTA or MMM.
• “It requires a lot of hands-on keyboard statistics and analytics before, during, and after testing to make sure you’re making the right decisions based on the results,” said Darkow.

Standard fare: One of retail media’s biggest challenges is a lack of standardization across retail media networks (RMNs). In an effort to increase standardization and transparency across the industry, the Interactive Advertising Bureau and Media Rating Council released a set of Retail Media Measurement Guidelines last year.

Darkow supports these guidelines. “I think both the buy-side and sell-side should read through them again. It’s great for kicking off conversations around transparency and consistency.”

But some aspects of measurement wouldn’t benefit from standardization—like return on ad spend (ROAS).

• “I work with a lot of different marketers with a lot of different objectives. Sometimes they want to drive sales during a campaign or event happening now, but sometimes they want to measure the success of longer campaigns or purchase cycles,” said Darkow.
• The longer the campaign, the longer the attribution window, which must be considered when calculating ROAS. The function of different marketing channels may also fluctuate depending on the objective, another consideration for ROAS.

Because there are so many nuances to retail media measurement, Darkow has introduced the concept of “return on marketing objective” or ROMO. ROMO isn’t a replacement for ROAS, but rather a way to set up for measurement success.

“It’s not necessarily a metric but a framework to start having conversations about campaign objectives, because ROAS may not give you the most accurate picture of campaign impact. At the end of the day, it’s about being able to say you achieved the objective because of the marketing actions you took,” he said.

The cookie crumbles: Third-party cookie deprecation, which Google says will happen early next year, will add to retail media’s measurement challenges.

RMNs should use this time to assess what consumer data they have and how they plan to collect.

• “Get your first-party data in order and figure out how best to use it,” advised Darkow. “Figure out how you are protecting your consumer, too. Do you have the right data governance in place? Are you handling data updates and delete requests correctly?”
• Third-party partners can help RMNs fill in any gaps, from data and measurement to consent management.
• “There are so many potential partners out there in so many different areas,” said Darkow. “There are data onboarders [that help collect, upload, match, and validate customer data], measurement partners who can help with attribution, or data clean rooms that help advertisers collaborate with partners in privacy-safe ways.”

This was originally featured in the Retail Media Weekly newsletter. For more marketing insights, statistics, and trends, subscribe here.