Why Macy’s Launched an Online Advertising Platform

Why Macy’s Launched an Online Advertising Platform

by Tim Colucci 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.”

Contact True Interactive

To succeed with online advertising, contact True Interactive. Read about some of our client work here.

Walmart Asserts Its Leadership in Advertising

Walmart Asserts Its Leadership in Advertising

by Tim Colucci Walmart

Walmart is thinking big.

After a year during which the world’s largest retailer doubled ad revenue, Walmart is partnering with advertising technology company The Trade Desk to build a new advertising platform. The goal? To make Walmart an even bigger player in the advertising landscape than it is today, and take on rival Amazon as an advertising leader. Read on to learn more.

What’s In A Name?

The initiative begins with a name change. Janey Whiteside, chief consumer officer at Walmart, has announced that the retailer is rebranding its media business. Goodbye Walmart Media Group. Hello Walmart Connect. The new name hints at the sea changes in Walmart’s approach to advertising, including an expansion that links the retailer’s advertising business to in-store media.

Walmart Connect

It’s a canny move. While many retailers ignore their physical properties by conflating digital with online-only, Walmart is integrating digital with brick-and-mortar, in the process competing with Amazon’s muscular online presence. According to Reuters, the retailer will sell ads on more than 170,000 screens—including televisions and self-checkout kiosk screens—located inside more than 4,500 U.S. stores. Mark Boidman, managing director and head of media and tech services at the independent investment bank and financial services company PJ Solomon, believes the plan has promise. He notes:

The ability to use on-premise media, and in particular digital signage and digital out-of-home media, allows brands and retailers to be reactive and provide contextually relevant content and advertising, Think coffee promotions in the morning or marketing hot chocolate or snow shovels ahead of a big snow storm.

That means the messaging can’t — and won’t — be one-size fits all. After all, shoppers in Florida are unlikely to relate to snow shovel ads at any time. Walmart understands this; as reported in Ad Age, brand messages will be delivered specific to date, time, and geography.

Part of Walmart’s initiative also capitalizes on the company’s access to in-store and online shopper data. As the Wall Street Journal reports, this trove of data may well give Walmart’s demand-side platform an advantage over that of rival ad sellers, and help the company effectively compete for a bigger share of marketer dollars.

Implications of Walmart Connect for Brands

Walmart wants to share its data riches — with brands. By doing so, Walmart creates a win-win situation in which consumer needs are anticipated and marketers can remain agile in the face of changing need. “Walmart is pioneering a new frontier in digital advertising, providing marketers with access to shopper data for the first time, in a way that both protects consumer privacy and improves the consumer experience,” Jeff Green, CEO and co-founder of The Trade Desk, noted in a statement. “In doing so, marketers will be able to create much more refined, relevant and measurable advertising campaigns, which can be adapted on the fly.”

What would that adaptation look like? For starters, marketers can target ads to audiences based on data about shopping behavior. In addition, advertisers can monitor sales in brick-and-mortar Walmart stores in real time, subsequently tweaking marketing campaigns as needed.

“We have this unparalleled source of data that we can bring to bear,” Whiteside says. “Who else can actually tell you if a customer saw something online and then a week later, physically bought it in the store?”

Smarter Advertising across the Web

Walmart isn’t just sharing data with brands available in Walmart stores. The company’s demand-side platform will allow brands not even sold at Walmart to use the trove of data — for a price — to better understand consumer habits, and subsequently craft messaging appropriate to those shoppers. In the past, most advertisers used the company’s data to expose shoppers to ads on Walmart properties — Walmart’s website and app, for example. The retailer means to expand that reach across the entire Web.

Contact True Interactive

In-store digital advertising. Capitalizing on consumer data so that both brands and shoppers benefit. In its aspirations to be a media powerhouse, Walmart is thinking outside the box to bring digital advertising to the next level.

Learn more about our expertise with Walmart Connect here.