Three questions to ask while evaluating your retail media investment and why the answer should always include testing
- December 14, 2023
- Lauren Lavin
Retail media networks can seem like the ideal for both consumers and the marketers hoping to reach them.
Consumers typically get an engaging shopping experience, as a retail media network’s ad technology delivers personalized suggestions, keying in on past purchase behavior as well as other factors like when and where they’re shopping.
For marketers, particularly consumer packaged goods companies, these networks offer powerful insights and analysis. The closed-loop reporting and first-party data enable companies to see who is buying their products, what else is in the basket, and which customers are new-to-brand versus repeat.
But as with any other media investment, it can be difficult to determine what success looks like and understand the relative efficacy of the different investments. Especially for something that feels as new as retail media, you need a proper framework.
With a goal of making marketers smarter, GroupM and Instacart partnered to author this guide to look at the three most important questions to ask when deciding where to invest your retail media dollar.
Who is the available audience?
Brands should look at three factors when they’re evaluating the audience they can reach with a retail media investment:
- Intent: What is the shopper doing at the time they see your ad? Shoppers don’t use all ecommerce sites the same way. Someone shopping on a general ecommerce site or a department store retailer carrying everything from flip-flops to televisions to car batteries may simply be browsing and have no intent to purchase your product. But if someone is shopping at a specialty retailer dedicated to your product categories, it is a safer bet they have some interest.
- Relevancy: Roughly translates to the quality of the audience. The context in which the audience can see an ad, their past purchases, shopping habits, and price sensitivity all help to describe how relevant an audience is. It’s going to make those reached with top-of-the-funnel strategies more valuable to you in the long run, and it’s going to positively influence those metrics that gauge the success of lower-funnel campaigns.
- Availability: A high-intent, relevant audience is useless if you can’t reach it. Maybe the placements are budget-breakers. Maybe inventory is low or already bought up for the specific pages or keywords you want to target.
The best way to check the intent, relevancy, and availability of the audience any retail media network provides is to run test campaigns.
GroupM worked with a major CPG company to launch media on Instacart. The marketer was able to reach high-intent Instacart users shopping for personal care and paper goods products. A paid search ad on Instacart for a specific paper goods product keyword or a display ad for a brand at the top of a personal care aisle satisfies the intent and relevancy aspect of audience evaluation as those investments are matched to audiences actively seeking out those products. The audience Instacart brought had both a high intent and relevancy, and scale could be assessed directionally through impression volume.
What tools and tactics can you use to reach that audience?
What tools does a retail media investment provide and how well do they work? This breaks down to control, reporting, the ability to test, and automation.
Start by examining the ad solutions provided; in what formats can advertisements be run, what options are available for each format in terms of targeting, dimensions, campaign duration, audience size or estimated impressions, cost, and billing processes. These factor into how much control the tools provide you, and the more the better.
You also need to understand what kind of data is available to you to monitor the performance. No matter how much control you have, you need to know where you’re going. For that you need reporting.
But above all, test.
There is no substitute for running initial test campaigns and looking at the real results to prove out the business case for an investment. This makes the ability to test absolutely essential to know that any retail media investment is successful.
Automation is also important, whether you work with an agency or use your own tools or those provided by the retail media network. Control is important, but manual control requires a lot of effort, time, and attention. An agency can typically programmatically manage campaigns by adjusting bids, budgets, and so forth, automatically. If you work with an agency, you’ll want to verify your agency can properly engage with the toolset provided. Either way, it’s worthwhile to have tools that leverage modern technology to manage the performance of your ads by optimizing bids or determining targeting and improve the performance of your ads.
How do you know it’s working?
Once you understand your investments within the framework, you need to test your conclusions. This is the most important step of the evaluation and requires trusted, industry-leading measurements that prove the investment is working.
Comparing reporting across the different realms of retail media advertising becomes tricky. This makes it key for brands to insist on industry-standard methods to prove out the results of their investments. Tests that measure sales incrementality or sales lift do this.
‘Incrementality’ is often an overused word that gets applied to many different approaches, which is why brands evaluating their media investments should understand what it is and, crucially, what it is not.
Sales lift testing is used to determine the causal, incremental sales impact of ads by comparing the sales of consumers who saw the ads and those who did not. With all other variables held constant between the two groups, the difference quantifies the sales impact of seeing the ads.
Incrementality does not mean extrapolated, correlated, or modeled. True incrementality tests, like those performed by Instacart, provide results that are not modeled from small samples and do not require correlation or regression exercises.
And what do incrementality tests tell us about retail media?
The major CPG company we worked with saw a 26% incremental sales lift for one of its personal care categories and a 63% incremental sales lift for its paper goods category from Instacart Ads*. When a snack food company partnered with GroupM and Instacart to conduct a lift test, they saw a 47% incremental sales lift*.
But that’s due in part to asking the right questions throughout the process. These questions should help you effectively evaluate investments in retail media. As with other media, bigger doesn’t always equal better. It boils down to what your aims are and who you’re trying to reach – and which retail media network is the best fit for that. These networks can be very powerful, but to get the most out of them, make sure you’re targeting the right audience, being provided the right tools for delivery and measurement, and that you’re testing, testing, and testing.
*Sales lift measured from 11/14/2022 – 12/25/2022 for the snack food company and 04/20/2023 – 05/17/2023 for the personal care company leveraging sponsored product ads. There can be no assurance that the outcomes experienced in these instances can be maintained or replicated due to a variety of factors, some of which may not be within Instacart’s control or cannot be anticipated.