Research Reveals Why Retail Media Measurement Is Lagging Expectations
As retail media matures, expectations around performance are rising faster than the systems designed to measure it. New research from Northwestern University and Dentsu, shared with The Path to Purchase Institute prior to publication, examines why retail media networks have unified data across channels, but failed to unify how organizations define success.
By combining data from a major consumer survey with insights from senior executives at brands, retailers and agencies, the research seeks to illustrate the steps that must be taken on two major fronts — data analytics and organizational realignment — to create a measurement plan that balances short-term KPIs with long-term brand health, quantifies incremental impact across paid and non-paid channels, and provides signals as to when upper-funnel spending begins to reach diminishing returns.
Retail media's maturity is increasingly linked to marketing at both ends of the funnel, with retail media networks and their data now interacting directly with other forms of digital media, as well as trade activity, price, promotion and in-store merchandising. As such, brands can no longer view performance in isolation, and a more comprehensive and holistic approach is needed to unlock the full value, the report notes.
At the core of the paper's principle is that measurement is not simply a reporting function but an organizing principle. “It determines how teams collaborate, how budgets flow and how growth is defined,” the report states. “Organizations that establish a shared measurement framework will be able to move beyond channel-level optimization toward unified value creation.”
Adapt Measurement Techniques to Omnichannel Realities
Current RMN measurement techniques too often take a myopic view of brand performance and do not adequately capture the fluid and dynamic omnichannel shopping behaviors of today’s consumers. Marketers can adapt, however, by strengthening their approach in several key areas:
Move beyond attribution as the default measurement language.
Attribution reveals correlation, but not contribution. It connects exposures to conversions and provides teams with fast directional signals. It is useful for pacing budgets, identifying non-performing placements and optimizing creative in real time.
But attribution has structural limits, the report notes, which points to the IAB MRC Retail Media Measurement Guidelines as further reinforcement that it must be used for optimization but not determining contribution, incrementality or strategic ROI.
Customize marketing mix modeling to retail media environments.
Marketing mix modeling used specifically for retail media requires a more granular specification than traditional models. IAB guidelines emphasize that retailer channels must be decomposed by tactic. The most accurate MMMs break retail media into retailer level; on-site vs off-site; and channel or format.
Embrace observational and experimental incrementality methodologies.
Incrementality testing is the most effective way to isolate the impact of advertising on sales lift, the report stresses. As with MMM, marketers must adapt their incrementality methodologies to RMNs, which lend themselves to two distinct types of testing: observational (e.g., synthetic controls, matched markets); and experimental (e.g., RCTs, geo-lift, masked household holdouts).
Align Organizations With Unified Measurement
These measurement challenges are reinforced at the organizational level. RMNs introduced closed-loop measurement as a way to connect disparate teams and functions, each of which relies on separate data, success metrics and planning cycles. But, as the report states, “While RMNs unify the data, they do not unify the systems interpreting it.”
Thus, marketers cannot implement an integrated measurement solution without also unifying the organization around a shared set of objectives and KPIs.
Where Measurement Is Headed Next
As RMNs expand into upper-funnel and in-store environments, the study asserts that organizations without standardized definitions, normalized inputs and unified governance will struggle to scale investment.
By contrast, companies that align attribution, marketing mix modeling and incrementality under shared ownership will be better positioned to shift budgets proactively, plan jointly with retailers and invest earlier in emerging commerce surfaces with confidence.
