Latest / Retail Media Breakfast Club / Costco Exposing Its Retail Media Tech Stack Might Change Everything
Transcript
- Snips - tech transparency === [00:00:00] Speaker: Last August I wrote a piece of Forbes Laying out Five Reasons Why Retail Media Networks Hide their tech stacks from the very brands that they want to attract. These factors include shame, financial narrative [00:00:15] control, the knowledge gap, margin protection, and fear of being copied. I polled verified brand side buyers alongside the piece. [00:00:24] Does knowing a retailer's ad tech stack influence your spending decision? [00:00:30] 88% of brands and agencies said yes. Then in January, Costco's, Mark Williamson, a VP of retail media, walked on stage at an NRF side event and put his entire tech stack on a series of [00:00:45] slides, In front of customers, observers, and competitors. It was a bold move, underscored by the fact that nearly everyone in the room raised their phones immediately to photograph it. I wrote about it for my column at the drum at the time. This [00:01:00] week I hosted a live stream with Mark Williamson and John Flugtag, who is the Chief Business Officer at Meta Outter, who sponsored the live stream to talk in part about how such transparency is working out at [00:01:15] Costco Velocity, the new name for the retailer's media network. [00:01:20] Let's jump in. [00:01:21] [00:01:22] Speaker: So Mark has been in retail media for 15 years across Sam's Club, a whole Del Hayes, [00:01:28] Epsilon and Citrus A. [00:01:30] He has been the insecure retail media network leader who didn't wanna talk about his platform. Let's listen. [00:01:37] Mark: for us, I think it was, it was really leaning in on this idea of transparency and usually transparent, the transparency requirement. [00:01:44] Comes [00:01:45] down to what? Like, like, let me see the results. And so let me, or let me do my own measurement or have an independent third party do the measurement. And that, that is a critical part of the transparency, uh, uh, requirement from from advertisers. But in this case though, I, I, I just feel like, like [00:02:00] on paper, Costco's not gonna win any, um, any hackathons, uh, or any, you know, dig digital innovation awards. [00:02:07] That's just not, that's not what our core competency is. And so I would say like the mo part of the motivation was like, I. Feel like we [00:02:15] need to, like, I think we've got a good idea here and I think it is at least mildly differentiated. Um, like I don't think we're inventing any new, like, we're not inventing any new technology. [00:02:24] I think there's a lot of well done. In, in our setup. But, uh, having worked [00:02:30] in retail media specifically for 15 years at multiple different places, like there are a lot of original sins. So there, there, there are some, there's some jaded people in our ecosystem. I've been one of those people. [00:02:41] [00:02:43] Speaker: so Mark decided that [00:02:45] Costco would win on honesty about what their building and where the gaps are. [00:02:49] Mark: even if agencies are buying or brands are buying, like at the end of the day, we are doing partnerships with people that supply goods to Costco that our members love. [00:02:58] And I, I feel like [00:03:00] it's our obligation to respect them enough to tell them. What we're doing and how we're doing it. And that may come with some warts. There are gaps in our stack. There are things that we're, we're still building. There's some things that we have that, that we does that don't work as well as we want. [00:03:12] [00:03:14] Speaker: When [00:03:15] Costco says no to a capability request, they can point to the stack and explain why and when it might become a yes. Costco has also made it a requirement for new tech vendors to explicitly commit to working with their existing identity and [00:03:30] data layer. One of the first questions they ask any prospective partner is, have you integrated with. [00:03:36] Meta outter meta outer is their data and identity layer. It captures behavioral signals from Costco's digital properties, [00:03:45] resolves them to a member identity and distributes that data to whatever activation or measurement tool needs it. Crucially, as John FFLs said, during the live stream, meta router deploys inside Costco's own [00:04:00] virtual private cloud, and that means that member data never leaves. [00:04:04] Costco's environment, and that matters because one of Mark's earliest decisions was a set of non-negotiable data principles. We own the [00:04:15] data, we minimize data movement, and we minimize data copying. [00:04:20] But Mark is quick to say that it hasn't always been easy or cheap to build things this way. He's Costco's data was fragmented across disparate systems with [00:04:30] identifiers that had nothing to do with the actual member. [00:04:32] Mark: We had to tick and tie every single, uh, piece, uh, every single detail to make sure that we had the approval to do it. And that friction forced a lot of clarity in the vision. It [00:04:45] forced us to be. Very creative about how we solve those problems. It's taken longer, it's cost more money, and it's been way more complicated than quote unquote it needs to be. [00:04:56] But it had to be this way for it to work. And so for, [00:05:00] for the partners that have been with us from the very beginning, that's been the whole story is the path leads resistance is probably not the one we're gonna go down. And so, so like the, what, what has kind of emerged as the Costco velocity stack that we, yes, we're trying to be as transparent as we can be [00:05:15] about, uh, uh, with the idea is that, um, we think that it's valuable for our partners to understand how we're doing things. [00:05:23] [00:05:24] Speaker: Getting approval to access, organize, and use the data meant jumping through hoops at [00:05:30] every step. But the path to unlocking the power of Costco's data has ultimately been a very unique Costco journey. The company runs what most people experience as one store, but what internally operates is roughly 10 different [00:05:45] businesses. [00:05:45] E-commerce, warehouse, same day, Costco, travel, tires, fuel. Each has its own systems. Each has its own p and l, and so stitching those together to resolve at the member [00:06:00] level is the foundational work that everything else depends on. Miracle Ads is the only retail media solution designed for both one P and [00:06:15] three P Marketplace brands. Why does that matter? Marketplace sellers demand a seamless advertiser experience that still offers full funnel ad formats, and retailers need a flexible solution that allows you [00:06:30] to scale your media business. [00:06:32] Kiri Masters: Learn more@miracle.com. That's M-I-R-A-K l.com. [00:06:40] [00:06:40] Five years ago, the vendor landscape was thinner but [00:06:45] now there are more options on the table. Let's hear from John FFLs. Dad from Metta up. [00:06:49] Jon: Mark and the Costco crew have this really interesting opportunity, you know, kind of being a late mover, if you will, in retail media to basically like build modern [00:07:00] tooling in the right way and all the ways he talked about it, but it's like a built builtin arbitrage opportunity. Like they can be innovative and sort of like stand out in a way because they're building it to solve all these problems that others have seen. [00:07:08] And with like modern infrastructure in a new way. I think that's where you can like get an advantage around [00:07:15] some of the transparency and like kind of bully pulpit the announcement over the top around like what you're building. [00:07:19] [00:07:21] Speaker: in the piece that accompanies this podcast today, I get into a few other details that I don't have time to cover off in this episode, including two [00:07:30] new moves that the tech stack enables. So if you wanna a little bit more detail, do check out the blog post today because that has some more context. [00:07:37] But wrapping up here, is Costco's transparency changing advertiser behavior or is it just good pr? [00:07:45] Well, it's probably a little bit of both. If 88% of brand side buyers say that a retailer's tech stack influences spending decisions, and one retailer is bold enough to bear it, all that retailer picks up a [00:08:00] disproportionate share of. [00:08:01] At least curiosity and likely some pilot budgets. [00:08:06] The five reasons I outlined in August haven't gone away, but Costco's experience points to something I didn't cover. Then [00:08:15] transparency makes the internal job easier too. It forces clarity, it creates accountability to a public roadmap, and it gives the retail media team a shared language with merchants, brands and technology partners that [00:08:30] opacity can't. [00:08:32] As Mark says, it actually makes it easier to tell our story when you have nothing to hide. We'll leave it there for today. Thanks for tuning in, and I'll catch you tomorrow. [00:08:41]