Macy’s isn’t wasting time — or revenue opportunities — when it comes to its retail media offering.
Yesterday, the retailer announced an expanded partnership with Rokt, a technology partner that allows Macy’s to deliver high-quality, non-endemic offerings to its shoppers after they shop online.
Ads and offers are shown to a customer immediately after they check out on the Macy’s website. These offers are personalized to each customer, based on Macy’s first-party data and Rokt’s partner data.
“Rokt’s unique AI-powered technology enables us to use our first-party data to provide our customers with high-quality, premium offers from non-native advertisers post-purchase, communicating the right message to the right time, ultimately leading to increased customer engagement. ,” said Michael Krans, Vice President, Macy’s Media Network.
An example of a post-purchase offer shown to a Macy’s customer, powered by Rokt.
The partnership means Macy’s can get new ad dollars with an assumed minimal additional investment in its core ad technology. Rokt’s e-commerce network enables retailers to leverage intelligence from more than 5 billion transactions across hundreds of major businesses.
It also unlocks a whole new type of advertiser for Macy’s: non-endemic brands. While native advertising (eg, ads for products sold on Macy’s site) is most effective before a customer selects a product on an e-commerce site, non-native advertising is most effective during the transaction stage, when customers are more likely to respond to new offers.
“This is the only way for non-endemic advertisers to reach Macy’s customers within the on-premises environment,” says Michael Krans, Vice President of Macy’s Media Network.
Krans says a number of non-endemic brands have already shown interest, including Paramount Plus, Hulu, Vogue and premium meal kit subscription companies.
Protecting the customer experience
Any opportunity to increase advertising revenue must be balanced with customer experience. Customers are frustrated with the number of ads they are shown when searching for products on Amazon for example. Monetizing any stage of the customer purchase journey can ultimately turn customers away.
Rokt says its priority is to ensure customers are met with the most meaningful experience possible. “Rokt’s technology leverages intelligence powered by more than 5 billion transactions across more than 2,000 leading businesses, and each message is tailored to a buyer based on factors related to their transaction,” said Elizabeth Buchanan, Chief Commercial Officer at Rokt. “This level of importance is why our engagement rates, which average between 5% and 15%, are well above the industry average.”
Buchanan adds that if a shopper has never clicked on an offer on the confirmation page, our technology will make sure they are no longer presented with offers and messages. “We take the long view on experience and believe that sometimes not presenting a customer with an offer provides the best experience.”
Macy’s Michael Krans adds that Macy’s Media Network has seen increased customer engagement since partnering with Rokt. “Since Rokt-supported advertising is served to customers post-transaction (before they arrive at the order confirmation page), it does not detract from the customer’s shopping experience,” says Krans. “We believe our customers see these special offers as an added value to being a loyal Macy’s customer.”
The latest in Macy’s continued investment in Retail Media
Retail media, compared to a retailer’s core business of selling physical items, is generally very profitable. With its Rokt partnership, Macy’s can unlock enterprise value through an existing asset—customer transactions that are already happening.
This latest development is part of the company’s ongoing efforts to leverage its digital platforms and customer data to create new revenue streams.
Macy’s has made a number of innovations in their media offering in the past 2 years, including the launch of a self-service media buying capability, shoppable display ads, top-of-funnel video ads, and a partnership with The Trade Desk.
Macy’s RMN launched in 2020, which puts the retailer ahead of other department store rivals like Nordstrom, but behind mainstream giants Amazon, Walmart and Target.
Macy’s Media Network generated $37 million in revenue in the first quarter of 2024. Department store rival Nordstrom has not disclosed ad revenue from its media network since its launch in 2021, which totaled $40 million dollars for the whole year.
But that win is still dwarfed by top rivals like Target, Walmart and Amazon.
Amazon’s advertising revenue in the first quarter of 2024 was $11.8 billion. And Roundel, Target’s advertising business, brought in $1.5 billion “in value” for the company in 2023.
Growth of Macy’s core business
Compared to competitors with stronger digital roots, it’s fair to ask how much volume Macy’s is doing online — with sales volume and e-commerce traffic a key requirement for a retail media network’s attractiveness to advertisers.
Unfortunately, the most recent digital sales numbers we have are for Macy’s fiscal year 2023, where digital sales fell 7% year-over-year.
But the benefits of the expanded partnership with Rokt could go beyond the ability to monetize digital sales.
In addition to securing revenue from non-endemic brands, Macy’s is now planning to use the purchase confirmation phase to drive other strategic internal initiatives, such as signing up for the Macy’s credit card and joining its loyalty program. Star Rewards.
Promoting its loyalty programs and credit cards may not directly boost the retailer’s total ad revenue numbers, but there is a long-term payoff in Macy’s ability to grow its first-party data set through growth of participation in these programs. First-party data is an asset that is of great interest to advertisers and can be leveraged in the future as Macy’s retail media offering matures.
Digital growth has been named a top priority by Macy’s new CEO Tony Spring, who came on board in February 2024. Strengthening first-party data through better adoption of credit card and loyalty programs could decide the foundations for a better online experience for customers as well as a compelling value proposition for future advertisers eager for richer customer data sets that drive more efficient media spend and reach.
conclusion
With this expanded partnership, Macy’s is demonstrating its commitment to building a powerful retail media business that leverages its valuable first-party data and customer relationships. By leveraging post-purchase engagement opportunities with personalized, non-endemic offers, Macy’s can unlock new revenue streams without compromising the customer experience.
Critically, the retailer is taking a balanced approach—using these new monetization capabilities to also drive strategic initiatives like credit card enrollment and loyalty program growth. This holistic strategy positions Macy’s to not only grow its advertising revenue in the short term, but also strengthen its overall business by growing its first-party data assets over the long term. As retail media networks become an increasingly important part of the modern marketing landscape, Macy’s is making smart moves to position itself as a major player in this space.