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THOUGHT LEADERSHIP

Best Practices for Measuring iROAS?

24 Apr 2023

The Mars Agency’s Ethan Goodman and Kandi Arrington tackle some of the most common questions that brands are asking about retail media strategy and activation.

QUESTION: Are there any best practices for measuring iROAS?

A: Retail media networks, especially the more mature ones, are steadily starting to provide iROAS* as a standard performance metric in one way or another.

Our concern is that iROAS is often measured by comparing sales among shoppers who saw your media compared with those who didn’t. While there is definitely value in calculating it that way, we’re more interested in finding ways to identify the true incrementality gained over the base volume of the business.

We want to understand if the program brought new households into the brand, or if it drove an existing brand household to increase purchase frequency or basket size. Getting that level of granularity lets us truly understand if the retail media investment was accretive.

We’re still in the early stages of this evolution, but we’re already seeing Kroger Precision Marketing and Albertsons Media Collective make some solid moves in this direction.

The other issue on our radar is that some networks are requiring advertisers to reach a minimum spending threshold before they can qualify to receive any data on incremental sales lift. That can be a stumbling block to real collaboration that we’ll need to watch going forward.

–Ethan Goodman

*iROAS: Incremental return on ad spend is a measurement that factors out organic sales to determine the actual lift generated by a specific media campaign.

Get more insights from previous Fast FAQs:

What metrics should brands be using to measure retail media performance?

In terms of collaborative joint value planning, what retailer is best in class?

What percentage of your overall marketing spend should be allocated to retail media?

How do you compare results across retailer media networks when attribution windows vary so much?

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