Beyond the Bling: Why Your Retail Media Spend Needs a Hard-Nosed Incrementality Check

Right, let's talk brass tacks. You've probably seen the dizzying projections for retail media – a market set to hit an eye-watering £12 billion in the UK by 2028. Every major retailer, from Tesco to Boots, John Lewis to Argos, is piling in, offering sponsored product listings, onsite banners, and even off-site programmatic ads targeting their valuable customer data. The appeal is obvious: direct access to high-intent buyers, right at the point of purchase. But here's the uncomfortable question I want you to chew on: Is your retail media spend actually *working*? Or are you just paying for sales you would have got anyway?

I’m seeing too many brands get swept up in the hype, pouring budget into retail media networks without adequately understanding the true incremental value. It's not enough to see a ROAS of 3x or 4x if a significant chunk of that revenue was destined for your coffers regardless of the ad. That, my friends, is marketing malpractice.

The Allure of the Walled Garden (and its Hidden Costs)

Retail media's strength is its closed-loop reporting. You can directly attribute a sale to an ad impression on, say, Sainsbury's Groceries Online. Fantastic, right? Well, not entirely. This creates a seductive, yet potentially misleading, picture of success. Imagine a loyal customer, week-in, week-out, adds your brand of premium coffee to their basket. If your retail media campaign shows them a sponsored ad for that same coffee right before checkout, and they proceed to buy it, the retail media platform will claim that conversion.

But did the ad *cause* the sale? Or did it simply intercept it? This is the core challenge. Without a robust methodology to isolate truly incremental impact, you're essentially paying a tax on your own brand's existing demand.

Why 'ROAS' Is a Blunt Instrument Here

In other paid channels, ROAS (Return On Ad Spend) is a key metric. But with retail media, particularly for established brands, it can be dangerously misleading. A high ROAS might simply be reflecting strong baseline demand, not new demand generated by your advertising.

• **Cannibalisation:** You’re paying for a conversion you would have earned organically or via direct navigation.
• **Brand Search Interception:** Consumers searching directly for your brand are shown your sponsored ad, giving the platform credit for brand-driven demand.
• **Existing Customer Bias:** Platforms often target existing customers for retargeting, making it hard to discern new vs. repeat sales driven by advertising.

This isn't to say retail media is bad. Far from it! It offers unprecedented targeting and proximity to purchase. But you need to evolve your measurement beyond simple ROAS.

Your New Mantra: Test, Control, Incrementality

For Digital Munkey clients, we're pushing a more scientific approach. It’s time to get forensic.

1. **Geographic Split Testing (Geo-lifts):** This is the gold standard. Run your retail media campaigns in specific geographic regions (your 'test' areas) and withhold them from comparable 'control' regions. Compare sales uplift between the two. This helps isolate the true incremental impact.
2. **A/B Testing within Platforms:** Where possible, leverage the platform's own A/B testing capabilities. Test ad groups with and without specific placements or targeting parameters to see the difference.
3. **Pause/Pulsing Tests:** Temporarily pause campaigns or significantly reduce spend for a short, controlled period and observe the dip in sales. While not perfect, it can provide directional insight into reliance.
4. **Holdout Groups:** For some platforms, you can create a 'holdout' audience that won't be shown ads. Comparing their behaviour to the exposed group is crucial.
5. **Market Mix Modelling (MMM):** For larger brands with significant budgets, MMM can help disentangle the impact of retail media from other marketing channels and external factors, giving you a holistic view of incrementality.

Remember, the goal isn't just to make sales; it’s to make *more* sales than you would have without the ad. Every single penny you spend on retail media should be scrutinised through this lens.

Demand Better from Your Retail Media Partners

Retail media networks are evolving rapidly, and they know incrementality is the future. Don’t be afraid to push them. Ask about their incrementality measurement capabilities, their ability to set up proper control groups, and their long-term vision for providing truly additive value. If they can’t answer, or punt you back to a ROAS report, it’s a red flag.

My strong opinion? Any retail media strategy that isn't actively pursuing and measuring incrementality is simply leaving money on the table, or worse, misattributing organic wins. It's not about being clever with your budget; it’s about being *effective* with it. In a market where every penny counts, ensuring your retail media spend is genuinely growing your pie – not just carving it up differently – is non-negotiable. Time to get tough with your numbers, folks.