Ad Tech Insights

Costco's New Ad Network

The story: While a bit late to the party, Costco has officially entered the advertising business, leveraging its trove of loyalty membership data to power targeted ads both online and offline. As the third-largest U.S. retailer, and with 74.5M household members, Costco’s rich data sets will allow them to examine shopping habits to deliver personalized ad experiences. Despite their late entry to the retail media arena, eMarketer predicts this initiative will reach $166B by 2025. And success for Costco could mean good news for Costco members. The wholesaler plans to reinvest profits from its ad business into keeping prices low for consumers, offsetting shipping costs and maintaining the fan favorite $4.99 rotisserie chicken. 

‍The takeaway: Costco’s commitment to reinvesting advertising profits means that brands may find lower advertising costs than with other retail media platforms. Most notably, brands may find more loyal consumers. Costco’s high level of member loyalty and their shopping frequency creates a unique opportunity to interact with a truly dedicated customer base, boosting the likelihood of successful ad campaigns.

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Extra Industry Insights

• YouTube Shopping ads are about to get a boost from Instacart’s retail media muscle. Brands like Clorox are piloting the integration, contributing to a growing movement among RMNs to leverage first-party data and power campaigns on offsite marketing channels. . 
• The Trade Desk’s release of top 100 publishers on the open web has stirred up concerns, with many publishers fearing that the largest independent DSP is placing another obstacle between them and ad budgets.
• According to Kenneth Rona, co-founder of Chalice Custom Algorithms, although The Trade Desk shares its general criteria for assessing media (including the quality of a publisher’s content, ad experience, audience scale, and efficiency), there is still a lack of clarity around which of these factors weigh most heavily. 
• The Trade Desk’s ranking criteria, which evaluates ad-to-content ratio, may have skewed the list toward CTV publishers, who populate much of this year’s top 100. Unlike websites, CTV ads cannot show multiple ads at one time, making it easier to satisfy this piece of criteria. 

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Kevel Catch-Up

LIVE: Kevel eBook “Retail Media Performance Optimization” 

With most advertisers looking to work with 5-10 retail media networks, and those networks being in constant competition with other channels for spend, retailers must prove clear ROI in order to keep winning media budgets.

This eBook outlines three main ways retail media networks can optimize their performance metrics to ensure they stay on advertiser budgets while still prioritizing their own GMV. With advertisers comparing performance across their networks and channels, retailers who are not explicitly and transparently showcasing key performance metrics will get left behind.

Read our eBook here, or request your own copy.

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Keep Learning

WATCH → Albertsons Media Collective's Evan Hovorka and Threefold's Matthew Lee share their thoughts on the challenges related to measurement standardization, new technologies creating technical headwinds for measurement improvements and much more.  

READ → Advertisers are pragmatically negotiating with tech giants like Google, Meta, and YouTube to commit to proposed standards for greater transparency in ad auctions, as detailed in a recent letter from the Media Rating Council’s CEO George Ivie and its VP of Research & Standards Ron Pinelli. 

LISTEN → On this episode of the MadTech Daily Podcast: GroupM Teams Up with Tesco; IAB Tech Lab Releases Final Privacy Sandbox Analysis; TikTok Launches “Deals For You Days.” (Listening time: 2:26).