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Retail media’s sales figures have their charms, but beware the ROAS trap

By Nicole Kivel, Managing Director, Northern Europe, Criteo

In the early days of retail media, many FMCG brands jumped at the chance to directly engage with buyers. While shopper marketing has always existed in physical stores, seeing real-time sales in the digital realm was transformational.

Subsequently retail media became synonymous with return on ad spend, deeming it a critical metric to track. It has made ROAS the driving force for a lot of retail media – but ROAS rarely tells the full story. 

Brands have more nuanced goals than simply driving sales. They want to connect with new audiences, sell higher value products and drive greater lifetime value, particularly on the FMCG side. So how can we be sure retail media ROAS is of an incremental nature? 

The answer, according to data from over 44,000 retail media brand campaigns, shows that US brands running sponsored product ads enjoy, on average, a remarkable 428% incremental return on investment, while EMEA brands that ran onsite display ads saw a bump of 160% more sales per user.

Nonetheless, many brands and retailers are at risk of falling into the ROAS trap. ROAS has been the go-to metric for measuring profitability for good reason, but there’s a whole world of other ways to measure success beyond brand sales. 

Remember to grow your brand

In a world where new customers are increasingly hard to acquire, retail media proves to be a strong acquisition tool by offering brands more visibility on the digital shelf. When planned and executed properly, it is the fastest route to reaching new consumers at a crucial consideration point in the journey with a seamless path to conversion.

In fact, The ROAS Trap report confirms that it consistently converts new to brand shoppers. For Apparel & Accessories, Arts & Entertainment, and Health & Beauty, global data shows that three in five people who clicked and purchased from a retail media campaign are new to brand shoppers.

Another pitfall of the ROAS trap is to become too fixated on the digital side. The primary purpose of retail media has to be to maintain, and more importantly grow, online and in-store incremental sales. This is crucial since a huge portion of retail sales are still completed in-store, of which many are digitally influenced.

Within the shopper journey, online and offline touchpoints don’t operate in silos, and their metrics shouldn’t either. Investing more in online advertising to enhance a brand’s digital presence directly influences the world of offline too. Global retailer data shows that the more brands increase their online investment, the more their offline sales rise.

Transform results through the shopper journey

Retail media is a highly influential way to enhance the customer experience, weaving moments of inspiration, ease, and savings throughout their shopping journey. Customer data backs this up; customers who engage with ads increase their purchasing frequency, shop across more stores in a multi-retailer marketplace, and have greater affinity and brand loyalty to advertising partners.

Retail media has the power to shape positive conversations through targeted messaging, real-time engagement, loyalty programs, and more. These strategies motivate shoppers to organically share their positive experiences through product reviews and social media, reinforcing a brand’s social proof and influencing other shoppers’ purchasing decisions.

Not falling into the ROAS trap opens the opportunity to effectively implement these kinds of unified commerce strategy. Unlike other advertising channels, retail media’s direct access to the consumer transaction unlocks insights and closed-loop reporting that powers better data-driven decision making. Looking at the journey end-to-end enables us to provide customers with an innovative, personalized advertising experience that seamlessly integrates across brick-and-mortar and digital storefronts, facilitating sustainable revenue growth.

Nicole Kivel, Managing Director, Northern Europe, Criteo

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