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The Big Impression
CVS Media Exchange’s Parbinder Dhariwal on the next phase of the retail-media revolution
00:20:51
Parbinder Dhariwal, VP and GM of CVS Media Exchange, discusses CVS’s self-service advertising offering and the future of DEI initiatives in retail media.
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A
I'm Ilyce Loeffring.
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And I'm Damian Fowler.
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A
And welcome to this edition of the Current podcast.
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This week we're delighted to talk with Parbinder Dhariwal, or Parbs as he's known by friends and colleagues. He's the Vice President and General Manager at CVS Media Exchange.
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Launched in 2020. The CVS Media Exchange, or CMX, helps brands and partners reach CVS pharmacy customers and members of its extra care loyalty program through a variety of digital platform including social channels, programmatic display and on.
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CVS.com there's been a ton of advertiser interest in the retail media space. In fact, it's become one of the fastest growing digital media channels.
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According to Group M, retail media networks are expected to grow revenues by 8.3% in 2024. We start off by asking Parbs about this revolution.
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So Pabst, we keep reading about the retail media revolution from retail media networks exploding to self service and data portability. What do you think the next phase of this revolution is?
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C
Well, the retail media revolution is in full swing, isn't it? It's rocking and rolling right now and doesn't seem to be slowing down and letting up. I think the group mstat and growth that they're forecasting for this year is an interesting one. We also know that it's going to be the fastest growing channel right the way through 2027. If you look at the E marketer stats, we're going to outpace linear TV in the next couple of years. So there is tremendous amount of growth. I think as we think about that revolution, as we think about the way in which we operate as an industry as a whole, measurement, transparency and clear campaign attribution are going to continue to be the driving force of the way in which we think about our business. This has got to be central for brands. We have an opportunity as, as an industry to really change the game there and and we're very much leaving in the other piece is around how do we continue to advance in technology, how do we continue to advance in using AI, machine learning, a lot of the analytics tools that are going to be available to us and build our capabilities so we can really start to compete with some of those larger platforms within the industry. And then also let's always not forget retail media is nothing without the core brands that we are retail media networks and a part of. So in this instance, we're very much a retail media network. CMX is the retail media network for CVS Pharmacy. We operate under that guise and what is most important to us within that capacity is to, for us to really understand and meet the needs of the consumer. If we don't understand the consumer, we can't meet their needs. If we can't service the consumer and help understand, understand whether they're in a store environment and how can we create a level of discoverability in the in store environment or how do we create that discoverability in digital environments, that's when we start to lose our gravitas. So thinking about the consumer first and then how do we add to their experience as they're shopping through our stores, both as I said, from a physical as well as digital and looking at it through the omnichannel lens.
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B
And just off the back of that, you do have tremendous scale. What kind of customer reach are you looking at?
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C
Yeah, it's a great question. And you got to remember CVS Pharmacy is a national brand in the United States. And this is probably the moment for me to throw a few stats at you. Let's do this. So first and foremost, CVS stores, there's 9,000 locations in the U.S. we are part of CVS Health, which is the largest health and wellness business in the US as you think about our stores in particular, we have close to 5 million million interactions with our stores every single day from consumers. So vast amount of traffic that comes through our stores and for various need states as well. From a digital perspective, we have almost 140 million users who are coming to the cvs.com site and again interacting with us with various different need states. But shopping is a core component of that. And then the most important stats, certainly from a CMX standpoint, is we are predicated and built upon our loyalty program. And it kind of differentiates us a little bit from other, other retail media networks. Our loyalty program is 74 million extra care consumers, substantial at scale, but also gives us that really strong purview of that omnichannel experience. So yeah, hopefully that sort of just helps you give an understanding of the scale that we operate within.
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B
Really? Yeah, I mean that's, it's massive. And we want to talk a little bit more about the extra care loyalty program further on. But you know, I'm not sure if this question, if there's anybody out there right now who doesn't actually subscribe to retail media, the power of retail media. But what would you say to such a person, an advertiser who believes retail media doesn't fit into their media investment?
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C
Yeah, I say that to them. The, you know, retail data, the Way in which we see the transactions within our stores, that level of wealth of proprietary data and understanding of behaviors, and the way in which consumers are shopping between digital physical environments when they're coming into store, the frequency by which they're purchasing products, that is a highly effective tool. And as a brand, if you're not leveraging that, you're missing out on an enormous channel. This is the reason why brands are leaning in heavily. They're becoming much more sophisticated in how they use retail media. I think they're also really pushing retail media as well to become more sophisticated in the offerings, more sophisticated in the way that we measure, more sophisticated in the way in which we provide that level of transparency across our businesses. Closing the loop and building that attribution model is also really, really important. That sets us apart from any other platform. Like there are some of the larger platforms that have continually struggled to provide that level of closed loop attribution. As they think about, I saw an ad or I've engaged with an ad, and what has that driven me to do and what is the outcomes as a result of that? That again, is something that retail media is very much in an exclusive camp and we've got to make sure that brands truly understand how to use that. The other thing that we should make sure that we understand is that there's retail media networks that have enormous amount of first party data. And as a result of that first party data, it gives us the ability to leverage that consumer across the Omni Channel, but not just on our owned and operated properties. But how do you leverage that data, that asset, across the open web, Right when you're trading with, be it through DSP environments or otherwise, how do you leverage that CVS data, the Extra Care loyalty program, to continually enrich your programs, your marketing efforts to drive more performance, to drive more product, to drive more engagement with the consumer. So we're sitting on a massive opportunity and it's in our hands, right? It's in our hands as the retailers to step up. It's in our hands to make sure that we continue to provide all of the things that brands are looking for and provide that level of transparency on how we're measuring our performance. And more importantly, bringing brands in the industry along on this. We're just at a pivotal moment.
