Navigating the Challenges of In-Store Measurement Amid Retail Media Growth.

Retail media networks have become a critical channel for brands seeking to engage with consumers at the point of purchase. As digital commerce grows, retail media has expanded significantly, with retailers leveraging their first-party data and consumer insights to offer targeted advertising opportunities. However, a notable gap remains in the measurement of in-store performance. Despite the rise of retail media, the tools and methodologies for measuring the effectiveness of in-store campaigns need to catch up with digital and online advertising. This gap poses challenges for brands looking to assess the full impact of their omnichannel strategies and optimise their media investments across the board.

We want to explore the rapid growth of retail media, the challenges in accurately measuring in-store performance, and potential solutions that could help bridge the gap between digital and physical retail environments.

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The Growth of Retail Media Networks

Retail media has emerged as a critical advertising platform, with major retailers such as Amazon, Walmart, and Target building media networks. These networks capitalise on first-party data to deliver personalised and highly targeted ads to consumers at critical moments in their purchasing journey. According to industry estimates, retail media spending reached $45 billion in 2023, reflecting a shift in how brands allocate their advertising budgets.

Several factors have contributed to the growth of retail media, including:

• The Decline of Third-Party Cookies: With changes in data privacy regulations and the impending deprecation of third-party cookies, advertisers are increasingly turning to first-party data to effectively target consumers.
• Shift to Digital Commerce: The continued rise of e-commerce and digital shopping experiences has made it easier for retailers to capture valuable data and insights about consumer behaviours.
• Omnichannel Strategies: Brands seek to engage with consumers across online and offline touchpoints, necessitating a more integrated approach to media buying.

Retail media is particularly appealing to advertisers because it allows advertisers to target consumers with high intent at the point of purchase and leverage closed-loop reporting based on first-party data. However, while the measurement of online retail media campaigns is relatively advanced, the same cannot be said for in-store measurement.

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The In-Store Measurement Challenge

Despite the sophistication of digital media measurement, understanding the impact of in-store retail media campaigns remains a significant challenge. Retailers are still developing tools that accurately track and analyse consumer behaviour in physical stores, where purchases are often influenced by various unmeasurable factors, such as in-store promotions, product placement, or even weather conditions.

Key issues with in-store measurement include:

• Lack of Standardization: Different from digital advertising, where measurement frameworks like viewability and attribution models are well-established, there is no industry-wide standard for measuring in-store media performance.
• Data Fragmentation: In-store data often resides in different silos within a retailer's ecosystem. Sales data, foot traffic, and promotional data may be captured by separate systems, making creating a comprehensive view of a campaign’s impact difficult.
• Limited Attribution Models: Many brands struggle to attribute in-store purchases to specific media exposures accurately. While retailers may offer some attribution tools, they often need more sophistication than those used in digital channels.
• Consumer Privacy Concerns: Privacy regulations and consumer expectations further complicate in-store data collection. Tracking consumers in physical environments can raise ethical and legal questions that do not arise online.

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The Consequences of Poor In-Store Measurement

The inability to effectively measure in-store performance has significant implications for brands and retailers. With accurate measurement tools, brands can rely on assumptions or complete data to decide their media investments. This creates several challenges, including:?

• Inefficient Media Spend: Brands may spend less on media placements that must deliver the desired results or underinvest in more effective tactics than they realise.
• Suboptimal Omnichannel Strategies: As brands look to engage consumers across both online and offline channels, the lack of reliable in-store measurement can lead to an imbalanced media strategy, where too much emphasis is placed on digital channels at the expense of in-store engagement.
• Missed Opportunities for Optimization: With clear insights into how in-store campaigns perform, brands can make real-time adjustments or optimise future campaigns based on past performance.

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Bridging the In-Store Measurement Gap

To address the challenges of in-store measurement, retailers and brands are beginning to explore new technologies and methodologies that could improve data accuracy and reliability in physical retail environments. Some of the most promising developments include:

• Advanced In-Store Sensors and IoT Devices: Innovations such as smart shelves, beacons, and in-store cameras equipped with AI are being deployed to gather data on consumer behaviour. These devices can track how long consumers spend in certain aisles, whether they engage with specific products, and how in-store media (such as digital displays) influence purchasing decisions.
• Point-of-Sale (POS) Integration: Many retailers are working to integrate their in-store and digital systems more effectively, linking POS data with media exposure data to create a more comprehensive view of the customer journey. This would enable more accurate attribution models and help brands better understand the relationship between media touchpoints and in-store purchases.
• Retailer Partnerships: Some brands partner directly with retailers to access their first-party data and gain deeper insights into in-store performance. By sharing data and working together to develop better measurement frameworks, retailers and brands can create a more cohesive approach to in-store media.
• Data Analytics and AI: Leveraging AI and machine learning technologies can help retailers and brands make sense of the vast amounts of in-store data they collect. These tools can identify patterns, predict consumer behaviour, and provide actionable insights for more effective media optimisation.

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The Future of In-Store Measurement

As retail media grows, the demand for more sophisticated in-store measurement tools will only increase. Retailers that can provide brands with a clear understanding of how their in-store campaigns are performing will be better positioned to attract media dollars and differentiate themselves from competitors.

The convergence of digital and physical shopping experiences will likely drive further innovation in the measurement space. As more consumers engage with brands across multiple touchpoints, the ability to track and measure behaviour across both online and offline channels will become increasingly important. Retailers and brands that invest in the right technologies and strategies will be well-positioned to thrive in the next phase of the evolution of retail media.

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Wrap-up

Despite the rapid growth of retail media networks, in-store measurement remains a significant challenge for brands and retailers. While digital advertising benefits from well-established measurement frameworks, in-store media is still playing catch-up. By adopting new technologies, improving data integration, and developing more accurate attribution models, retailers and brands can begin to bridge the gap between digital and physical media measurement. This will improve media ROI and enable more effective omnichannel strategies that drive business growth.

J.J. Thompson

Amazon Ads Partners | Smollan | GIG Retail