Costco sells 3 pound pretzels and 4 gallons of mayonnaiseOr, more famously, a $1.50 hot dog combo. But these purchases can help retailers target their advertising, the report said. Morning Brew Thursday.
Costco plans to use customer purchase history in retail media to sell ads to brands that entice customers to buy more of the products they love, and the hope is that Costco’s membership program (which requires shoppers to have a membership card tied to every purchase) will make it easier to track those purchases, allowing ads for diapers, for example, to catch the eye of parents with young children.
“Not only do we reach Costco members, we help you reach the right members in the right context based on their past behavior,” Mark Williamson, Costco’s vice president of retail media, told Morning Brew.
Costco, the third-largest retailer in the U.S., is actually behind the curve when it comes to selling ads based on customer data — other big box stores like Walmart, Target, Kroger and Best Buy have been doing this sort of thing for years, as Morning Brew points out — but Williamson was interviewed at the Las Vegas convention. In April Regarding Costco’s plans, he joked that because it was a late entrant into retail media sales, it might have the “100th company advantage.”
“One of our key missions is to avoid the pitfalls and the roadblocks, and perhaps the self-inflicted wounds, of previous iterations of retail media,” Williamson said. “The good news is that the space is mature, the retailers are mature, the audiences buying media are mature, the channels themselves are mature, the technology is mature, so now is the perfect time to make a fresh start in retail media.”
Costco has 130 million members around the world, and Williamson acknowledged that consumer tastes are prone to change.
“Customer behavior is changing dramatically and we have to pivot quickly,” Williamson said, “so we want whatever we put together to be able to evolve with the market and evolve with our members. And we expect the same from our technology vendors – that they will evolve in their own space and give us the flexibility to evolve as well.”
That said, Williamson is also excited about how much ad tracking has advanced over the past decade, allowing retailers and advertisers to dig into the details and find people. He says it’s great that technology has made “everything trackable, addressable, measurable and accountable.”
“We didn’t have these tools. [15 years ago]”But we envisioned the day when it would become a reality,” Williamson says, “so it’s exciting to be in an environment where technology is matching what consumers are actually doing and what retailers are asking for.”
According to Morning Brew, Target’s retail media sales are “worth” the company $1.5 billion, which makes sense: Leveraging customer data to sell more products is a big win.
