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"There's a ton of angst in the industry about the pending depreciation of third-party cookies and retail media as a category is quite well-positioned in that space. Anyone that has a direct relationship with the end consumer is pretty well-positioned."
— Luke Kigel, VP at Walgreens Media, Head of Walgreens Advertising Group
With the rise of retailer ad platforms, retailers are increasingly seeking to monetize their first-party data and become an alternative destination where brands can spend their marketing and advertising dollars.
Walgreens is the latest entrant in this space. The company launched Walgreens Advertising Group in December 2020. Luke Kigel, VP of Walgreens Media and head of Walgreens Advertising Group, says mass personalization is the guiding principle behind the company's media strategy.
"Personalized marketing is certainly not unique to us, but it is our rallying cry for how we drive data-fueled, technology-enabled, and — quite frankly — more meaningful and relevant communication with our customers and patients in our marketing," Kigel says.
Kigel appeared on a recent episode of the Unpacking the Digital Shelf podcast, "100 Million Reasons to Use Walgreen's Media Platform," and shared how Walgreens is unlocking the value of its massive repository of first-party data.
Here's Kigel's take on the opportunity retail media presents for brands.
First-party data has become vital in a cookie-less world. Firefox, Google, and Apple have all announced plans — or already made moves to — either limit or stop supporting third-party cookies altogether.
"There's a ton of angst in the industry about the pending depreciation of third-party cookies and retail media as a category is quite well-positioned in that space. Anyone that has a direct relationship with the end consumer is pretty well-positioned," Kigel says.
Kigel adds that Walgreens' competitive advantage is its 100 million loyalty members. These members give its brand partners access to a treasure trove of rich data, which they can use to build custom audience segments and better target consumers on Walgreens' platforms and other channels, including Facebook, Pinterest, and YouTube.
"It's all based on the foundation of our ability to unlock the value of our first-party data. We have a first-party data asset that's grounded in 100 million loyalty members. That's 100 million people," Kigel says. "There's no modeling; there's no estimates; there's no probabilistic work that is done to get to a scaled audience. We can do all of that."
Walgreens has laid the groundwork for mass personalization by putting contractual agreements, protocols, and privacy protections in place to activate against its own first-party data in a scalable way.
Its retail media offering is anchored by a personalization engine that is fueled with insights from the company’s 100 million-plus loyalty members who engage with the brand on its app and across channels. Brands can harness this data to buy targeted placements on Walgreens-owned channels and brand-safe external sites across digital display, email, social, streaming audio, and video.
Brands that advertise with Walgreens Media Group also get access to the company’s demand-side platform (DSP), which they can use to optimize their campaigns in real-time based on customers’ daily transactions.
Walgreens also has forged a partnership with OpenAP to help brands leverage its first-party data in TV advertising and connect Walgreens customers’ in-store or digital shopping experience to targeted TV ads. Walgreens’ offering presents a viable alternative to walled gardens or traditional media buying, giving brands more visibility into the end-to-end customer journey and access to better targeting with the company’s deterministic matching capabilities.
“If you can deliver a more relevant experience — reaching a more targeted audience leveraging our first-party data — and you can do that at the right cost, it will improve your marketing return on investment [ROI],” Kigel says.
The potential value proposition of Walgreens' ad platform is clear, but organizations still will have to shift both their mindset and how they allocate media dollars to lift the growing retail media ecosystem.
"You've got folks on the client-side, where you've got budget delineations. You've got some shopper marketing here. You've got your brand marketing dollars there. You've got your ecommerce dollars there. You got your digital programmatic dollars there. At the end of the day, it's all kind of based on arbitrary constructs because the consumer doesn't know the difference," Kigel says.
"This notion of 'You've got a separate digital team from your either traditional media team or a TV team — or you've got some digital capability that lives in one place — and then you've got a separate agency that's doing all your TV,' I just continue to believe that it's just an antiquated model that, again, is structurally working against innovation," he adds. "Where we're trying to actually go as an industry is driving towards personalization."
Rather than operating in silos or focusing on who gets credit, brands instead need to focus on optimizing the omnichannel customer experience. Kigel says focusing on specialty areas or buckets of funding misses the point.
"It is actually, in some ways, missing the opportunity, which is to deliver a better experience to customers and patients," he says. "The goal should be to get to a place where media strategy is truly audience-first and channel-agnostic, which is the complete inverse of the way it's been done for the past 50-plus years."
In the coming years, there likely will be more walled gardens as more companies insulate around data privacy, Kigel says.
In this environment, brands will continually have to replicate what they’re doing within these platforms outside of them in an attempt to activate a similar audience, which is often cumbersome and not entirely replicable.
Retail media — especially of the size and scale that Walgreens is offering — gives brands the chance to invest in channels that actually drive provable, measurable return ROI, even if they aren’t yet ready to shift a considerable portion of their budgets away from traditional media buys, TV, or brand marketing.
“One of the other benefits of retail media as a category is the measurement,” Kigel says. “The ability to actually tie the investment to the return is another overall benefit that retail media as a category is bringing to the table.”
Listen to the full podcast episode to hear additional insights from Kigel about how to take on the opportunity of retail media for your brand.
