This post originally appeared in my column for Forbes.com, on Wednesday February 5, 2025.
More than $10 billion in incremental ad spending will flow into U.S. retail media in 2025, according to Emarketer. Yet as investment surges, brands face a growing challenge: proving these increasing budgets are actually driving incremental value. New research reveals 45% of organizations still struggle with measuring performance across retail media networks and ad types, highlighting a critical gap between spending and accountability.
The Investment Rush
Retail media has become the most important marketing channel for consumer goods brands, according to the State of Retail Media 2025, a new research report released today by omnichannel advertising platform Skai and the Path to Purchase Institute.
Out of ten major marketing channels, including paid search, television, out of home, and social, 92% of the report’s respondents ranked retail media as the single most important, a double-digit increase from the previous year.
"Retail media is evolving rapidly, and those who embrace emerging technologies, master incrementality, and break down operational silos will lead the pack in 2025," says Michelle Urwin, Executive Vice President of Marketing for Skai. However, this evolution comes with growing complexity - organizations currently work with an average of six retail media networks, which Skai expects to increase to 11 by 2026.
The Measurement Challenge
As budgets grow, so does scrutiny over return on investment. The IAB reports that 62% of retail media buyers cite lack of measurement standards as a top challenge to continued growth.
In Skai’s report, one-third of marketers cited difficulties integrating retail media with other digital channels, and 32% expressed concerns about ROI.
Among the concerns for brands is an inability for advertisers to accurately compare results from retailer to retailer, and a limited understanding as to whether an ad campaign truly spurred net-new sales.
Why Incrementality Is More Complex Than It Seems
The challenge extends beyond technical limitations. Many brands have committed spend amounts with certain retailers as part of their annual trade negotiations or JBPs, meaning they can't simply shift budgets based on performance data. Instead, the real opportunity lies in optimization within each network - making incrementality insights crucial for improving rather than reallocating spend.
Further complicating matters is the reality of cross-channel shopping behavior. Since consumers may discover products in one channel but purchase in another, single-channel measurement can significantly underestimate advertising impact. This disconnect masks the true role each channel plays in driving sales.
Traditional Solutions Fall Short
Effective measurement solutions have existed for decades in the traditional brick-and-mortar shopping context. Measurement solutions from firms like Nielsen and Circana have been relied on by brands seeking to understand the effect of their media campaigns on in-store sales of a given product - aggregating Point-Of-Sale (POS) data and consumer panel data across multiple retailers and allowing brands to gauge the effectiveness of their ad campaigns.
Brands want to measure how retail media campaigns contributes to total sales. Doing so requires unifying data from multiple sources. But because the networks do not openly share data, advertisers must rely on patchwork solutions, direct partnerships, or partial data sets.
Some retail media networks do partner selectively with third-party measurement providers (e.g., Nielsen, Circana) to validate results or provide multi-touch attribution. However, these partnerships are often limited in scope and vary widely by retailer.
Meanwhile, retail media networks themselves offer measurement solutions, but these create a fragmented view limited to their own ecosystems. With no incentive to share data across platforms, networks maintain their "walled gardens," making holistic measurement nearly impossible.
Looking Ahead
Despite these challenges, brands feel they are making progress. The Skai report reveals that 57% of organizations now report proficiency in measuring incrementality - a significant improvement from last year (XXX%). However, technical limitations and lack of clear methodologies remain significant hurdles.
"Retail media is as challenging and complex for brands as it is exciting and dynamic," notes Urwin. "Marketers must be prepared to navigate more channels, publishers, formats, technologies, and approaches than ever before in order to unlock demand and drive growth in 2025."
For brands caught in this measurement maze, the path forward likely involves a combination of improved internal capabilities and industry standardization efforts that are already underway. Skai’s research shows that 55% of organizations say access to improved insights from retail media networks would accelerate their future investments. Until then, brands face the challenging task of balancing growing investment against imperfect measurement capabilities.
