Is ROAS hurting your sales?
Last-touch attribution is the most widely adopted measurement outcome in commerce media today. All of the top-five retail media networks (RMNs) have some flavor of last-touch return on advertising spend (ROAS) as the default measure of performance.
Budgets are planned with ROAS. Sales goals are assigned based on it. Optimization algorithms are built from it. If there is one metric that directs the flow of commerce media more than any other, it’s ROAS. So the $100-billion question: does it actually correlate to sales growth?
One of the first meta-analyses we did when I joined the Incremental team was to look at a broad cross-section of campaigns. The results were stark:
For those following digital marketing measurement and effectiveness over the years, this chart should look familiar. The last 15 years of research have clearly shown time and time again that clicks and click-based attribution have no relationship to true business growth.
- 2009 Nielsen: CTR vs. ROI: r=-0.07
- 2012 comScore: Clicks vs. Conversions: r=0.01
- 2015 Nielsen: Clicks vs. Conversions: r=0.01
- 2019 Dunnhumby: CTR vs. incremental sales: r=-0.28
- 2021 Quantcast: CTR vs. Conversion rate: r=-0.12
With commerce media poised to reach a $65 billion spend here in the United States this year, this data should give everyone in the industry pause. That is a lot of investment potentially being measured, optimized, and planned in a way that decades of research have shown is uncorrelated with real business growth.
The reliance on ROAS is all the more complicated by the inflection point we are reaching with agentic AI. What happens when agentic AI is built on a foundational model that includes last-touch attribution results? We need a viable alternative to last-touch attribution at the scale, granularity, and frequency required to feed directly into automated execution decisioning—whether managed by algorithms or agentic AI.
When making that transition from last-touch attribution to an incrementality-based outcome as the signal driving day-to-day campaign management, the results advertisers have seen on our platform are as impressive as they are consistent. Across billions of dollars of measured sales, the Incremental team consistently sees a 10 to 40% increase in media efficiency by replacing ROAS.
