As the world of retail becomes increasingly competitive, retailers are constantly looking for ways to improve their bottom line. One key metric that retailers use to measure their success is return on ad spend (ROAS). ROAS is calculated by dividing revenue by the cost of advertising, and it is an important metric because it helps retailers understand the effectiveness of their advertising efforts. However, simply calculating ROAS is not enough. To truly understand the effectiveness of advertising, retailers and brands need to use closed-loop attribution.

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What is Closed-Loop Attribution?

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Closed-loop attribution is the process of crediting each channel or touchpoint that leads to conversions. It involves connecting data from multiple sources to provide a complete view of the customer journey and identify the most effective channels and touchpoints for driving conversions. Closed-loop attribution is not limited to tracking drivers of in-store or online sales separately, but instead includes tracking all channels and touchpoints that lead to a sale or conversion.

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How Does Closed-Loop Attribution Impact ROAS?

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Closed-loop attribution can significantly impact a brand's return on ad spend (ROAS). By attributing credit to each channel and touchpoint, marketers can better understand the impact of their marketing efforts and make data-driven decisions to optimize their campaigns. For example, if a particular ad campaign is driving a high volume of clicks but a low conversion rate, closed-loop attribution can help identify the issue and make adjustments to improve conversion rates, thus improving ROAS.

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The Success Of Closed-Loop Attribution In Retail Media

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Closed-loop attribution is particularly powerful in the context of retail media. With retail media, brands can advertise their products directly within a retailer's e-commerce platform, driving traffic and sales to their products. On track to grow into a $100B+ global industry in 2023, retail media is particularly well-suited for closed-loop attribution for a few reasons:

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Access to rich, privacy-safe customer data: Retailers and marketplaces have access to a wealth of first-party customer data, including purchase history, browsing behavior, and more. This data can be used to connect the dots between online and offline behavior and track the effectiveness of advertising campaigns across channels and touchpoints.

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Native integration with e-commerce platforms: Retail media advertising is often integrated directly within a retailer's e-commerce platform, allowing for seamless tracking of customer behavior from ad impression to purchase. This makes it easier to track the entire customer journey and identify the most effective channels and touchpoints for driving conversions.

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Highly targeted campaigns: Retail media campaigns can be highly targeted based on factors such as customer demographics, purchase history, and browsing behavior. This makes it easier to attribute conversions to specific campaigns and optimize future campaigns based on that data.

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Sam's Club's Closed-Loop Attribution on its Member Access Platform

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Sam's Club has implemented closed-loop attribution on its Member Access Platform, which provides data-driven insights to its suppliers. The platform tracks sales and promotions to determine the effectiveness of different campaigns and optimize future campaigns. The closed-loop attribution system allows Sam's Club to see the impact of retail media campaigns on both online and offline sales, providing a complete view of the customer journey.

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To sum up, closed-loop attribution is a powerful tool for modern marketers looking to optimize their campaigns and improve their ROAS. By connecting the dots in their data, marketers can gain a deeper understanding of the customer journey and identify the most effective channels and touchpoints for driving conversions. This is particularly true in the context of retail media, where closed-loop attribution can provide insights into the effectiveness of advertising campaigns across all channels and touchpoints.