On-platform obfuscation: One of retail media’s strengths, specifically in search ads, is its ability to drive conversions and the clear ability to measure that connection. If a consumer searches a product, clicks an ad, and then makes a conversion, that entire transaction can be attributed to the ad. But that understanding of intent can also be a problem for performance marketers.
“I think the proximity to purchase in retail media is kind of a double-edged sword here when it comes to measuring performance of on-platform ads, because it’s even easier for a purchase that was already going to happen to be routed through a sponsored listing,” said our analyst Evelyn Mitchell-Wolf.
That means retail media networks and the brands that advertise with them need to go beyond ROAS when understanding ad impact.
That’s where incrementality comes in. Brands want better incrementality measurement capabilities. “It is the top thing that I hear from brands today, particularly CPG [consumer packaged goods] brands,” said Lipsman.
In fact, 37% of retail media decision-makers in North America said the inability to prove incrementality could slow investment growth to retail media, according to a January report from Skai and BWG Strategy.
ROAS is not a band-aid solution because there is no correlation between campaign performance as measured by ROAS versus incremental ROAS, according to retail media analytics company Incremental.
That means brands should work with their data to create a holistic picture of retail media attribution, and retailers should improve incrementality metrics to unlock more ad spend.