Is the honeymoon over for commerce media? After five years of what one industry leader calls “easy growth,” the sector now faces harder questions about sustainability, shared language, and whether it can truly integrate into the broader advertising ecosystem.
With ad spend forecasted to exceed $150 billion across the US and Europe, according to IAB research, commerce media has become too big to remain siloed. But growing pains are evident, from inconsistent definitions of basic metrics to organizational structures that pit merchandising against media teams.
“Can we be a durable, sustainable industry going forward? That’s going to be the broad theme,” said Collin Colburn, vp of commerce and retail media at IAB, in a video interview with Beet.TV ahead of the IAB Connected Commerce Summit on April 14 in New York.
The language barrier nobody talks about
One of the most fundamental obstacles to scaling commerce media, Colburn said, is surprisingly basic: people are using the same words to mean different things.
“When we’re talking about things like ROAS or iROAS, being super clear across retailers, across brands, what do those two things mean?” Colburn said. “How do we define iROAS? How do we define ROAS? Just one particular point of language barriers that sometimes exist.”
The incrementality debate illustrates the problem perfectly. Brands typically want to know whether their media spend moved additional product. Retailers, meanwhile, often view incrementality through the lens of margin contribution. “Brands often are looking at incremental sales lift,” Colburn explained. “Whereas the retailers sometimes look at it as, is that driving incremental margin for my business as a merchant?”
Measurement as crystal ball, not rearview mirror
The industry’s measurement fixation has been largely backward-looking, focused on proving past performance rather than informing future decisions, according to Colburn.
“I think what we misunderstand is that measurement can also be used for future planning,” he said. “And that’s where I think a lot of the disconnect happens today is that we don’t use measurement for how should I be changing my investment.”
That shift toward predictive measurement would require brands and retailers to leverage sales data and media performance data together, optimizing spend across channels and creative formats in real time. The stakes are high: get this right, and commerce media becomes a strategic planning tool rather than just a transactional channel.
“How do we use all of this data? How do we use sales data? How do we use media performance data to be able to better allocate and better spend in different channels, different retailers, with different kinds of media creative that’s going to yield the greatest incremental return,” Colburn said.
Breaking out of the performance box
Commerce media has long been pigeonholed as a bottom-funnel, transaction-focused channel. Recent moves suggest that’s changing. Kroger’s partnership with DV360, announced at Shoptalk, exemplifies how retailers are pushing their media offerings into offsite environments and upper-funnel applications.
“You see, one of the really interesting things coming out of something like Shoptalk last week is that retail media is starting to go into other offsite avenues,” Colburn noted.
The opportunity lies in using retailer first-party data across the entire funnel, from awareness through consideration to purchase. This represents a significant evolution from commerce media’s transaction-driven roots. “Really get at the heart of like delight, surprise, being able to draw a new customer into your brand portfolio,” Colburn said.
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