CVS Health is positioning itself as a formidable player in the retail media landscape by leveraging its extensive first-party data. The company aims to transform various customer interactions—from pharmacy visits to mobile app engagements—into strategic advertising opportunities. According to Parbinder Dhariwal, Vice President and General Manager at CVS Media Exchange, this approach not only enhances customer engagement but also solidifies CVS’s unique standing in the competitive retail environment.
The retail media model, while not new, has evolved significantly. It enables retailers like CVS to utilize first-party customer data to offer targeted advertising opportunities to brands looking to engage consumers at critical decision-making moments. During a recent discussion hosted by PYMNTS CEO Karen Webster, Dhariwal emphasized the potential of this model, stating, “Retailers have information through transactional and loyalty data, along with actual purchase behavior data. This combination sets retail media apart from other mediums, including social media.”
Harnessing Data for Targeted Advertising
With access to data from approximately 90 million consumers, CVS has built a comprehensive database encompassing beauty, health, wellness, and personal care purchases. This wealth of information allows the company to present advertisers with a detailed understanding of consumer behavior. Dhariwal noted, “We know that a consumer who buys a specific type of lip gloss monthly is unlikely to switch brands. However, they may frequently change facial cleansers based on various factors, making them ripe for targeted marketing.”
For brands accustomed to navigating the complexities of online advertising, CVS’s clear and actionable data presents a refreshing opportunity for more effective precision marketing. “When we engage with consumers, it’s crucial that our messaging is consistent across all touchpoints,” Dhariwal explained. This balance of personalization and frequency is vital for maximizing engagement without overwhelming customers.
Integrating Retail Media with Consumer Journeys
Effectively managing the retail media strategy involves reducing friction not only for consumers but also across internal organizational teams. Customers may not differentiate between marketing messages, loyalty communications, or promotional offers, yet the alignment of these elements is essential for CVS. Dhariwal stated, “Retail media needs to fit into the hand that fits into the glove of the retailer. Understanding the consumer journey and how retail media supports it is critical.”
Earlier this year, CVS introduced a “tempo strategy” encapsulated in the mantra “Approach One CVS, Approach One Heart.” This initiative integrates three core pillars: the merchant organization, the marketing team, and the retail media network. This collaboration ensures a cohesive approach to major events such as the Epic Beauty Event, where merchandising defines the offers, marketing generates awareness, and retail media amplifies the message across both digital and physical channels.
Every day, nearly five million customers visit CVS locations, underscoring the importance of the physical store in the company’s strategy. Dhariwal highlighted an innovative approach at about 2,000 CVS locations, where screens in waiting areas near the pharmacy act as mini media networks. “With an average dwell time of about three minutes at the pharmacy, this presents a prime opportunity for brands to communicate effectively with consumers,” he noted. This strategic placement encourages shoppers to explore additional products as they navigate the store.
CVS’s commitment extends beyond driving sales at their own locations. Dhariwal expressed, “We’re not solely focused on ensuring that consumers purchase only at CVS, even if they are ExtraCare members. Our data-driven approach is yielding significant success in helping brands drive total market growth.”
By harnessing its extensive first-party data, CVS Health is not just enhancing its own retail media capabilities but also reshaping the advertising landscape, offering brands unprecedented opportunities to connect with consumers at pivotal moments. As the retail environment continues to evolve, CVS’s innovative strategies may well set a new standard for how retailers engage with both customers and advertisers.
