Without standard metrics, should brands still invest in retail media?

The rise of retail media advertising networks in 2022 has led to numerous retailers launching ad businesses to seize the opportunities presented by changing revenue budgets.

However, with an uncertain economic climate, the lack of standards and agreed-upon measurement protocols for this relatively new ad channel is causing issues. 

Without a framework, it is challenging to assess the effectiveness of ads on one network versus another, such as GrabAds vs Foodpanda's Panda Ads.

Brands like Unilever have called for retail media networks to unite and establish standards to assist anxious advertisers. The CPG giant points to its "Digital Responsibility Framework" last year, which employs lessons learned from advertising on tech platforms to measure digital ads.

The IAB SEA & India has since announced it will establish a new Retail Media Council that will collaborate with the Retail Media Councils in Europe and the US to help guide the industry with more unified standards for digital retail media.

Sybil Ng, account director for Asia at Quantcast, points out retail media is a constantly and quickly evolving space, with each retailer measuring their media efforts by yardsticks.

She explains acquiring industry standards means breaking down walled gardens and opening each network up to transparent use and evaluation, open internet for all retail media buying.

"However, it will take a lot of effort to reach this due to a plethora of retail media networks now available and the amount of first-party data that dominant retailers naturally prefer to keep for their exclusive use," Ng tells Campaign Asia-Pacific.

"In the long term, data privatisation will be called into question; how can standards be achieved when only a few prominent players influence decisions?"

Presently in retail media, the buying standard can vary with ad format and the type of commerce platform. The most common ad format is the sponsored banner, typically priced according to CPM (cost per thousand) or CPT (cost per time).

Junho Lee, head of retail media platform business for South East Asia and Australia & New Zealand (ANZ) at Moloco, notes that native advertising, such as sponsored products, is fast becoming the preferred option in retail media. This option is due to its direct placement within the user transaction space.

"The buying standard for sponsored products is typically performance-driven, for example, CPC (cost per click) or CPS (cost per sale) models. Then there is an emerging category as commerce platforms become increasingly verticalised," Lee explains to Campaign Asia-Pacific.

"For example, some advanced food delivery platforms have started to leverage a PPO (pay per order) model to accommodate the needs of restaurant advertisers."

Clockwise from top left: Sybil Ng, Brian Yang, JJ Eastwood, Taranjeet Singh, Mitch Waters and Junho Lee

Brian Yang, co-founder and chief strategy officer at CacaFly International Media, suggests brands should have a longer horizon when measuring revenue generated from ads (ROAS).

"Ideally, they should measure the average LTV (lifetime value) versus CAC (customer acquisition costs) for their products, whether FMCG or digital products such as gaming or software-as-a-service (SaaS), provided by the same brand," Yang tells Campaign Asia-Pacific.

The Trade Desk, which entered the retail media space by partnering with Walmart, the most prominent global retailer, to create the Walmart DSP, is working on standardisation for retail media measurement. It has also formed a retail data partnership with Singapore-based FairPrice Group.

TTD acknowledges that while a retailer may have a different attribution look-back window, metrics, and methodologies, it wants to work with the retailers to create standards to meet advertiser demands.

"Advertisers who execute campaigns with The Trade Desk can use sales measurement from our retail partners to understand how their off-site and open internet campaigns drive online and in-store sales, using metrics like CPA and ROAS," Mitch Waters, the senior vice president of client services for Asia Pacific at The Trade Desk explains to Campaign Asia-Pacific.

Carouselll Media Group, a retail media network in Southeast Asia, believes a robust performance offering is at the core of every successful retail media business.

It notes the standard practice on-platform for this is a CPC offering built around consumer search queries, with advertisers tracking the overall return on ad spend.

"Off-platform programmatic offerings generally follow all the usual KPIs, such as CPC views for videos and Listen Through Rates for digital audio," JJ Eastwood, managing director at Carousell Media Group, tells Campaign Asia-Pacific.

Tracking investment versus results

While the prices in retail media are significantly higher, the industry has yet to see a precise way of tracking investment versus results.

One of the main reasons marketers pay a premium for retail media is that they can be closer to the moment of transaction, thus typically driving higher performance for their campaigns. But whether the publisher can provide closed-loop performance management is a key differentiator.

"Attribution visibility will be critical to retail media officially claiming its title as THE next advertising pillar. Therefore, retail media providers must build performance dashboards alongside their solutions to engender trust," explains Moloco's Lee.

Taranjeet Singh, managing director for south APAC at Criteo, notes the industry expects transparency in advertising, and retail media is the same.

Singh explains there often needs to be a way to track investment results in cases where retailers still need to adopt retail media programs delivered through platforms with measurement capabilities. As a result, the ability to record an investment and directly link it back to a sale drives the growth of retail media platforms.

"Naturally, different platforms have different attribution settings and definitions of closed-loop measurement. It is critical to understand what settings are being used on each platform. More importantly, these conversions must be visible in transparent reports," Singh tells Campaign Asia-Pacific.

Panda Ads

For example, Criteo allows advertisers to select consolidated attribution settings across all retailers in the Criteo retailer network to which they deliver.

The advertiser can change attribution settings or download detailed attribution transaction reports anytime, allowing for precise and cross-platform analyses.

However, the reality is that unless online retailers open up and make their inventory available to third-party technology platforms, it is difficult to close and accurately track the users' marketing journey fully.

Being able to map, categorise and activate against first-party customer data will be the key to mapping the effectiveness of each advertiser's marketing efforts. To accomplish this, advertisers must find a way to sync their first-party customer data (willingly given emails, phone numbers etc.). and match this against retail media networks they are activating against, like Amazon login data.

