The appeal of retail media networks is undeniable. One of their biggest value drivers is the ability to target customers with a retailer’s first-party data set. This unlocks a significant opportunity for CPG brands fighting for market share across the industry.
With retail media networks, your audience customization possibilities are limitless. You can target customers at the brand, category or item level, during specific timeframes, while also considering certain purchasing behaviors. For example, you can build a unique audience by targeting customers who bought ice cream, whipped cream and cherries within the past four weeks.
So, how can these selected audiences be used to inform performance metrics and define success?
All audiences are not created equal
There are clear merits of measuring incremental return on ad spend (iROAS), as well as using incrementality to measure retail media campaign impact. However, there’s more to consider: In an industry where iROAS is universally used, how does targeting that uses first-party audiences serve to contextualize performance results?
Traditionally, when a campaign objective is to drive sales, targeting current or lapsed buyers should drive a more favorable ROAS. Why? Because converting a past buyer is easier than acquiring a new one. But are you truly driving sales or simply reinforcing a behavior that would have occurred regardless of served media? By measuring a campaign using iROAS methodologies, the inherent bias toward expected behavior is neutralized.
With retail media networks, your audience customization possibilities are limitless.
With new context, a campaign objective of driving sales means audience targeting can be more pointed. Shoppers who have not purchased your brand, but are buying other items in the category, are notoriously difficult to convert. No matter how eye-catching the creative or how effective your call to action is, driving these elusive shoppers to your purchasing funnel will always be an uphill battle.
But all hope is not lost. While the overall attributed sales from these buyers may be low, success looks different using iROAS, as a statistically significant lift can be determined for sales, units, orders and buyers. When reviewing campaign performance for the above acquisition-focused campaign, iROAS will likely be lower than what is generally considered successful. However, it is important to recall your original objective which informed audience selection.
With the pressure to deliver positive results against annual goals, it is easy to forget this is a long game. Sacrificing strategy for short-term wins won’t move the needle. Instead, converting non-buyers into incremental loyal consumers leads to more future success than earning a greater than $1 ROAS in a single campaign targeting shoppers already buying your products.
While this shift in perceived success requires testing, learning and education, understanding what drives higher iROAS will undoubtedly do more for your business than artificially inflated ROAS.
The path to success
Because campaign performance lives on a spectrum, audience targeting can help frame campaign results. Set yourself up for success at the beginning of a campaign by working with account management and media planning partners to align on a clear, thoughtful objective. This is imperative before proceeding with audience selection.
Even with all the benefits of using iROAS for measurement, it alone does not tell the full story. For example, when launching a new product, one could anticipate ROAS to be challenging because the objective is to drive awareness and trial. So, while iROAS as a metric is powerful, it should be supplemented with additional metrics such as reach or new category buyers to help define success.
Benchmarking is also critical to understanding success, which is something Albertsons Media Collective continually practices to better understand what “good” performance looks like across campaign objectives, categories and, eventually, audience types.
Targeting the right audience might lead to subpar numbers in the short term, but with iROAS changing the way success is measured, it will pay off down the line as your brand builds loyalty among new shoppers. Just be confident and trust the process.
