Retail Media: Is ROAS Enough?

December 13, 2023

The rise of Retail Media Networks (RMNs) has made measuring ad campaigns a hot topic. ROAS is the preferred metric among performance marketers, but according to Andrew Lipsman, Senior Analyst at Insider Intelligence, ROAS does not provide a complete picture of campaign performance when it comes to RMNs.

With discovery, research, and sales occurring on ecommerce sites, the consumer’s path to purchase is evolving. For example, many customers have a strong intent to buy when they click on a search ad. Engagement with a sponsored listing for a product the consumer was already planning to buy will help the ROAS metric but won’t impact sales volume. In this case and many others, it becomes difficult to measure the true causality of the ad exposure.

Taking a Holistic Approach to Measurement

Retail media networks offer a variety of advertising opportunities, so it is important to take a holistic approach when analyzing campaign performance. One of RMN’s core strengths is audience expansion. In addition to onsite, the reach extends off-site and in-store. It is important to incorporate omnichannel and offline data into the analysis for a more complete picture of performance. Other metrics, such as unique reach, CPM, and CPC, should also be factored in.

Metrics beyond ROAS to evaluate investment in retail media networks

The Role of Incrementality

Another hurdle is measuring brand-specific conversions and incrementality. If you donʼt have custom conversions set up, it is impossible to segment out purchases made for one particular brand compared to all ecommerce purchases. Metaʼs MPA Lite solution can be a beneficial tool since campaigns can optimize performance toward a brand-specific conversion. You can also get a glimpse into granular SKU-level reporting – a new feature that hasnʼt been offered by Meta in the past. 

Looking Beyond ROAS

Advertisers are becoming more aware of the importance of incrementality and RMNs’ role in it. In fact, 37% of the retail media decision-makers in North America said that the inability to prove incrementality is one of the major reasons for slow investment growth in RMNs (Skai & BWG Strategy report). Account-level conversion lift studies can help all stakeholders understand campaign performance beyond standard metrics like Return on Ad Spend (ROAS) and CPP (Cost Per Purchase).

Learn more about measuring success with RMNs from our friends at AdParlor here. Or get in touch with the AdParlor team to discuss your company’s goals for 2024.