Retail media management (RMM): How to measure and optimize your digital shelf success
Ecommerce is ever-changing. Even top brands face difficulties in gaining profitable market share on the digital shelf. Many seek innovative ways to optimize and drive growth, and a growing number are turning to RMM solutions to gain an edge. Jordan Gisch, retail media expert at CommerceIQ, pinpoints three questions brands must consider to get the most out of RMM.
It’s hard to ignore the commercial juggernaut that is retail media these days.
According to Group M, the size of the global retail media market is on course to hit $125.7 billion in 2023. By 2028, retail media revenue is forecast to exceed TV advertising revenue.
Buoyed by the size of the opportunity, retailers are constantly evolving and expanding their retail media offerings. And brands are ready to flash the cash. US retail media network ad buyers are expected to increase spend by 11% in 2023, according to IAB; 52% plan to reallocate budget to retail media.
With more and more money flowing toward retail media, it is vital for consumer brands to take a disciplined approach to retail media management. Robust data, analytics, and – increasingly – AI tools are critical. To maximize growth and market share, integration with wider digital shelf optimization efforts is also key.
Here are three essential points for brands to consider.
1. What’s the right RMM model for you?
In simple terms, retail media management is the process of managing your paid online advertising outside of your own website.
This can take several forms, and an important first step for brands is deciding which approach best fits their needs, objectives, and capabilities. There are three main models to choose from:
#1 Full-service management
The most comprehensive option of the three, this model sees an RMM provider such as CommerceIQ act as your retail media agency. Your entire retail media business is managed for you: think hands on keyboard, optimizing keywords, adjusting budgets, and reporting back on success on a weekly basis.
#2 Licensing RMM tech to your agency of record
If you have a good existing relationship with a digital media agency, it can make sense to license RMM technology to that agency instead of moving the entire retail media business over to be managed by an RMM provider. The RMM provider will still have a relationship with you, but your main point of contact is the digital media agency.
#3 Licensing RMM tech directly to you
Brands with their own in-house retail media teams can take charge of their retail media management by licensing technology directly from a provider like CommerceIQ. Under this model, we still report back to you on a weekly basis and work together on optimization, but the day-to-day management is done by your in-house team.
Right now, most brands we work with at CommerceIQ are choosing the full-service model for total peace of mind.
However, as brands ramp up their own retail media capabilities, we are seeing growing interest in licensing arrangements. As a result, our CommerceIQ experts are highly experienced at working with in-house teams – as well as agencies – to ensure their people are upskilled on our platform and empowered to use it to drive the right results.
2. How well does your RMM connect to your digital shelf?
In addition to picking an appropriate service model to suit their needs, brands should consider how well their chosen RMM solution integrates with other ecommerce tools.
Successful retail media management doesn’t exist in a vacuum. To get the best return on your spend, RMM must be viewed in the context of your wider activities on the digital shelf. Here’s why.
Let’s say you have $100k to spend on retail media. Using the traditional approach to media buying –where you don’t connect your digital shelf to your RMM – you would decide where to invest that $100k based on where your return on advertising spend (ROAS) is highest. Given the choice between a keyword with a $8 ROAS and one with $5, you’d naturally pick the $8 one.
But ROAS doesn’t tell the whole story – and it does not always steer you in the direction of true growth.
Ultimately, the ad dollars you spend on retail media should improve your visibility in areas where you are not already showing up organically. That’s where the opportunity for incremental growth is. There’s little point paying for keywords where you are already winning organically, no matter how good the ROAS might look on paper. With incremental return in mind, the smart choice may well be the $5 keyword, not the $8 one.
The only way you’ll spot such opportunities for incremental growth is by linking your digital shelf and your RMM. You need a clear view of where you are and aren’t showing up online, so you can utilize retail media to adjust for where your organic visibility is falling short.
That’s why at CommerceIQ we are so passionate about linking retail media management with the digital shelf: we know you won’t achieve the right results if you look at either in isolation. And it’s why we’ve recently launched our Incrementality Estimation Module – a pioneering, AI-driven tool that allows brands to pinpoint where to spend on retail media based on digital shelf signals.
3. Are you paying attention to the right KPIs?
When push comes to shove, only one KPI matters: total business growth. Is your retail media spend helping to grow your top-line sales?
Far too many brands and agencies focus myopically on ad spend and ROAS without taking into account the wider business performance. But if you are raising your ad budget year on year and your sales remain flat, consider it a red flag. More often than not, it’s a sign the mix between your retail media and the digital shelf is wrong.
To ensure you are investing your dollars to impact the total business versus just looking at advertising in a silo, KPIs that focus on incrementality are key.
At CommerceIQ, our data science team have built two proprietary incrementality metrics that are designed to do precisely that: incremental return on advertising spend (iROAS) and incrementality factor. Both will steer you toward investments that deliver total business growth.
We also encourage clients to monitor market share as part of RMM efforts. Market share is a useful leading KPI that we can back into. For example, if a brand wants to own 20% of a certain category, we can start to work backwards from there to use the digital shelf and retail media to accomplish that.
Finally, it’s good practice to consider key digital shelf KPIs within a retail media context. Specifically, what’s your share of voice, and where are you showing up?
Ideally, you should look at these together, through a connected platform like CommerceIQ. However, even if you don’t have a unified ecommerce tech stack, make a point of establishing some baseline metrics around your digital shelf performance. Where are you winning organically, and where are you not?
By paying attention to signals from the digital shelf, you will ensure you are spending your retail media ad dollars where they can make the biggest difference to your total business.
Need help with optimizing your retail media management and digital shelf performance? Book a demo with our consultants today!