Any marketer looking at a new advertising medium asks themselves two fundamental questions: who should I work with, and how much budget should I allocate to them.
Unfortunately, in the case of retail media networks, finding the answers is much harder than it ought to be.
For a start, there are more than 600 RMNs currently operating, and more are coming on-stream all the time. But what really complicates things is that almost every one has its own way of doing things, its own approach to attribution, and its own methods of measurement. The result is that brands have no meaningful way of comparing the performance of their advertising on one network with that on another, or with any other channels they’re using.
Retailers aren’t media owners
In a way, we shouldn’t be surprised this has happened. After all, it’s happened with pretty much every advertising channel ever invented. And retailers aren’t media owners. They don’t necessarily know how brands are used to having results reported when they’re setting up their RMNs.
But too many people are now taking advantage of the situation. They’re either making it really hard for brands to understand what they’re talking about, or making their methods really difficult to understand, or trying to show their media in the best possible light. Put simply, they’re marking their own homework, and giving themselves gold stars every time. And it has to stop.
The irony is that, while the retailers who are doing this might think they’re winning, they’re actually shooting themselves in the foot. Most marketers are still in the test-and-learn stage of working with RMNs. They’re also under huge pressure from the business to maximise the return on their spending, and to justify their budgets. According to The Q1 2023 IPA Bellwether Report, only 21% of companies saw an expansion of their marketing budgets in the period, compared to 13% where marketing budgets were cut, and 66% where the budget stayed the same. In these circumstances, no data means no investment.
As one of the brand marketers who took part in a recent roundtable we ran put it: “As a brand, we’re in a really challenging place. Finance is constantly on my back going, ‘What’s the ROI? We’ve got to make choices.’ And if I can’t articulate in a consistent manner what the thing I want to do is going to deliver, based on either test-and-learns that you’ve run, or benchmarking it in the marketplace, that investment isn’t being signed off.”
Standards help everyone
This is why standardisation has happened in every other advertising medium. Without a way to compare like with like, advertisers are reluctant to spend money. It’s the reason the IAB was first set up back in 1996, and it’s why the organisation is currently working on standardising digital measurement in retail media.
This is certainly important work but, at SMG, we don’t think it's enough.
Most brands’ digital spend is about 20% of their total budget. You can make sure your measurement is really good in the digital space and optimise your spend there, but if it’s not working in the physical space, how is that helping your overall efficiency in marketing, planning and spending? We need to recognise that digital is only a very small part of what the industry should be trying to standardise.
This is also an area where marketers need to up their game. They need to be clear which metrics are most suitable for their needs, then ask the RMNs for that information. Recent history is littered with discarded metrics, things like clicks and likes that we measured because we could, rather than because they told us what we wanted to know. So it’s not just about standardising industry metrics, it’s also about educating brands on the best KPIs to use, and helping them grow the category through better KPI planning.
As you’ve probably guessed, this is something we at SMG take very seriously. We have a proprietary commerce marketing platform called Plan-Apps, and its entire development has been done with a view to standardising measurement. Everything we measure across our entire portfolio of RMNs has exactly the same methodology underpinning it, so not only do brands know exactly what the data they’re getting means, they can also make robust comparisons between networks. They’re finally able to compare like with like.
That’s why we’re pushing this issue so hard, because we know it’s not just the right thing for us or our clients, whether they’re retailers or brands. Standardisation is the right thing for the entire industry.