Buyers Face Retail Media Growing Pains as Sector Booms

The IAB is working on creating standards for digital retail media buying in 2023

Elizabeth Marsten, group director of marketplace strategic services at agency Tinuiti, was evaluating a retail media buy when she noticed something seemed off.

For all the impressions the retailer reported, the ad should have generated way more clicks.

“[I asked the retailer] ‘Do you measure impressions with [trade body] Media Rating Council standards?’” Marsten said, only to be informed that the retailer did not. The initial conversation happened in late 2020—when the retail media industry was still in its early stages—but the retailer still wasn’t using MRC standards in 2022, she added.

“That tells you a maturity standpoint,” she said.

Marsten’s experience is not unique among buyers of retail media, which lets brands advertise against retailers’ ecommerce platforms and use valuable shopper data. According to Insider Intelligence, retail media is expected to command $40.8 billion in spending in 2022, a 31% increase year-over-year and more than triple its 2019 total.

It is one of the bright spots in a slowing economy: Walmart’s advertising revenue grew over 30% year-over-year in the third quarter, while revenue overall only increased by 8.7%. Amazon, the largest retail media company, saw its ad revenue grow by 25% year over year, also faster than its overall sales growth and better than many other advertising giants like Google and Meta.

But retail media’s technical sophistication has not grown in tandem, sources told Adweek, with different retailers and ad-tech partners reporting different kinds of metrics, making comparison difficult. Even the reporting metrics buyers get back can be riddled with inconsistencies.

The industry will have an opportunity to air these grievances next year, as the Interactive Advertising Bureau convenes a working group to determine standards for retail media advertising, expected to be finalized in early 2024, said Jeffrey Bustos, vp of programmatic & data center at IAB, who is spearheading the effort.

“We’re going to identify 10 to 20 standards that all retailers need to offer their advertisers,” Bustos said, noting that the IAB will be drawing from existing digital advertising standards, such as viewability and reporting metrics, rather than reinventing the wheel. “Brands and agencies [should be] able to really understand what they’re getting and do cross-retailer analysis.”

Marketers’ efforts to standardize retail media mirror similar struggles for other emerging, hot areas of digital advertising, like connected TV and the metaverse, and reflect the reality that generating buzz and eyeballs is often easier than proving their existence.

Trusting sales metrics

Outside of impressions and clicks, other data reported by retail media networks can be hard to believe.

Katya Constantine, CEO of direct-to-consumer agency DigiShopGirl, buys on platforms like Amazon, Instacart and Criteo’s retail media demand-side platform. Sometimes a retail media network’s reports don’t correlate with those of on-premise sales from retailers.

“We’ve seen instances where store numbers aren’t moving, but the platform numbers are really great,” Constantine said.

Compounding this confusion, some ad-tech firms, when reporting a sale, don’t specify if it was online or in-store, she added.

Helping advertisers know if media actually deserves credit for the sales it claims to generate is an IAB priority. The trade body is working on honing more standards around viewability in retail media, so advertisers only pay for impressions that are seen, Bustos said.

“Let’s say you hire someone to walk your dog four times a day, but he only walks the dog three times a day, but your dog doesn’t pee in the house,” Bustos said. “Should [the dog walker] still get paid four times a day?”

Searching for consistency

Even when metrics are trustworthy, different retail media networks and ad-tech firms report varying signals, with different levels of granularity.

“If you work with Criteo, Citrus and Google, you’re going to get three different reports,” said Janine Flaccavento, svp of new stream media at Dentsu-owned Merkle. “As a brand, there are too many places to buy retail media and no common reporting standards.”

An area of particular inconsistency is attribution windows, Flaccavento said, meaning the time period between an ad being served and a purchase being made where a retail media network can take credit. The challenge with standardizing attribution windows is that different timeframes are appropriate for different kinds of products; three days might be fair for buying milk, but not for a television.

The need for reliable metrics is becoming even more critical as digital retail media placements are increasingly baked into the agreements between retailers and brands, Constantine said. For example, a deal between a pasta brand and a grocer might include both a commitment to purchase on the grocer’s retail media network alongside promises for adequate shelf space, making the buying process distinct from other media deals.

This is still an improvement from the past, however, where the pasta brand might negotiate inclusion in a grocery-store catalog without any data on the efficiency of that buy, Constantine said.

“The tools are just a slightly different flavor of what has always gone on,” Constantine said. “The biggest difference is the advertiser is in the driver’s seat.”