November 20, 2024.
In the fast-evolving world of media, Retail Media is the land of opportunity. With the global market projected to grow from $140 billion in 2024 to $166 billion in 2025 (according to eMarketer), businesses are eager to capture their share of this expanding ecosystem.
However, as advertisers continue pouring dollars into Retail Media Networks (RMNs), a growing concern arises among marketers: Are these investments driving higher sales and increased brand awareness ? The #1 factor influencing future investments in retail media is the ability to provide clear and credible ROI proof (according to eMarketer).
Moving Beyond ROAS: Why Incrementality Matters
Traditionally, Return on Advertising Spend (ROAS) has been a go-to metric for evaluating digital media performance. Naturally ROAS is now widely used in Retail Media. Wrongly. Its limitations in Retail Media are apparent:
Attribution Model Bias: ROAS values vary significantly based on the attribution model used. For instance, a last-click model might overemphasize lower-funnel formats, while a linear model distributes credit across the customer journey. These discrepancies can distort perceived performance.
Attribution Window Bias:
Longer attribution windows inflate ROAS by capturing more sales within the timeframe, regardless of their true connection to the ad campaign:
Product Mix Bias:
Best-selling products naturally generate higher ROAS, skewing performance metrics through organic sales cannibalization and masking underperforming elements of a campaign. Analysis using logarithmic scales validates this phenomenon empirically:
For businesses serious about maximizing their retail media investments, clinging to ROAS is not just insufficient—it’s a flawed strategy. Incrementality metrics—such as incremental sales, incremental ROAS (iROAS), new-to-brand sales, and incremental share of voice—are non-negotiable for gaining actionable insights and driving real results.
Measuring Incrementality: how to start
Incrementality measures the true impact of advertising by isolating sales or outcomes that would not have occurred without the campaign. While no single measurement methodology is perfect, businesses can choose an approach tailored to their goals and the quality of their data. Most effective methods include:
Source: Datagram / IAB.
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The Path Forward
To unlock the full potential of retail media, brands must shift their focus from ROAS to incrementality-based KPIs. This transition enables better decision-making, deeper insights into campaign performance, and stronger alignment with business objectives.
By adopting incrementality metrics, businesses can not only prove the value of their retail media investments but also refine their strategies to drive sustainable growth in a competitive landscape.