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Last year, CVS's Extra Care was named one of Newsweek's best loyalty programs. How has CVS cultivated such a strong relationship with its customers?
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C
Yeah, and look, Extra Care has been around for over two decades. The longitudinal latitudinal nature of the program gives us a really strong insight into the way that the consumers are behaving and purchasing products with us. Again, I'm sounding like a little bit of a broken record here. It's not my intention, but the consumer is at the center of everything that we do. Understanding the way that the consumer purchases it enables us to deliver message, personalized message to those consumers in the environments that within which they operate. We can understand certain need states and how that consumer is wanting to go and work with us in our environments. We will continue to build that loyalty program with extra care. It's the foundation. We talked about it at the top of this podcast. There's 74 million of those consumers. They're swiping at really high levels. They're engaging with our program as well. And that's where the opportunity comes on us providing a level of service back to them with the ads business as well.
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A
On that note, no separate notes, but along the line of service, CVS Media Exchange introduced the self service option for advertisers that was announced this past canneslion. Why is launching a self service important for increased transparency? I know that's a popular buzzword around the industry, but it's also extremely important.
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C
Yeah, the transparency is, it is a buzzword, but it's a. It's also an incredibly important foundational pillar for us as a business and the way in which we operate. So I think that's the. I would say that the related to the self serve announcement that we announced at Cannes, it's actually more about whilst transparency is there, it's also about accessibility. How do we provide a level of accessibility to our inventory in ways in which they can access that inventory through a DSP platform through a particular seat. So self serve opens up how brands want to work with retail media and we've only really been in market as a retail media Network since 2020. We're developing this business, we're bringing it to market. I think we're doing it at speed, I think we're doing it very thoughtfully on the partners that we work with. In this instance, we're working with a trade desk on this self service program. Trade desk share our values, they share the way in which we want to innovate, they share the way in which we are looking at the consumer and driving that technology in order to continue to develop solutions for our advertisers. What I don't want us to forget is, you know, as we think about that accessibility, as we think about transparency, how do we continue to iterate from here how do we continue to develop innovation with other tech partners with the Trade Desk to further enhance how we're bringing new solutions to our advertisers?
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A
Can you actually explain it a little bit more where in using your self serve option, where can advertisers expect their ads to appear or how are they accessing your data to drive ads?
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C
So we're going into a closed beta with the Trade Desk that will allow a certain number of select advertisers to come and work with us and develop programs within our closed self serve beta environment. We're building audiences within those environments. The way in which it will operate is that the brand will use their trade des C in order to activate campaigns through the Trade Desk DSP into the open web so they have the ability to buy open web or CTV and all of the different products that are available through the Trade Desk. But accessibility to 74 million extra care consumers, it's the first time that we've made that available in a self serve capacity with the Trade Desk. Now that's not always how brands want to operate. Some brands want to go into the self serve world and others want to just continue down the managed service route. So we will continue to offer managed serve as an option so that product will remain and we have a strong team to support that. But we also want to create again accessibility options for the way in which brands want to engage with us.
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B
Very interesting. Now you wrote an op ed for the current this year and in that op ed you said something, if I may quote you, creating a tailored customer experience across channels and pulling together data from various touch points. That being website visits, mobile apps, in store interactions, loyalty programs and more can be a challenge. And I know we often like to talk about opportunities hand in hand with challenges. I wonder if you could talk a little bit about the challenge you're referencing. There's.