Ng explains that a proper one-to-one matching between the end consumer and the ad exposure is only then. She states that the ad server must support these activities by parsing and matching data to deliver the ad to the end consumer.

"There are also increasing challenges externally that hamper/impede data collection, including, but not limited to, the impending cookie deprecation, limitations to mobile in-app tracking and changing privacy and data compliance regulations happening globally," says Ng.

"The long and short of it is accurate tracking. Ad measurement requires an in-depth end-to-end connection across all partners involved in the advertising chain, from advertiser-collected data to ad servers to ad tech platforms. In addition, there needs to be a common link to which users can be mapped for accurate measurement of ad dollars; in a way that adheres to industry regulations. As a result, we see a rise in adopting data clean rooms, particularly in the retail media space."

Agreeing on metrics

It is natural for commerce platforms to apply different metrics and data depending on the use case, category, or business vertical.

For instance, if a restaurant advertises on a food delivery platform, it would anticipate prompt decision-making. Thus, the attribution windows should be short. On the other hand, an advertiser specialising in appliances or furniture would likely only see results several days or even weeks later.

Lee explains that several common elements, such as the number of impressions, clicks, click-through rate, and ROAS, can be used as key success metrics.

"These measures are, however, typical of the entire advertising chain. So the real question is different from what we measure and what metrics we use but how quickly we can get that information back to advertisers," explains Lee.

"The closer we can provide these metrics in real-time, the quicker advertisers can adjust and optimise their campaigns for tremendous success."

Beyond CPC and ROAS metrics, Carousell Media has found that brands have a massive appetite to garner more campaign insights from post-campaign reports, says Eastwood.

"For example, in addition to the product they purchased from the brand, what other products have they purchased in the past? These insights can be used to influence their other above-the-line marketing initiatives," explains Eastwood.

Retailers may choose not to join retail media networks to maintain their relationship with their brands. In such cases, retailers should share the information they are willing to provide, while retail media networks should give advertisers standardised reporting.

The need to agree on measurement and metrics largely falls in the hands of brands and their expectations, says Singh. The brand holds the budgets and expectations, regardless of whether the brand purchases the inventory through a retail media platform network or a direct retailer relationship.

"Retail media solutions can help advertisers track attribution and measure their advertising campaigns' impact. The platform provides unified and closed-loop measurements to see the commerce outcomes, including revenue, sales, and leads," explains Singh.

"Advertisers can use the data to make informed strategic and spending decisions and enhance performance across the buying journey."

Is attention metrics the answer?

Retail media's advantage lies in the fact that online user behaviour is more readily measurable with appropriate marketing infrastructure, as opposed to offline in-store customer behaviours that are hard to quantify.

Advertisers can make inferences about what a user is interested in and predict what products their consumers might be interested in based on simple actions such as scrolling through product feeds and hovering on or clicking to find out more about specific products.

"If adequately captured and measured, this invaluable consumer insight can be translated into marketing tactics to drive sales uplift on specific products. It also facilitates hyper-personalisation by understanding each customer's shopping behaviours and real-time and near-future purchase intentions," explains Ng.

"The key to making this work is to map out personalised shopping journeys as granular as possible (down to the individual level), then distil this into actionable audience segments to comply with data privacy regulations."

However, Lee argues instead of using 'attention' as a metric, he would suggest advertisers use 'data-driven' retail media channels to target and optimise campaigns for relevant audiences.

"Advanced retail media could analyse user behaviour patterns at the individual shopper level by applying state-of-the-art technologies such as machine learning to legitimate first-party data, better understanding and forecasting the customer buying journey," explains Lee.

Eastwood advises brands not bought on retail media networks, such as banks, insurance or QSRs, to think of ways to tap into the consumer journey natively.

For example, Carouselll Media worked with an insurance company in Singapore that ran a prize giveaway. They offered prizes to the top three searched-for items on Carouselll the prior month, like iPhone 13, Brompton Bike and a Nintendo Wii.

Achieving ROI

Business leaders will scrutinise marketing in the current economic climate. In this scenario, marketing dollars will likely shift to performance-driven channels that can provide measurable growth and justify marketing decisions to key stakeholders such as the CFO.

Similarly, retail media faces increased expectations of getting more immediate outcomes by placing marketing campaigns at the final transactional moment.

However, as we live in an era of digital privacy, Lee cautions that accessing and using third-party data to target the right audience for marketing campaigns is getting more difficult.

"Retail media is an excellent option for circumnavigating this, as it uses first-party data. Therefore, advertisers should partner with a retail media channel to access their first-party data at execution and feedback loop levels," says Lee.

"The right retail media platform will be able to eliminate manual input by advertisers and instead offer automated campaign processes for their advertisers. As a result, marketers can be freed from more menial processes such as design and execution. Instead, they focus on adjusting their campaign strategy through real-time and sophisticated visibility around the campaign's outcomes."

ROI remains a challenge today with retail media networks since advertisers would effectively only drive maximum sales through a single retailer at a time.

To maximise ROI, Ng advises advertisers to pursue a retail agnostic advertising strategy potentially–when brands target shoppers on the sites and apps they organically engage with, allowing advertisers to drive sales through multiple channels.

The problem with this, however, lies in the deduplication of consumer data since users may engage with the brand across multiple channels.

She explains the key is to map the user journey through ad exposures and attribute success according to a contribution weightage to each channel in the lead-up to the conversion/purchase.

"Tools like Google's Campaign Manager 360's path to conversion report does a reasonably decent job tracking the user journey but fall short according to influence on each channel," she explains.

"The onus is to advertisers to determine which channels drive the best impact for them through a standardised measurement metric, like attention. Attention can be split into measurable metrics like dwell time, button clicks, and CPM."