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Commerce Media Heats Up With New Moves From Costco, United, and Albertsons
Sources: Marketing Brew, Grocery Dive, and CBS
Summary: Costco, America's third-largest retailer, is entering the commerce media industry with a new ad network that will leverage data from its 74.5M members. The wholesale retailer is beta testing using member data for targeting ads on websites across the web before testing on its own site. Costco sits on a wealth of first-party data, including member purchase histories from its warehouses and its website. Costco made an estimated $225M in digital advertising revenue last year from its Costco Connection magazine and simple on-site contextual ads. Unlocking the power of Costco's member data could quadruple that ad revenue, according to Mark Williamson, who is spearheading Costco's advertising efforts. With digital advertising providing a high-margin revenue stream, there is lots of upside in Costco's move. Just ask Kroger, which generated $910M in ad revenue last year or Target, which brought in $1.5B. Costco competitor Walmart raked in $3.4B in 2023 digital ad revenue.
Meanwhile, United Airlines has launched Kinective Media, its own media network built on its travel behavior data. United calls it a "first-of-its-kind, real-time, ad tech-enabled traveler media network" that will connect its customers to premium brands. That will include targeted ads on nearly 100,000 seat-back screens, which United says can provide 3.5 hours of attention per traveler. Customers can opt out of targeted advertising, and data from minors will be excluded.
Also this week, Albertsons Media Collective (which is grocery company Alberton’s media network) has partnered with e-com tech company Rokt to secure ad dollars from brands that don't sell products or services at Albertsons. The retailer will use Rokt Ads to serve targeted ads across Rokt’s network of digital merchants to reach Albertsons consumers who are most likely to engage. Rokt's merchant network includes Ticketmaster, Uber, and AMC Theatres.
Opinion: In recent months, we’ve seen the arrival of two new categories of commerce media networks: travel media networks (Marriott, United) and finance media networks (Chase, PayPal). Of course, we already have retail media networks, tech media networks (Google, Meta), telco media networks (T-Mobile, AT&T), and entertainment media networks (Disney, NBCUniversal). All that’s left is … CPG media networks? 🤔
All roads lead back to “everything is an ad network”.
Last week we talked about how the number of media networks is exploding and ultimately the market will not be able to support all of them. There will be winners and losers. Many will eventually turn to intermediaries (in classic ad tech fashion) that will aggregate their assets for the buy side.
This week, let’s consider what attributes will dictate who wins and loses.
Winners will:
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Have access to unique audiences and inventory, at scale
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Reach audiences in a unique mindset that is conducive to advertising
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Be able to tie together ad exposure to transaction data without going offsite
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Offer tools that make it easy for buyers to plan, execute, and measure within their existing marketing apparatus
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Get to market with an offering, fast
Losers will … exhibit the opposite attributes.
At some point, there are going to be so many media networks that just one (or two, or three) of these attributes won't quite cut it.
So who do you think the winners and losers of commerce media will be?
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