Walgreens debuts retail media network, with revamped loyalty program front and center

Dive Brief:

Walgreens unveiled a retail media network Thursday, promising marketers better personalization and direct access to valuable first-party customer data to support their digital advertising buys, according to a company announcement.
Called the Walgreens Advertising Group (WAG), the pharmacy chain's bet on growing a bigger ad business emphasizes an ability to leverage a physical retail footprint of more than 9,000 stores and a loyalty program that has over 100 million members. Walgreens last month debuted MyWalgreens, a revamped loyalty offering that includes a redesigned mobile app, same-day pickup and partnerships with third-party delivery platforms like DoorDash and Postmates.
Walgreens follows chief rival CVS in rolling out a media network, but its loyalty program is larger. The company is also under growing pressure after Amazon introduced a dedicated pharmacy business, Amazon Pharmacy, in November.

Dive Insight:

In retailers' rush to grow media networks that can score more advertising dollars, Walgreens is a bit of a latecomer. The chain not only tails its biggest competitor, CVS, which launched the CVS Media Exchange in August after months of speculation, but also others in the brick-and-mortar category like Walmart, Target and Kroger.

Walgreens clearly sees its expansive loyalty program as a linchpin that can win over more brands, and the company is propping up WAG as a full-service operation. WAG offers creative services, for instance, along with the measurement, analytics and campaign optimization tools that are more typical to a media network. And while CVS is the largest pharmacy chain in the U.S., Walgreens wins out on the loyalty front: CVS' ExtraCare rewards program has about 78 million active members, according to Chain Store Age, compared to Walgreens' 100-million-plus.

Retailers' push to establish media networks is a reaction to a number of factors, chief among them is Google's deprecation of third-party cookies and the mounting threat posed by Amazon, which itself has steadily built out an impressive advertising business along with continuing to disrupt the retail category with a massive e-commerce operation shored up by the pandemic.

Marketers, particularly in categories like consumer packaged goods, are eager for ways to access first-party data, and have long pushed for an alternative to the dominant digital platforms. Retailers believe they can differentiate from companies like Amazon, Google and Facebook due to their respective troves of in-store shopper data, which can be leveraged alongside digital insights to provide a more omnichannel view of customers.

Walgreens is emphasizing such capabilities in its WAG pitch, claiming brand partners will be able to reach shoppers across third-party digital display, video, social media, streaming audio and email channels, as well as through the pharmacy chain's digital platforms and in-store assets. Working with WAG also provides access to Walgreen's programmatic demand-side platform, which promises "SKU level real-time optimization based on daily transactions," per the announcement.