As a brand or agency investing in retail media advertising, maximizing your return on ad spend (ROAS) is critical. With the right optimization strategies, retail media can drive substantial incremental sales both online and in-store.In this comprehensive guide, we’ll provide 10 actionable tips to help you improve ROAS from your retail media campaigns based on industry best practices.
1. Set clear campaign objectives and KPIs
The first step is defining your campaign objectives and key performance indicators (KPIs) upfront. Are you driving awareness, consideration, site traffic, or sales? Do you care about brand lift or only direct response?Having clear goals tied to business outcomes will inform your overall retail media strategy and optimization approach. It also enables you to accurately track performance against your targets.
- For awareness campaigns, measure reach, frequency, impression delivery, brand awareness lift, etc.
- For consideration campaigns, track metrics like click-through rate (CTR), site traffic, time on site, and page views per visit.
- For sales campaigns, focus on ROAS, incremental sales, in-cart rates, and purchase conversion rates.
Set benchmarks and targets for each KPI and have regular check-ins to assess progress. This discipline is critical for retail media success. More about campaigns optimization.
2. Leverage first-party data to target high-value audiences
Using your first-party sales data to identify and target your highest value customers with retail media is one of the biggest drivers of ROAS. You can build custom audiences based on:
- Past purchase history — Target buyers of specific products, brands, and categories
- Purchase recency — Engage recent purchasers when they’re most likely to buy again
- Purchase frequency — Identify your heavy repeat customers for retention
- Customer lifetime value — Focus on high-value VIP segments
Layering in demographic, behavioral, and contextual data can further refine your targeting to reach your ideal customers. This improves ad relevancy and drives stronger performance.
3. Test different ad formats and placements
Every retail media platform offers a variety of ad formats and placements to engage shoppers across their journey. It’s important to experiment to see what resonates best with your audience and goals.Consider testing:
- Product display ads
- Sponsored brand ads
- Sponsored product ads
- Native ads
- Search ads
- Category/brand pages
- Recommendation widgets
- On-site banners
- Cart ads
- Email ads
Measure impact on both brand and performance metrics to identify the optimal channel mix. This testing and learning approach is essential to maximize ROAS.
4. Optimize for the full funnel, not just sales
The biggest mistake brands make is focusing too heavily on the bottom of the funnel. In retail media, brands have the unique opportunity to engage consumers across the entire journey from discovery to purchase. Allocate budget across awareness, consideration, and sales campaigns to drive both long-term growth and short-term ROAS:
- Awareness — Reach new audiences to grow brand affinity
- Consideration — Promote products to drive site traffic and engagement
- Sales — Retarget high-intent users to convert sales
Over-indexing on sales activations leaves money on the table. Take a holistic approach across the funnel and see how mimbi can help you visualize it.
5. Analyze performance by product, category, and brand
Conducting deep analysis of ROAS performance by product, category, brand, and other cuts is instrumental for optimization. Look for patterns and outliers:
- Which products are the highest/lowest ROAS?
- Which categories over/underperform?
- How do different brands and price points compare?
Use these insights to double down on what’s working and reduce/reallocate spend from poor performers. Ongoing category and product analysis enables you to maximize ROI.
6. Set dayparting schedules based on buyer behavior
Your audience’s shopping habits likely vary throughout the day and week. Setting dayparting schedules aligned to periods of high commercial intent for your products can significantly lift performance.Some best practices:
- Promote coffee and breakfast products in the morning commute window
- Drive awareness for household essentials mid-week during daytime hours
- Activate impulse purchase categories on weekends
- Retarget cart abandoners in the evenings when purchase intent is highest
Dayparting takes some testing but the ROI impact can be substantial.
7. Leverage automated bidding strategies
Most retail media platforms now offer automated bidding capabilities to optimize bids and budgets based on your campaign goals. This can be a powerful tool to improve ROAS.Key options to test:
- Target ROAS — Sets bids to achieve a target return at the campaign or product level
- Conversion bidding — Automatically maximizes for site purchases
- Budget pacing — Smooths budget delivery and prevents overspending
Let the machines do the heavy lifting to maximize performance at scale. Monitor closely and adjust targets based on insights.
8. Continuously test new audiences
The biggest opportunity to drive incremental ROAS is identifying and activating new custom audiences. You need to continuously test and iterate.Explore building audiences based on:
- Interests and hobbies
- Behaviors like recent purchases in category
- Shopping patterns and frequency
- Channel preferences
- Demographics
- Context like weather or time of day
Uncover new pockets of value across your customer base to unlock additional sales potential.
9. Monitor competitor Retail Media activity
Gaining visibility into what your competitors are doing in retail media can provide tremendous insights to refine your own strategy:
- Which products are they promoting most?
- What ad formats and placements are they using?
- How are they leveraging 1P data and promotions?
- How are their retail media budgets trending?
Use competitive intelligence to validate your approach or pivot to capture whitespace opportunities. A marketplace view is critical.
10. Analyze in-store sales lift to quantify true ROAS
A limitation of retail media is it can more easily measure online sales impact. To quantify the total ROAS, you need to tie campaigns back to in-store purchases.This requires leveraging offline sales data and location analytics to connect media exposure to store visits and sales lift. With retail foot traffic patterns still in flux, measuring in-store ROAS is more critical than ever. While complex, closing the online to offline loop is the only way to fully optimize retail media and prove total incremental value.
More about why ROAS alone may not be enough.
Key takeaways
Improving retail media ROAS requires testing, analyzing performance, optimizing based on insights, and continuously iterating. With the right strategies across targeting, creative, placements, audiences, and bidding, retail media can be a powerful performance channel for brands. Hopefully this guide provides a blueprint of best practices to help you maximize your return from these fast-growing budgets.
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