ROAS (Return on Advertising Spend) has long been one of the leading indicators for assessing the effectiveness of advertising expenditure. But as the advertising environment becomes more complex, particularly with the rise of retail media, its limits are becoming increasingly apparent. In this context, advertisers need to rethink their performance measurement methods and consider more nuanced and representative indicators.
ROAS: a starting point, but not an end in itself
ROAS remains a key metric for advertisers, providing a quick and simple view of the immediate profitability of advertising investments. As such, it is particularly useful for optimizing short-term campaigns. But this simplicity is also its biggest drawback. ROAS only takes into account the direct sales generated by a campaign, and neglects other important aspects such as the long-term impact on the brand, customer loyalty, or the complex interactions between online and offline sales channels. Today, it’s crucial to nuance its use. While ROAS may continue to play a central role for campaigns with immediate objectives, it should not be the only metric for assessing the effectiveness of an overall strategy. Advertisers, particularly in retail media, need to integrate other indicators that provide a more comprehensive view of a campaign’s impact.
Beyond ROAS: indicators for a more global vision
To better understand campaign performance in an omnichannel retail media environment, several new indicators have been introduced. These metrics offer a richer vision of campaign impact:
- Incrementality: This concept measures additional sales directly attributable to a campaign, in other words, sales that would not have occurred without advertising. Unlike ROAS, incrementality doesn’t just track immediate results, but highlights a campaign’s real contribution to overall sales.
- The ROPO (Research Online, Purchase Offline) effect: More and more consumers are researching online before finalizing their purchases in-store. ROAS, by focusing solely on online sales, fails to capture this phenomenon. Measuring the ROPO effect is becoming essential for omnichannel retailers.
- The Halo effect: An advertisement can influence not only the sale of the product directly promoted, but also that of other products in the same brand or category. For example, a campaign for a flagship product may stimulate interest in complementary items, or reinforce a brand’s overall image, leading to higher sales in other segments.
These new indicators give advertisers a more holistic view of their campaigns’ performance, and a better understanding of how their advertising fits into a complex customer journey.
Flexibility and customization of attribution systems
One of the major criticisms of ROAS is its lack of flexibility. Traditional attribution systems, based on a “last click” model, do not take into account the many interactions that lead to a sale, nor the different sales cycles in different sectors. For example, some products require a longer cooling-off period, making a rigid attribution model unsuitable. To remedy this, it’s crucial that attribution systems adapt to the specific needs of campaigns. This may involve widening the attribution window to take account of post-view or post-click conversions, or enabling finer granularity in audience segmentation. By customizing these attribution models, advertisers can better understand the true contribution of each touchpoint throughout the buying journey. This flexibility enables retailers to maximize the impact of their campaigns, optimizing not only immediate sales but also long-term customer relationships.
