Jan 27, 2025

ROAS vs. incrementality: Scrutiny around ad spend grows in booming retail media space Ivy Liu For all the dollars advertisers have been shoveling into retail media networks, marketers are starting to scrutinize the industry’s latest shiny object a bit harder. The pitch of RMNs was their first-party data and the potential to truly track sales. Marketers, however, are still looking for the retailers to make good on that promise. This year, expect more emphasis on measurement with advertisers prioritizing incrementality metrics as opposed to return on ad spend, or ROAS, which has traditionally been the gold standard to help marketers determine which campaigns and ads are working (and which aren’t). “Retailers can report incremental sales with greater accuracy than any other media company,” Christine Foster, vp product strategy and media operations for Kroger Precision Marketing at 84.51°, said in an email response to Digiday. “We know exactly what the baseline organic sales should be in any category we sell.” And that’s what advertisers say they want in on, especially as retail media networks act more as media companies, rolling out off-site ad opportunities to reposition themselves from performance marketing channels to one-stop ad shops. “The retail media networks are claiming enormous credit for driving sales, but they’re missing this really important aspect: Would that sale have happened regardless of the ad?” questioned Matt Voda, CEO of OptiMine, a marketing analytics company. Some retailers have already started building out tools and measurement capabilities in hopes to better compete for ad dollars amongst 200-plus retail media networks. Earlier this month, Kroger Precision Marketing (KPM), the grocery chain’s retail media arm, announced new capabilities, bringing incremental sales reporting to self-service programmatic campaigns. Similarly, Albertsons Media Collective, retail media arm for Albertsons Companies food and drug retailer, announced the launch of an API, enabling advertisers to integrate Albertsons campaign performance data into their own measurement models for analysis. And while there’s still the issue of lagging standardization for the retail media space, Instacart, Criteo and other retail media network players received Media Rating Council (MRC) accreditation last year, pointing to its push to ensure the accuracy of its metrics. Retail media was the fastest growing ad channel last year, expected to account for nearly a quarter of total media ad spend by 2028, per eMarketer. That growth is expected to cool ever so slightly this year, according to the market research company. It’s a trend that could continue as marketers start to pick apart metrics like ROAS, looking for more granular level insights to determine campaign effectiveness. Historically, ROAS has been a go-to calculation, “Put money in, get money out. It’s an easy go-to,” said Cindy Meltzer, vp of research and analytics at Dagger ad agency. Incrementality, on the other hand, is more hands on keyboards, testing and experimenting to get a complete picture of ad spend impact, she added. For some Dagger clients, that looks like pausing and restarting media spend to compare sales within certain period of time or segment. Meanwhile, digital marketing agency Wpromote is leveraging proprietary incrementality and measurement tools in platform for off-platform retail media, and leveraging third-party partner solutions for on-platform media incrementality testing. Going back to the standardization issue, some retailers, like Amazon and Walmart, share insights, but marketers question how accurate that incrementality is because “they always take 100% attribution for sales,” said Ashley Karim-Kincey, svp of media at Dagger. In the retailers’ defense, experts in the space say retail media is still in its infancy in comparison to other channels like social or video. Last January, the Interactive Advertising Bureau (IAB) and Media Rating Council (MRC) finalized retail media measurement standards, to which retailers like Instacart and others have aligned themselves with. Those standards set a framework for audience measurement and metrics, best practices when measuring incrementality as well as reporting and transparency. Still, the pivot from ROAS to incrementality is just the tip of the iceberg in a landscape where there are still “tensions within the marketplace” and “a lot of work that still needs to be done,” according to Jeffrey Bustos, svp of retail media analytics at Merkle. Marketers want the data to prove retail media is all it’s hyped up to be and retailers want to stand out in a crowded marketplace, leveraging granular insights to do so. Retail media networks are, as Bustos puts it, “the first ecosystem in which the outcome and the ad happens in the same ecosystem.” Meaning, the ad shows up in the same place where the buying decision happens, making it even more crucial to tie ad spend back to sales. “Incrementality is definitely a huge priority for brands,” he said, “because you’re within an environment where retailers are grading their own homework and this helps brands prove out their performance.”