Over the last year, the retail media space has experienced dramatic growth. Online retailers and legacy retail chains have created huge revenue streams by selling advertising inventory on their websites.
But advertisers’ priorities are shifting—the Association of National Advertisers put out a report in January stating that 42% of advertisers are now questioning their investments in retail media networks. Why the change of heart, and how can retail media networks address their concerns?
Advertisers are confronting continued pressure to prove results as the macroeconomic environment remains uncertain and volatile. And they are making adjustments to accommodate: According to our proprietary research, three in five advertisers report shifting budgets into high-performing media to maximize return on investment, while more than half report shifting budgets out of underperforming media.
This emphasis on performance can also be seen specifically with digital retail advertisers. When asked what their biggest challenges are, digital retail advertisers most often give three answers: high prices, insufficient return on ad spend and difficulty attributing sales to advertising. And when asked to rank those challenges, attribution is most often No. 1.
In this economic environment, digital retail advertisers are making it clear they need their partners to prove the ad resulted in an outcome.
Retail media networks are at a distinct advantage when it comes to measurement. With first-party, transactional data, these networks can link impressions to direct purchases. As a result, marketers can realize better returns from advertising with them compared to other ad platforms. They just need to see the numbers, on and beyond the network’s platform.
Any retail media network is going to be willing to provide some kind of closed loop attribution reporting, which would credit sales on their platforms to ads on their platforms. But an important missing piece is understanding holistically how those ads are contributing to sales on each platform. This allows advertisers to understand the bigger picture, not just within any given retailer.
Offering this capability will require retail media networks to be willing to engage in a more sophisticated way—for example, by partnering with data clean rooms so advertisers can extract more insights than just the basic KPIs in a dashboard. Retail media networks should engage these solutions and market the integrations. In this environment, the onus is on these networks to provide this functionality as a partner and stay competitive for ad dollars.
