Retail media has a serious attribution problem.
Closed-loop purchase attribution is one of the main selling points of retail media. It’s why retail media network (RMN) placements are so expensive relative to open programmatic.
But purchase attribution can be gamed by programmatic metrics and create perverse incentives for RMNs to serve ads to low-quality and low-transparency inventory.
Crux of the problem
The attribution gamesmanship that drives many advertisers mad is that RMNs now serve ads across the open web – but without even the most basic standards of transparency. There’s no page-level reporting or standard verification tags.
Retailer platforms will tag an online ID on some cheap network site, or even outright MFA sites, and if that person purchases within a week – a typical attribution lookback window – the retailer credits itself for the sale.
This isn’t hypothetical. In a report published earlier this month, Adalytics found that Amazon’s retail media network was “plastering” MFA sites with ads, as Founder and CEO Krzysztof Franaszek put it.
If all those MFA ad placements disappeared, the number of actual product sales on Amazon would essentially remain unchanged, because these ads don’t drive any value.
But advertisers would see a shift from sales attributed to Amazon Ads to more organic sales.
RMNs often take a walled garden approach, which means they don’t share log file data or URL reporting. This creates a perverse incentive to serve ads on MFA as a vehicle to claim attribution credit for real online users.
Amazon and Google are the main offenders in terms of overall MFA ad serving, as per the Adalytics report, but regional and mid-tail retailers are doing much the same with their own RMNs, according to two agency buyers who spoke with AdExchanger on condition of anonymity.
The CPG way
On the one hand, CPG and grocery brands are accustomed to this way of life.
They own little or no data, their customers are actually the store’s customers and they pay a fortune for physical shelf space.
RMNs aren’t under the same pressure as a typical performance marketing platform to provide transparency or demonstrate results. Brands carried in supermarkets or large chain stores are contractually required to re-spend a certain percent of their sales with their retailer partners as shopper marketing budgets.
Typically, a store will include a brand in a coupon pamphlet, for example, or set its own promotional price. But these days, shopper marketing budgets are moving over to programmatic.
The difference here, though, as one Fortune 100 consumer brand marketer said (also on condition of anonymity), is that MFA or crummy network placements can damage a brand in some people’s eyes, unlike when a store includes a product in a sale or a coupon circular in a local newspaper.
Many brands have developed their own standards for programmatic media. But when they spend through RMNs, they don’t get visibility until a disgruntled customer sends them a screenshot of their ad on a garbage MFA site.
But putting aside an advertiser’s responsibility to monetize quality media and avoid contributing to digital media scammers, RMNs are robbing brands of their hard-earned organic customers.
Room to grow
RMNs have reached a point where – aside from Amazon and Google, which have their own empires – they’ve run out of space to serve ads, one agency buyer said. Retailers have only nascent video and CTV businesses, and their sites don’t have much traffic or ad space. In other words, retailers have demand and valuable data but nowhere for it to go.
A banal sponsored listing on the homepage of a top-10 grocer’s site can be one of the most expensive placements on the web, according to one large beverage brand marketer. More expensive than an ESPN homepage takeover or even premium CTV spots, she said.
So, what can RMNs do to grow?
One option is to improve the efficiency and ROAS metrics of their ad platform. Without additional supply or budget, RMNs can still increase revenue by claiming greater attribution credit. And one cost effective way to do this is by serving banner ads across MFA and other nontransparent network placements.
Some retailers do allow ad verification and are part of the broader industry push for transparency. But it’s mostly the ones with scale that see transparency as a way to distinguish from the horde of smaller RMNs that launched over the past few years.
Many RMNs report $50 or more return on ad spend, with seemingly no connection to actual customer purchase cycles, said Claire Wyatt, Albertsons’ VP of business strategy and marketing science, at an IAB panel on retail media standards last year.
“That’s a lie!” she said.
The info disparity
Brands often suffer from an imbalance of power in their relationship with retailers. But fueling their resentment, in this case, is an even greater issue of data asymmetry.
There is a major lemon market in retail media. Even brands that are diligent about requiring and monitoring log files and campaign reporting can do little to monitor this ad attribution craftiness.
Are you going to stop selling on Amazon? Because Amazon won’t give up on its walled garden model.
Is a CPG really going to pull products from grocery and convenience store shelves?
Retailers can exploit their data disparity to great effect.
A grocery chain has a very good sense of how often online grocery shoppers repurchase certain products or if there are seasonal items people buy at certain times, like, say, every Easter. The retailer also knows what’s currently in a shopper’s cart and what’s likely to be purchased at the same time. It knows if people have searched for a specific product before – for instance, someone who previously searched for “Colgate toothpaste” is probably going to buy Colgate toothpaste when that tube runs out, and they can be effectively tagged for attribution credit even if they’d convert on the brand without any paid media.
Brands are beset by RMNs using their ad dollars to serve ads into placements they would never pay for themselves. A few cents on the CPMs here or there is one thing, but the attribution credit cuts an additional (and sizable) slice of profit margin, which is far more impactful than wasted media spend.
Sure, it’s fair for retailers to take contractual shopper marketing budgets and use them at their own discretion, said the same beverage brand marketer.
“But if they consider every customer as having been delivered by their platform,” she said, “then they really don’t believe in brands having organic sales.”
