The challenge of offsite retail media measurement and how to overcome it

The next wave of growth in retail media is being driven by the infusion of retailer data into offsite media. As retailers balanced consumer experience with creating additional onsite advertising inventory to fill the increasing demand from advertisers, it was only natural for retail media’s growth to shift to offsite inventory. Offsite retail media is enabling retailers to generate even greater profits from their powerful first-party data by allowing it to be used while targeting a much broader set of inventories.

The big question is now – how to measure it?

While the path to closing the loop between onsite advertising and onsite sales is fairly straightforward (although still with shortcomings – see article), offsite retail media opens up a more complicated set of measurement problems:  

Limited conversion tracking

Measurement of offsite inventory requires conversions to be tracked on the retailer’s website. If that media is being run by a platform that the retailer doesn’t operate themselves, an outside party would need to be allowed to track sales taking place within their walled garden… which most retailers are understandably hesitant to do given the risk of data leakage. This problem isn’t unique to retail media – we can already see this play out in programmatic and social. Amazon and Walmart don’t allow Meta or Google to place conversion tags on their sites making it very difficult to capture the sales that a campaign drove. The implication of this is that, unlike onsite retail media, conversion tracking will prove far more difficult for offsite retail media.

Sales converting in another channel

Lower funnel offsite retail media like retargeting may push users to convert immediately through a channel in which the conversions can be measured, e.g. retargeting in Amazon DSP driving sales back through Amazon.com. This gets far more complicated as retail data moves into upper-funnel ad formats like online video or CTV which don’t have that same direct response call-to-action driving users to immediately click through and purchase in one channel over another. There is also often a significant delay between the ad exposure and purchase for upper-funnel advertising, giving users the opportunity to convert elsewhere in a non-measured channel. The net result of this means that only a fraction of the sales touched by upper funnel offsite retail media campaigns are likely to be measured by traditional conversion tracking and that is even before looking at the spillover into brick and mortar conversions…

Identity breakage

Leaving the nice clean authenticated walled gardens, we now have to deal with an ever more complicated and fragmenting world of identity. Consumers moving across multiple devices and browsers along with privacy restrictions make determining what identifiers are collected fraught with issues. All this leads to breakage in the direct attribution underpinning the current measurement, contributing to undercounting.

Lacking interoperability across ad platforms

We now need to contend with users being touched by both onsite and offsite media across different advertising platforms. Without a unified ad-server de-duplicating impressions and sales there is a higher possibility of double counting. For example, a brand could be buying Walmart audiences via The Trade Desk and running onsite Amazon Ads. There is no interoperability across those systems to deduplicate conversions and that is before introducing any other digital media they may be running as well.

Last touch attribution is still the default

Even if the stars align and all the advertising occurs through systems that can talk to each other, and the conversion happens in a channel where they can be tracked it is still only the last touch that is credited by default across most of the platforms.  

Evidence of this is easy to see in the performance of offsite retail media campaigns. When we compare the self-reported last touch-based ROAS of offsite retail media to the probabilistic incremental return on investment (iROI), we can see how the factors above under-represent the performance of offsite retail media. We can also see how iROI provides a far more robust measure of offsite retail media insofar as:

• It captures sales that convert in other channels;
• It isn’t subject to undercounting from identity breakage;
• It better accounts for the longer-term effects of upper funnel retail media through adstock; and,
• It still controls for outside media spending and any potential double counting.

The one exception is often retargeting. These users have already expressed interest in the product and have a higher conversion rate even without advertising. For this reason, retargeting is often just reaching users who would already convert on their own and therefore often has a lower iROI.

On the other side, we do see that particularly for mid and upper-funnel offsite retail media, the self-reported ROAS significantly understated performance.

For offsite retail media to continue to fuel growth for brands, more robust third-party measurement is needed than what is currently available. Giving brands and agencies better visibility into how their investments drive growth allows them to have better fact-based business planning with retailers, plan their retail media investments more holistically, and generate more efficient growth for their business.

At Incremental, we are on a mission to help brands and their partners unlock more growth from their investments in retail media through better measurement. Talk to us today to learn more.

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