AdWeek | Three Opportunities to Drive Additional Revenue for Your Retail Media Spend by Mara Greenwald

One of the biggest challenges facing retail marketers is how to drive more revenue in an increasingly fragmented industry. The opportunity is significant as the market is expected to reach more than $29 billion by 2025*. Retail media networks have exploded but face limitations in reporting, frequent audience overlap across retailers, and an imperative to drive measurable Return on Ad Spend.

There are three actions marketers can take today to unlock incremental revenue.

Shorten Attribution Windows

An attribution window is the defined period of time when you measure an outcome after an exposure or click, such as a sale, lead, or prospect. Today the industry standard for attribution windows is generally 14 or 30 days. Marketers need access to data and analytics regarding consumers’ actions in as close to real time as possible because consumers are making purchase decisions quicker, and with more competing marketing and media channels than ever before.

Although it’s important to track the long tail of the sales lift for media investments, that lag could be hampering your ability to make real time adjustments to your investments and therefore hurting your bottom line. Think about how consumers shop on eCommerce. Search is the predominant behavior, and most consumers don’t go very far on the results pages. The way to win the first pages is generally via advertising. In order to appear in the ad placements, you have to win the bid against competitors. This algorithm changes multiple times per day. So, knowing that a consumer saw and/or clicked on a product in search results one day, then purchased it 14 days (or more) later does not help you optimize your media investment, nor does it accurately reflect the impact of your advertising.  A lower ROAS from a shorter attribution window that marketers can take action on can be more valuable than a higher ROAS collected across multiple channels from a longer attribution window.

For one client on a large eCommerce retailer, expanding the attribution window from 3 days to 14 days resulted in a report showing a sales lift of 10-12%.  Expanding the attribution window further to 30 days showed a sales lift of 16-18%.  While the sales numbers are higher, it can be misleading as there are many external factors that come into play with the longer attribution window and the results can cause you to heavily bias your investment decisions away from driving incremental revenue.

Shift from media attributed to holistic sales

Media buyers are frequently in a situation where retailer-attributed sales and ROAS are high, but holistic sales are not growing. A high ROAS on its own does not necessarily indicate performance.  However, it tends to be the default in how we measure and report on success. This can be a false positive and put marketers at a disadvantage.

Holistic sales data should be incorporated into every media measurement and optimization conversation. There are many ways to use this intelligence. From a cost perspective, analyzing TACOS (Total Advertising Cost of Sale) can help marketers understand how their media spend is impacting holistic sales. If TACOS increases, but holistic sales are flat, there is a problem in your media impact. Another valuable metric is looking at media-attributed sales over total sales. The goal is for both of these numbers to increase. If media attributed sales increases and total sales stay flat, it is likely being double attributed.

Identify and test leading indicators to holistic sales growth

Ultimately, media attributed sales alone, even with a shortened attribution window, will not give marketers a full understanding of their opportunity to drive additional revenue.  Often, the default optimization metrics like ROAS are not the sole leading indicator to sales success. Looking at holistic retail sales over time, and pulling data in multiple cuts, can help determine potential leading indicators to unlock huge potential business opportunities. Testing those indicators is the key to unlocking incrementality. Evaluating metrics like new-to-brand, the distribution of investment towards prospecting vs. retargeting audiences, the distribution of investment to branded vs. non-branded search terms, precision vs. broad segmentation and share of shelf help paint a more detailed picture. These can inform the right decisions, driving bottom line sales.

The formula for driving incremental revenue is not a one size fits all approach. Different brands, products and services will ultimately have different methodologies and leading indicators. As marketers, we have to continue to test, optimize and dive one step further to understand the true impact of our media performance. Ultimately, marketers who take this strategic view and expand their consideration of success beyond ROAS can drive additional revenue, capture market share, and become category leaders.

*Source: Business Research Company

Source: Three Opportunities to Drive Additional Revenue for Your Retail Media Spend – Advertising Week