Less than a third (32%) of retail marketers are currently measuring the profitability of their digital marketing efforts, despite eight in ten (80%) stating the metric is an important KPI for them. This is risking the financial stability of retailers in a challenging economic environment.
These findings are among new research into UK retail organisations and consumers by product performance management (PPM) platform, ROI Hunter. The research also found that a quarter (25%) of retail marketing respondents say that profitability is the most important metric to measure for digital advertising.
“Profitability is rightly a top priority for retailers in the current financial climate. The startling disparity between understanding the importance of knowing profitability, and actually tracking it in an actionable manner, identifies a concerning trend in the retail sector. If brands fail to have a clear grasp of the profitability of their individual products, and simply rely on Meta or Google algorithms for product promotion, they can’t effectively optimise their promotional efforts. As a result, they won’t be able to shift the budget from unprofitable products within a campaign to the profitable ones, which ultimately risks their ability to boost the bottom line,” said Karel Schindler, CEO at ROI Hunter.
Retailers are also failing to take actionable steps to drive profitability, with over half (56%) failing to see which products are likely to become deadstock. Without an understanding of the ad spend behind the products, commercial departments remain uncertain on whether their unsold stock needs to be discounted or if it simply lacked promotion.