Retail media networks have become a crucial channel for brands aiming to engage with consumers at the point of purchase. As digital commerce expands, retail media has grown significantly, with retailers utilising their first-party data and consumer insights to provide targeted advertising opportunities. However, a considerable gap persists in measuring in-store performance. Despite the growth of retail media, the tools and methodologies for assessing the effectiveness of in-store campaigns have yet to keep pace with digital and online advertising. This gap presents challenges for brands seeking to evaluate the full impact of their omnichannel strategies and optimise their media investments across the board.

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

The Growth of Retail Media Networks

Retail media has emerged as a vital advertising platform, with major retailers like Amazon, Walmart, and Target establishing media networks. These networks leverage first-party data to deliver personalised and highly targeted advertisements to consumers at crucial moments in their purchasing journey. According to industry estimates, retail media spending reached £45 billion in 2023, indicating 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: Due to changes in data privacy regulations and the upcoming deprecation of third-party cookies, advertisers are increasingly relying on first-party data to effectively target consumers.
• Transition to Digital Commerce: The persistent growth of e-commerce and digital shopping experiences has enabled retailers to obtain valuable data and insights into consumer behaviours.
• Omnichannel Strategies: Brands aim to engage consumers through both online and offline touchpoints, requiring a more integrated approach to media buying.

Retail media is particularly appealing to advertisers because it enables them to target consumers with high intent at the point of purchase and to 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.

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 to accurately track and analyse consumer behaviour in physical stores, where purchases are often influenced by various immeasurable factors, such as in-store promotions, product placement, or even weather conditions.

Key issues with in-store measurement include:

• Lack of Standardisation: Unlike digital advertising, where measurement frameworks such as viewability and attribution models are well-established, there is no industry-wide standard for measuring in-store media performance.  

• Data Fragmentation: In-store data frequently resides in different silos within a retailer's ecosystem. Sales data, foot traffic, and promotional data may be captured by separate systems, making it difficult to create a comprehensive view of a campaign’s impact. 

• Limited Attribution Models: Many brands struggle to accurately attribute in-store purchases to specific media exposures. Although retailers may provide some attribution tools, they often lack the sophistication found in digital channels.  

• Consumer Privacy Concerns: Privacy regulations and consumer expectations further complicate the collection of in-store data. Tracking consumers in physical environments can raise ethical and legal questions that do not arise online.

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 may rely on assumptions or incomplete data to make decisions regarding their media investments. This creates several challenges, including:  

• Inefficient Media Spend: Brands may allocate less to media placements that must deliver the desired results or may underinvest in more effective tactics than they realise.  

• Suboptimal Omnichannel Strategies: As brands strive to engage consumers across both online and offline channels, the absence of reliable in-store measurement can lead to a one-sided media strategy, where excessive emphasis is placed on digital channels at the expense of in-store engagement.  

• Missed Opportunities for Optimisation: With clear insights into how in-store campaigns perform, brands can make real-time adjustments or optimise future campaigns based on past performance.

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 utilised to gather data on consumer behaviour. These devices can monitor the duration consumers spend in particular aisles, whether they interact with specific products, and how in-store media (such as digital displays) influence purchasing decisions.

• Point-of-Sale (POS) Integration: Numerous retailers are striving 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 assist brands in better understanding the relationship between media touchpoints and in-store purchases.

• Retailer Partnerships: Certain brands collaborate 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 improved measurement frameworks, retailers and brands can establish a more cohesive approach to in-store media.

• Data Analytics and AI: Harnessing AI and machine learning technologies can assist retailers and brands in making 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. 

The Future of In-Store Measurement

As retail media expands, the demand for more sophisticated in-store measurement tools will continue to rise. Retailers that can offer brands a clear understanding of how their in-store campaigns are performing will be better positioned to attract media investment and distinguish themselves from competitors. 

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

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, enhancing data integration, and developing more accurate attribution models, retailers and brands can start 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