Why Macy’s Launched an Online Advertising Platform

Why Macy’s Launched an Online Advertising Platform

Advertising

Macy’s is capitalizing on a big-time trend in online advertising. The retailer recently discussed with investors the growth of an in-house online media network that sells ads to brands. The Macy’s Media Network, launched in August 2020, has already generated $35 million in revenue. The growth of the network underscores how big retailers are becoming advertising partners.

The Macy’s Media Network

Here’s how the network works:

  • An in-house Macy’s team offers advertisers digital formats like sponsored product, website display, and physical media ads.
  • Macy’s draws on all the data it has accumulated about Macy’s customers (including customer behavior data from the Macy’s website – known as first-party data) to ensure that the above ad formats target customers based on their shopping habits. As Macy’s says on its website, “We connect our shoppers to your brands through a wide range of advertising services. And it’s all driven by data . . . First-party data helps us find your perfect audience, whether it be on or off our site.”
  • The above ads appear on the Macy’s website or off it.
  • Macy’s describes its audience as “Fashion-focused customers who LOVE to shop.”

If the above approach already sounds familiar to you — well, it should. Macy’s is following a model that Amazon has already mastered via Amazon Advertising and that Walmart is developing with Walmart Connect. In addition, retailers ranging from Kroger to Target are building their own networks in an attempt to put their own first-party data to work and generate more revenue streams in a digital-first world. The two clear leaders are:

  • Walmart Connect. Walmart is just beginning to flex its muscle to provide advertising products that are similar to Amazon’s. What makes Walmart Connect stand apart is the way Walmart can also tap into shopping purchase behavior inside Walmart stores.

Why would Macy’s enter a market that is already becoming crowded? Because Macy’s, like any retailer with an ad platform, has something no one else has: its own first-party data. The data that Macy’s collects about its own customers gives potential insights into a targeted audience consisting of shoppers who are especially interested in beauty and fashion.

Here is what we believe will happen with retailer-based ad networks:

  • They will proliferate. Retailers are under tremendous pressure to improve their margins. As more shopping behavior shifts online, it makes sense to wrest more value from their customer data.
  • They will become more specialized. Macy’s, for instance, is focused on fashion and beauty customers. Consider how many other retailers could build up ad networks. Best Buy could offer services for advertisers wanting to reach consumers of high-tech consumer products, for example.

What Advertisers Should Do

We suggest that advertisers:

  • Consider retailer-based ad networks as a complement to your existing digital ad strategy, not as a replacement. If your strategy focuses on Facebook and Google, for instance, don’t move your ad dollars over to a retailer network. Remember that Facebook and Google also already offer proven advertising products that capitalize on their vast user base. For example, location-based digital advertising tools help strengthen Google’s advertising services at the local level.
  • Learn more about the ad products that might apply to you – and those products are evolving. For instance, Amazon recently launched Amazon Live, which makes it possible for retailers to use livestreams to sell products – part of the live commerce trend we blogged about recently. But if live commerce is not your cup of tea, ad products such as Display and Sponsored Brands may be more appealing.

Meanwhile, Macy’s expects more growth for its own ad platform. In a recent call with investors, Jeff Gennette, Macy’s chair and chief executive officer, told investors, “Looking ahead, we see a lot of promise in our ability to expand our monetization engine, while cultivating greater customer engagement with more relevant and personalized content and offers.”

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Retailers Ramp up Augmented Reality and Virtual Reality

Retailers Ramp up Augmented Reality and Virtual Reality

Retail

Last March we wrote about the increasingly important role that technologies like virtual reality (VR) and augmented reality (AR) have in the marketing field. Since then, major businesses have continued to apply AR and VR to support a number of functions. Retailers have been especially keen to use these technologies for shopping. For example:

  • To capitalize on the uptick in mobile holiday shopping, Macy’s has launched an AR app that lets shoppers see pieces of furniture virtually within their homes, following the successful pilot of a VR experience to make furniture shopping more immersive. According to Macy’s, shoppers using VR headsets to view Macy’s furniture had more than a 60 percent greater average order value than non-virtual reality furniture shoppers.
  • Walmart recently announced the launch of new AR scanning tool in its iOS app to help customers with product comparisons. Unlike traditional barcode scanners (which allow price comparison on one item at a time), Walmart’s AR scanner can be aimed at multiple products on store shelves to view details on pricing and customer ratings.

Some studies predict the global economic impact of virtual and augmented reality to reach $29.5 billion. Although this number may sound overly optimistic, I do believe there is a lot of value in these technologies yet to be exploited. Both VR and AR have the potential to be among the most valuable tools in any marketer’s arsenal simply because they offer intimate and engaging experiences. They allow brands to build a more profound connection with consumers by offering personalized, interactive experiences. In addition, when combined with artificial intelligence, these technologies have the potential to help make life easier by empowering users to take immediate action (like completing a custom order on the spot).

VR and AR Defined

Even though they may look similar, VR and AR are different:

  • Virtual reality: refers to any kind of experience that places the user “in” another world or dimension usually by way of a headset with special lenses.
  • Augmented reality: the term we use when we place content “into” the real world by using cameras (e.g., Pokémon GO)

Although some brands have rushed to experiment with augmented reality on social media platforms, others are using AR and VR to support commerce. One of the cleverest campaigns was that one from the Spanish fast fashion retailer, Zara.

Although their storefronts may have appeared empty to the naked eye, they came to life when people pointed their phone’s camera at the shop’s window (or in-store podiums) after downloading the Zara AR App. This app enabled users to see seven-to-twelve-second sequences of models Léa Julian and Fran Summers wearing selected looks from the brand’s Studio Collection and allowed the viewers to instantly order any of the looks shown at the touch of a button.

 

Tommy Hilfiger is another example of a retail brand that has also deployed AR technology to improve the shopping experience in their stores. By placing digitally enhanced mirrors inside the fitting rooms, Tommy Hilfiger gave customers instant access to information like styles, models, sizes and colors available both in-store and online. The experience also allowed shoppers to request a new size or color without leaving the room and suggested other products to browse. These smart mirrors made product discovery much simpler and promoted sales by helping users find the right style.

iMirror for Retail from Pieter on Vimeo.

But the business potential seems almost unlimited when AR/VR is combined with artificial intelligence. An example is Salesforce’s Einstein AI technology, which was subject to practical testing along with Coca-Cola. As noted in this article from Diginomica:

Einstein was trained to recognize, identify and count the varieties and quantities of Coca-Cola bottles stored in one of its cooler display cabinets, simply by analyzing a photo taken with an iPad or iPhone. […] Einstein can then take that stock count and combine the information with predictions based on known seasonal variations, weather information from Watson [the IBM AI system], and upcoming promotions, to automatically calculate a restocking order.

There is no doubt about the potential benefits of new technologies like augmented reality, virtual reality and artificial intelligence for both consumers and businesses. In the ever-changing and dynamic world of digital marketing, it would be safe to expect tech giants like Google, Amazon, and Facebook to soon develop and introduce new features that accommodate for these technologies in their portfolio of products and services.