Evaluating Essential KPIs of Retail Media Success
At Triad, I have the pleasure of leading an amazing team of creative strategists and data analysts who help brands win at retail through insights-driven digital media campaigns. If you don’t work with a similar team, you might be surprised to find that data and strategy nerds often have strong points of view. They’re also quick on their feet in mediating arguments that support their positions — and devising counter-arguments to counter your counter-arguments.
When I mentioned to them that I was authoring an article titled, “Evaluating Essential KPIs of Retail Media Success,” I was prepared for a spirited debate on the topic. After a few rounds, with a jab here and an uppercut there, we aligned on five KPIs that brands and agencies should be considering when evaluating the effectiveness of their retail media campaigns.
- Incremental ROAS (Return on Ad Spend) Incremental ROAS measures the effectiveness of your marketing dollars on driving product sales by comparing the sales of an ad-exposed audience to sales of a similar audience that was not ad-exposed. The goal is to more precisely demonstrate sales lift by filtering out sales influenced by other media, pricing discounts, brand loyalism, etc.
This metric can be very powerful in understanding the impact of your marketing investment, but it is far from perfect. First, incremental ROAS reporting is not a universal capability. Some platforms can’t show sales lift at all, while others can only show online sales lift. This is especially challenging when 94% of all CPG transactions for most retailers still happen in-store. Even when online and offline sales can be measured, most platforms are forced to extrapolate for sales outside of credit cards.
Additionally, methodologies are not the same across different retailers. Some platforms hold out audiences at the outset of the campaign for their test group. Other platforms exclude audiences at the time of reporting. This can impact the strategist’s ability to make the most impactful in-flight reallocations.
Lastly, many factors can inflate the lift numbers. For example, a high-priced consumer electronic can more easily drive lift than a typical grocery item.
- Category Reach/Growth
Category reach measures the percentage share a brand has of sales at a retailer, while growth measures incremental reach resulting from your media campaign. A brand with low reach at a retailer that drives a high percentage of category sales in the market may want to invest in retail media, regardless of incremental ROAS, if they are seeing growth. This may result in long-term success at a retail channel where they have to win and signal that they are boxing out their competition. Comparatively, a brand with huge reach in a given category may still want to invest in lower-performing retail media to keep its competitors from trying to take more share.
- New Buyers
Whether they’re shoppers trading up to higher-margin products within a brand portfolio, switchers from a competitor’s product or simply new to the category, new buyers are essential for brands to sustain longevity. Therefore, new buyer metrics can be a key indicator of retail performance. However, this metric poses some challenges. Brands that have a longer purchase cycle (like consumer electronics, furniture, and appliances) are often challenged to measure new buyers because the key identifiers — cookies and device IDs — are not indefinitely accessible.
Additionally, it’s hard to correlate this measurement across retailers. You’re often left asking, “is this a new buyer for this brand, or simply a new buyer for this retailer?”
Brand advertisers are shifting dollars to retail audiences and media channels for several reasons. One of these is the ability to report on incremental ROAS. Even if video is an inefficient medium for delivering immediate sales, the ability to show actual sales impact of a campaign is still powerful, and still difficult to prove outside of retail media.
Smart brand advertisers should look to other engagement metrics, video completion rate, and time spent to supplement incremental ROAS and use as a benchmark to measure effectiveness against other channels.
- Rest-of-Market/Rest-of-Basket Sales
The power of your retail media is not simply the ability to influence sales of a single brand’s product at a given retailer, but also the impact of that media to lift sales at other retailers and create growth in the overall brand portfolio. Rest-of-market and rest-of-basket are two metrics that can help you evaluate this larger impact.
Savvy shoppers increasingly look to ecommerce platforms as the first point of product discovery. They want to find additional information, including price, to help make an informed decision. However, the platform with the best tools for this discovery might not be the most convenient place for the individual consumer to convert. Rest-of-market analysis can help attribute media investment on one channel that feeds conversion elsewhere.
Additionally, media exposure doesn’t happen in a vacuum. Often, those exposed to brand A’s media might not only buy their advertised product, but other products within that same brand’s portfolio. Rest-of-basket can help marketers evaluate how their retail channel is impacting overall portfolio growth at a given retailer.
Bottom line: retail media is rich with data that the right team of analysts and strategists can help you unpack to better understand how your investment at retail is driving bottom lines. One metric doesn’t fit all; in fact, a combination of KPIs might be necessary to fully grasp sales success.