Recently, Amazon Ads and Skai invited retail media professionals to attend a roundtable event at the Hoxton Hotel in Chicago.
The topic of discussion? Retail media measurement.
Of course, having the right measurement approach is essential for success with every channel. But, because retail media is still evolving, measurement has been incredibly difficult to nail down. Case in point, in our 2023 State of Retail Media survey and report, we asked retail media advertisers what critical challenges they face. The two top answers are highly correlated: performance and measurement.
What Is Retail Media Measurement?
Retail media measurement refers to the process of quantifying and analyzing the effectiveness and impact of advertising campaigns within the retail environment. It involves tracking and evaluating various metrics and key performance indicators (KPIs) to gain insights into the performance of media initiatives. These measurements encompass aspects such as the reach and frequency of ad placements, consumer engagement and response, conversion rates, sales attribution, and return on investment (ROI).
By employing sophisticated data analysis techniques and leveraging data from multiple sources, including online platforms, and customer behavior tracking tools, retail media measurement enables advertisers and retailers to make data-driven decisions, optimize their marketing strategies, and assess the effectiveness of their advertising efforts.
As this channel continues its meteoric growth, brands will need to get savvier and more sophisticated with their measurement approaches to generate sales and defend their share of voice.
In today’s post, we share aggregated insights from the retail media advertisers that attended.
The following are key takeaways from the Mastering the Retail Media Measurement Mindfield event.
We’ve tried to measure it like an ad channel, but it doesn’t work
Its very nature — the fact that it is so integrated into the full operation of a CPG — is why it should be and needs to be treated much differently than every other digital channel. It touches product, inventory, warehousing, cost of goods, share of voice, online/offline impact…the list goes on.
Measuring success in retail media is no longer just about clicks, impressions, return on ad spend (ROAS), or advertising cost of goods sold (ACoG). Instead, brands are shifting toward a more holistic view of success, looking at metrics that better show incremental growth and business health. This means that clean rooms, Amazon Marketing Cloud (AMC), and overall brand presence will become more important for brands to understand where their investments deliver value.
It’s still evolving — which means today’s best practices may be outdated tomorrow
For example, when Amazon DSP was first launched, retail media marketers viewed it as a single component of their media plans. Now, Amazon DSP is being leveraged to engage users across the funnel: upper-funnel strategies for awareness, mid-funnel ads to drive consideration, bottom-funnel for conversions, and even beyond the traditional funnel for retention/loyalty.
Another example is that a few years ago Sponsored Products were treated like paid search ads. Today, the keyword analysis those campaigns generate helps brands understand which entry points are converting and which are growing lifetime value (LTV).
With so many different ad formats, retailers, and reports available, it can be challenging to determine the best way to measure everything. This isn’t an issue for other, more “stable” mature channels.
But for retail media, do you tackle each problem as it arises or wait for the dust to settle and work on more solid ground?
Yet another wrinkle: Retail media is becoming increasingly omnichannel
One attendee said that retail media is not a channel, it’s an environment. This person meant that as CPGs started seeing the opportunity, they began to realize how they could best complement their retail media programs using the rest of their operations, including their other channels.
In our 2023 State of Retail Media survey report, we found that coordinating retail media programs with other digital ad channels seems to be the norm. Only 9% of those surveyed indicated that they don’t have any level of coordination.
One of the big milestones of retail media happened in 2017 that wasn’t even in retail media — Google and Meta (then Facebook) began allowing marketers to send ad traffic beyond their brand websites and to select retailers. Today, the majority of retail media marketers report that their organizations consider social commerce and search shopping campaigns part of their retail media advertising program.
Today, retail media is clearly bigger than a single channel, and that’s another major reason why retail media measurement is such a tough nut to crack.
The retail media measurement solution: There’s no silver bullet
The major takeaway here is that there doesn’t seem to be any real silver bullet to solve retail media advertising. And there may never be. Unlike other marketing channels that are somewhat self-contained, as explained earlier in this article, retail media is simply a different animal. Each company’s commerce operation — with retail media a highly integrated part of it — is unique, and so their measurement solution will need to be unique as well.
The onus on each retail marketing organization will be to gather and scrutinize every metric, every KPI, and every dataset available and then come up with their own measurement approach. It will require a lot of investigation into new tools and technology, testing and learning to find what works, and ultimately a bit of out-of-the-box thinking to reach a sensible conclusion.
However vague this approach may seem, there are a few agreed, general consensus best practices that were uncovered at this event:
- We cannot simply measure retail media like another ad channel
- Retail media is more challenging because of how integrated it is with a brand’s total commerce strategy, but that’s also a benefit for truly driving growth
- Ad metrics should be just a part of the overall measurement approach, but RM requires much more
- The meteoric growth of the channel is another challenge to solving the measurement issue
- Retail media is becoming more omnichannel as it evolves — adding yet another wrinkle to the puzzle
We hope you found these event takeaways interesting. If you’d like to learn more about upcoming Skai events — both virtual and in-person — please visit our events page.