Retail media's measurement problem—industry must solve standardization issue to meet growth projections

Like several consumer packaged goods brands today, maternal care company Lansinoh Laboratories Inc. spends the bulk of its ad budget on retail media—investing about 80% in the space with networks including Amazon, Target and Walmart. It’s a reversal from five years ago, when 80% of Lansinoh’s budget went to digital marketing and just 20% went to retail media. With the ramp-up comes an increase in needs and resources, according to Umer Paracha, director of e-commerce and digital marketing at Alexandria, Virginia-based Lansinoh. “The biggest challenge is every media network requires a different set of assets—that’s a huge burden,” he said, noting that his team has to create a different set of ads tailored to each individual network’s specifications. “We’re dedicating time to create content for each channel.” Lansinoh’s issue exemplifies one of several challenges in retail media today. As the category, in which retailers essentially perform media duties for brands, sees skyrocketing growth, prevalent issues are emerging that paint a less rosy picture than glowing forecasts would have the industry believe. The growing number of networks—there are roughly 20 large retail media networks but closer to 100 in total, experts say—have brands scrambling to manage and measure their advertising dollars across a disparate group that lacks any universal consistency. Along with the lack of standardization, campaign performance is also difficult to discern as each retailer uses its own measurement data, much of which is proprietary for competitive reasons. Some efforts are underway—including the formation of new groups examining measurement issues and looking for standardization across platforms on behalf of CPG brands—but they are still nascent. “Retailers own the data and there’s a black box of attribution—they provide back measurement reports and things like that and it’s great,” said Jacquelyn Baker, chief experience officer at VMLY&R Commerce, which works with roughly 50 brands on retail media advertising. “But there’s a lack in the industry of credibility and believability in results you’re getting back because you have the retailers grading their own homework against a measurement model that differs from one to the next.” Ad Age Leading Women and Rising Stars Last call for the annual awards Enter here Already, there are some cracks appearing in the foundation of the category. Early this year, the Association of National Advertisers analyzed the trend and found that the majority of advertisers are “reluctant buyers,” heavily influenced by retailers to invest on their networks. Indeed, the relationship can be fraught. Advertisers worry that retailers might give them inferior placement on their shelves or lower search engine rankings, and retailers worry that brands might use retail media spending as leverage to negotiate better deals, according to Nikhil Lai, senior analyst at Forrester. “There is tension on both sides,” he said, noting that one brand once likened retail media advertising to “tithing to the church.” Potential in dollars and benefits Current Forrester research estimates that $40 billion of retail media was sold last year in the U.S., an amount that will more than double to $85 billion by 2026, Lai said. Globally, the figures are much greater—GroupM put spending at $101 billion by the end of 2022, a 15% rise over 2021. The potential is real, and carries benefits for both retailers and brands. For retailers, it’s an additional revenue stream that carries a profit margin between 40% and 80%, and for brands, retail media is a new way to target shoppers that is not Facebook or Google. “In some cases, retail media is a more affordable way of actually acquiring new customers relative to cost increases in other channels,” said Kiri Masters, head of retail marketplace strategy at ad agency Acadia. As companies recognize the rewards, a variety of different groups are trying to rectify the problems that exist in the category. One possible solution may come from the Interactive Advertising Bureau, which is currently examining the measurement issues. “The trade association is launching a working group in the first half of the year to address the challenges brands and advertisers are facing, which will bring together industry stakeholders to discuss measurement standards that will enable consistent measurement, metrics and outcomes across all retail media networks,” said Jeffrey Bustos, VP of measurement, addressability and data center at the IAB, in a statement. In addition, the Path to Purchase Institute is also getting involved with resources for brands and retailers to navigate the new terrain. Earlier this year, the member group for the marketing community created a Retail Media Guild. The group “operates as a high-level think tank devoted to trailblazing the future of retail media,” according to Eric Savitch, VP and brand director of the Institute, who noted that the group is open to executives from CPG brands, retailer media networks, solution providers and agencies. The Guild’s formation comes on the heels of Path to Purchase’s Retail Media Summit, a new event, and ahead of its Retail Media Awards, which opened this month. Savitch is enthusiastic about the new guild’s efforts “to bring best practices, learnings and standardization conversations to the forefront to help guide decision-making and strategies,” he wrote via email. Similarly, VMLY&R Commerce is also looking to push for more standardization as the retail media category grows and expands. The agency has seen an increase in pitches devoted to retail media as the scope in recent years—and within the last year, that rise has reached an “exponential growth” level, Baker said. Executives said the shop is bringing together “peer-to-peer learnings” as it seeks to improve the issues prevalent for CPG clients. Retail media is not a panacea Potential solutions can’t come soon enough. Experts say brands need more help than ever, particularly when new networks are debuting at a rapid pace and existing networks are upgrading. Less than a year after launching its Member Access Program retail media network, Sam’s Club recently said it was making a significant update to its targeting and retargeting capabilities. The changes are another thing for advertisers to keep up with. “It’s the cost to the executives of trying to figure out how much do we allocate to this channel versus that and how do we know we’re making the right decision—once you start pulling on that thread of all the decisions that need to be made, there are a lot of them,” said Masters. She noted that though measurement consistency is complex, it’s necessary. “Other industries have done it, so [this one] should be able to figure it out,” she added. Until that happens, brands need to choose where they spend their advertising dollars carefully, experts say. Forrester’s Lai said there is a danger in brands just jumping on the retail media bandwagon because the category has attracted so much industry hype, or because it does not have the same problems as a Google or a Facebook. Instead, brands should only invest if they are looking to target consumers on their shopper journey, or also improve a relationship with a retailer that sells their product, for example. “Retail media is not a panacea to the problems of data and depreciation,” Lai said. “It has a place in the mix, but it’s not going to solve Facebook’s problems or Google’s problems or the open internet’s problem for you.” At CitrusAd, the Epsilon-owned platform that works with 130 retailers including Petco and Cub Grocery & Pharmacy on their retail media programs, executives are working with stores to improve the information given to brands. As advertisers expect transparency around their media investment to know if their dollars are getting results, CitrusAd is working with retailers to deliver the right measurement attribution, said Joe Doran, chief product officer at Epsilon. He expects retail media to move away from the individual walled garden of each retail media network and into one of transparency around measurement so both the buy and sell side are more evenly balanced. “The retailers today are on that journey of how do they do this—the first step is they have to unify the data themselves across their fragmented technology stack to be able to send it back to the brands,” he said, noting that CitrusAd helps provide the technology to unify such data. “The big retailers are going to treat it as a walled garden and not want to share that information and the brands are going to demand it.” Some retailers are working at better disseminating the information they provide back to brands. Earlier this week, Best Buy announced My Ads, a new self-service tool and platform for brands to manage their campaigns on its retail media network Best Buy Ads. In pilot mode with a handful of brands including Dyson, the platform pulls specific measurement data but will eventually allow brands to customize the data reports they see. Experts expect retailers to continue to roll out improvements and new features to entice advertisers as the industry waits for measurement consistency and category standardization across networks. “We’ll see more and more networks coming on line but the challenges are going to persist unless marketers can really take control of this rather than letting it take control of them,” said Lai. Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here

Retail media's measurement problem—industry must solve standardization issue to meet growth projections

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