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C
Yeah, the challenge stems from again, retail media is, you know, it's predicated on really closing the loop. So how do we attribute an action right the way through to purchase? If you think about hyper personalization for the consumer to drive more engagement, that consumer is difficult to reach. But more importantly they're difficult to make sure that we continually serve the right level of message to them in the right environments. Previously, retailers have struggled with bringing the assets, the data components and then how do you target personalized message to them within the channels that we want to talk to them as well? I think that's where our first party data and the use of our first party data and as we're Building our audiences really actually comes into its own. That challenge of understanding the consumer and how you can actually leverage that consumer in different channels, that's really the driver to building a performance business for our brands. We're seeing a lot of work around, whether it's through customer data platforms or other technology to bring our consumers to life. We use data clean rooms to make sure that we always drive the security of our consumer, that we're not passing any data, any information through to TACT or through to any other platforms. We're maintaining that level of privacy. These are all obviously challenges, but it's important to mention that as we think about proprietary data, we think about precision targeting, we think about that real time optimization and that also the attribution of an end to end reporting, that's where brands are really embracing retail media networks. That's where we've got to lean in as an industry and we've got to get better, we've got to get more transparent about how we're providing those solutions because that again will grow the industry. And look, we've seen the IAB come to the market with some clear guidelines on how we should be measuring and what are the standardization of metrics. There's got to be more of that. Then there's got to be more of that lean in from retail media networks because we've all got to move together to build a better industry, to build a better way in which brands can use our platforms and give them options in the way in which they're talking to consumers. That's the exciting piece. It's phenomenal for retail media. Right? Like it's a real moment.
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B
Yeah, you're right in them on the front lines of it. You know, one aspect of retail data is that advertisers can connect their digital environment with the physical shopping environment. And as you mentioned, CVS Pharmacy has all of these environments, physical environments across the United States. Why does it matter that you connect those up?
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C
Well, the, the connection of the digital and physical environments, it's crucial because consumers shop how they want to shop, depending on that current need stay or the particular situation that they're in at any given time. Right. If we think about that level of integration of data around online and offline buying behaviors, like advertisers are consistently trying to understand, first of all, how do you create a seamless experience between those two environments, but then more importantly, how do you influence the consumer through that journey? Like we talk for a number of years within this industry, we've talked about a traditional funnel approach. And there's no funnel anymore. Retail media has actually condensed the funnel and your point of delivery of message through to point of purchase has shortened so much. There's no awareness, there's no consideration. It just goes straight down to the bottom of the funnel and purchase from the moment that you see an ad. And and so we've got to think about how do we continue to add value in that process. Right. The way through the digital and physical experiences. There are some challenges there as well. Right. Like when we think about showing an ad to a consumer in a digital environment and then whether they purchase that product in digital or they it's buy online, pickup in store and send it to a store or they go into a store and purchase. We see 52% of our web and app users who start their journey in a digital capacity and then finish it in a physical capacity as well within 48 hours. Right. Like that's the kind of.
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A
You can see that.
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C
Yeah. And we've got to make sure that again like working with the brands to really surface those kind of insights so they can then be along that journey with that consumer as well through the experience. Some of the in store activations, we've got screens within our in store environments, pharmacy counter, we have digital audio, we have out shelf promotions and so on. Some of those are a little bit more difficult to measure. I think one of the challenges that we will face as an industry is how do we bring a level of measurability to those components. And there's a lot of different outfits that, that are driving that. But with that, I think personalization needs to be consistent. Showing the value of connectivity between the digital and physical environments, being with that consumer across that entire journey and every single touch point will also set you apart from the rest of the industry ongoing. This is an evolution right. As, as we, as we continue to grow.
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A
Harbs, I know you're very passionate about Di. Where do you see that in the retail media space as it stands today and how do you think it can evolve since it's so new?
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C
Yeah, I am passionate about it. And I'm passionate about it because I've been in this industry for 25 years and I have. I think we can do better as it relates to DNI and as we give opportunity across all different layers of an organization. These are really important for the growth of our industry. And I'm not just talking about retail, I'm talking about the advertising industry. For us to build opportunity for more diverse voices within our business, for different ways of thinking for the way in which we want to be change agents within the whole industry. And we've got to continue to do better. Where retail media comes into play is that as we build this industry from the bottom up, it gives us an opportunity to think about DNI a little bit differently. We're building teams that are new teams. We might already have a blueprint from different organizations that we work with on what's worked or what's not worked. And as we've looked at cmx, we've built purposefully a level of diversity into our organization that gives us an understanding of not just the way in which we want to think as an organization, but it also gives us a relationship with how our consumers are. We have consumers shopping us from across the United States. They're consumers from various walks of life. And if we understand the consumer and we can share an understanding of who they are and live in their shoes, because we have, then that gives us an ability to think a little differently about our businesses. And then how does that relate to retail media? I think we can do better. I would like us to do better. I do challenge the industry around that. But overall, I think retail media can really pave the way for how we think about DE&I initiatives and bringing more diverse voices into our industry. And we're definitely doing that. Cmx, we can stand behind.
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And that's it for this edition of the Current Podcast. We'll be back next week, so stay tuned.
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The current podcast theme is by Love and Caliber. The current team includes Kat Vessi and Sydney Cairns.
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And remember, what is most important to us is to really understand and meet the needs of the consumer. If we don't understand the consumer, we can't meet their needs.
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I'm Damien. And I'm Eilese and we'll see you next time. And if you like what you hear, please subscribe and leave us a review. Also, tune into our other podcast, the Current Report.