Our columnist Colin Lewis argues that connecting customers who are researching online to their purchases in-store is vital for retail media.
Back in October, IAB Europe published its Omnichannel Guide to Retail Media. Early in the report, it cut to the chase:
“The challenge with omnichannel is the word ‘omnichannel’ itself. The word means different things to different people, and it means something different in every retailer or retail media network.”
For the world of retail media, “omnichannel” conjures up a MUCH bigger headache: connecting datasets to track whether shoppers research products online before they then purchase them in-store.
There are two fancy phrases used in the marketing literature that take opposite approaches to the word omnichannel to explain the challenge:
One is ‘showrooming’, the trend in shopping behaviour where consumers visit physical stores to touch and feel the products, but opt to purchase them online. The other is ‘ROPO’ (research online, purchase offline) when consumers research products online before purchasing them in-store.
Traditional marketing metrics of success often overlook the ROPO effect.
Most current measurement models focus only on on-site purchases, ignoring subsequent off-site behaviour.
Quantifying the extent of off-site purchase behaviour allows both retailers and advertisers to better understand the impact of their retail media ads, allocate media budgets effectively, and make informed brand growth decisions.
Solving the ROPO challenge is critical for maximising the value of retail media.
There are plenty of peer-reviewed papers in marketing journals on the impact of the ROPO effect. Koen Pauwels, Professor of Marketing at Northeastern University in Boston, points out that retail media offers two important benefits to marketers:
Discovery and decision mode: Consumers visiting retail websites are actively considering purchases, unlike users on social media or search platforms.
Full-funnel data: Retail media facilitates the integration of consumer behaviour across multiple ad exposures, turning the traditional 'funnel' into a 'cylinder' of conversion.
In a study for the International Journal of Research in Marketing snappily titled “The effectiveness of different forms of online advertising for purchase conversion in a multiple-channel attribution framework” Prof Pauwels observed that:
Retail media ads are more likely to be 'content-integrated', i.e. directly related to the main objective of the website's user.
In contrast, many non-retail media ads tend to be 'content-separated', i.e. they do not correspond to the user's main objective, which could be checking sports results, getting news, or connecting with friends and family.
Prof Pauwels suggests that content-integrated ads on retail media platforms are three times more effective at driving purchases than content-separated ads.
In a paper called “Amplifying Off-Site Purchases with On-Site Advertising”, Pauwels and his colleagues introduced two key metrics to measure ROPO. They combined Amazon internal data from customers’ browsing behaviour on Amazon.com and matched these with survey responses for the same customers about their offsite behaviour across 12 product categories.
Prof Pauwels and his colleagues created two brand-level measures to quantify the magnitude of off-site purchases among on-site researchers: ROPES (Research on-site purchases elsewhere share) and AR (amplifier ratio, a proxy for the amplification of return on ad spend by comparing on-site purchases to off-site purchases within the same category.
Prof Pauwels’ research was based on serious data sizes: they collected survey responses from 41,946 Amazon customers across ten categories in 2021 (Audio Speakers, Computer Printers, Doll Toys, Laptop Computers, Microwaves, Power Drills, Running Shoes, Smartphones, Tablet Computers, and Televisions).
Their papers showed that ROPO is “economically substantial”. Among the consumers who researched a product on Amazon, more end up buying it off-Amazon than on-Amazon - in every analysed category. In other words, off-site purchases often exceeded on-site purchases, with ROPES varying from 0.5% to 10% across categories. Doll toys, printers, and running shoes had higher ROPES than laptops or smartphones.
Moreover, consumers who visit more product pages, click more and spend a longer time on the product's Amazon page, are more likely to buy the product, both on and off Amazon.
Pupper funnel advertising like displayaAds, video ads or sponsored display ads tends to have a relatively larger share of off-site sales contribution relative to lower funnel advertising like sponsored products advertising that affects mainly on-site sales.
They also found that always-on advertising strategies on Amazon showed greater impact on off-site purchase behaviour compared to time-limited campaigns.
So, what should we take on all of this real-world, peer-reviewed data as well as the Boots announcement?
There are seven takeaways here:
ROPO is measurable and important
Attribution models and data ingestion capabilities at campaign level can show that including online-only sales and offline sales improves return on advertising spend.
Amplification effects of media campaigns extend beyond the initial channel, influencing broader purchase behaviour.
There are sizable contributions of off-Amazon sales of 16%–44% for the different ad products across brands.
Upper-funnel and always-on campaigns drive greater off-site purchase contributions
“Always-on” spending reaches consumers at any stage in the customer journey whereas ‘bursting’ ads at certain points in time limits the number of potential customers the brand can interact with,
Retail media sites act as major “billboards” for off-site purchases, amplifying brand presence and driving cross-channel results
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