Costco Working on Ad Network to Sell Its Shoppers’ Data, Report Says

Costco is the perfect place to shop whenever you need a 3-pound tub of pretzels and four gallons of mayonnaise. Or, perhaps more famously, those $1.50 hot dog combos. But now those purchases will help the retailer target you with ads, according to a report from Morning Brew Thursday.

Costco plans to put customer buying history to work in the retail media space, selling ads to brands that will hopefully entice you to buy more of the things you love. And Costco’s membership program (shoppers need to have a membership card that’s tied to all their purchases) is expected to make those purchases even easier to track—ensuring that ads for diapers, for instance, get in front of parents with young kids.

“Not only will we help you reach a Costco member, we will help you reach the right members in the right context based on past behavior,” Mark Williamson, assistant VP of retail media at Costco, told Morning Brew.

Costco, America’s third largest retailer, is actually behind the curve when it comes to selling ads based on customer data. Major stores like Walmart, Target, Kroger, and Best Buy have been doing this kind of thing for years, as Morning Brew notes. But Williamson gave an interview at a Las Vegas convention back in April about Costco’s plans where he joked about having the “100th mover advantage” since they’re so late getting into retail media sales.

“One of the key missions for us is to make sure that we’re avoiding the pitfalls and some of the barriers and maybe the self-inflicted wounds of previous iterations of retail media,” Williamson said. “Thankfully, the space is matured, the retailers are matured, the media buying audience is matured, the channels themselves and the technology are matured. And so it’s a really good time to be starting fresh in retail media.”

Costco has 130 million members worldwide and Williamson acknowledges consumer tastes can be fickle.

“Customer behavior is changing dramatically and we need to be able to pivot quickly,” Williamson said. “And so whatever we assemble, we want to make sure that we can evolve with the marketplace, we can evolve with our members. And we expect our technology vendors to do the same—is that they’re evolving in their space and they’re also giving us the flexibility to evolve as well.”

That being said, Williamson is also really excited about how far ad tracking has come over the past decade, allowing retailers and advertisers to drill down and find people in a really granular way. Williamson says it’s great that technology has made it so “everything’s traceable, addressable, measurable, accountable.”

“We didn’t have any of these tools [15 years ago], but we conceived of a day that it would happen,” Williamson said. “So it’s exciting to be in an environment where the technology is equal to the task of what consumers are actually doing and what retailers need.”

Target’s retail media sales have contributed $1.5 billion in “value” to the company, according to Morning Brew, so it makes sense. There’s a lot of money to be made using customer data to sell more stuff.