# S2 E6 - Mark Williamson, AVP Retail Media @ Costco

S2 E6 - Mark Williamson, AVP Retail Media @ Costco 

[00:00:00]  

[00:00:00] ​ 

[00:00:21] Tom: So today on the Middlemen, we are going to have a discussion with Mark Williamson from Costco.  

[00:00:28] Todd: So I think what's really interesting as you talk to one side of this retail media community, there's the vendors coming up with all cool new tech and Tom, I've seen your eyes get all stars. You see some of the cool things that people are doing, and by the way, there is some cool product stuff happening in retail media, especially from, you started in this business and help build it and launch programs for some large retailers, 7, 8, 9 years ago. 

[00:00:48] Todd: And have an interesting lens on where we've come from in that last decade. And what's fascinating to me is. When you talk to retail media leaders, the people running [00:01:00] these businesses, are some real interesting constraints that they have to deal with. Like they, they live in a, an environment. 

[00:01:08] Todd: Where you'd be thinking like from the lens of a publisher, right? The retail media team is the ad sales team and the merchandisers, or the editorial team, except in this case the editorial team runs the show. 'cause they generate revenue too, right? The merchandisers generate revenue. They have in-store sales, they're generating revenue. 

[00:01:23] Todd: They have a big seat at the table. And that reality I think is something, we are coming from the product and tech side often forget, which is how are you going to. Make retail media compatible with a retail business and what does that look like? And you know what's interesting is we I think we all started retail media and its roots are in offsite monetization. 

[00:01:46] Todd: And, we looked down, oh, that was a technology problem. The reason we did offsite was 'cause that was easy to do. Like it was the tech was doing programmatic retargeting effectively was something that was easy to execute on. And that's why it exists. 

[00:01:59] Tom: yeah, it came from the [00:02:00] fact that you had all of this in-store data the point of sale data, joining that with the loyalty program. All that data was more than what the online traffic was from most retailers outside of Amazon. And so it was an easy first step. And yeah, if if you're like me and you we went to shop talk and we saw, all the in-store tech and it's really exciting. 

[00:02:21] Tom: But before you get there, you have to think about what is the retail media organization? What is the merchant and the retailers organization, how do they fit together? 

[00:02:29] Todd: And I think what's interesting about if we think about offsite and stop looking down on it as the old thing and look at it as one of the pillars, right? When coming outta Shop Talk, we really settle on, there's really three pillars to retail media. There's onsite, offsite, and in store, and. 

[00:02:46] Todd: By saying offsite is a pillar, it's a really important program. And then you hear about, and learn from mark of how it is. It really offers him a lot of flexibility. It offers, as he's building green team, he is building trust with [00:03:00] the merchant side of the organization and has that flexibility to effectively monetize, and build a retail media business through a pillar. 

[00:03:10] Todd: A, a program at this offsite, which, is tried and true. It's been around for a while, but it's effective and it works and it offers the ability to build this business. And I think, we can't look down on, on, on the operators, on the marks of the world and if they're leveraging a tried and true tech technology, tried and true tech pillar in offsite, that it has its role and purpose. 

[00:03:30] Todd: And, there's other people who've, Epsilon certainly build their business originally around offsite too. And obviously they're moving, online and now, there I think there's discussions and they all wanna get in store just like everyone else. And so I think that becomes interesting as we look at the tech world and the retail media tech world of, there still might be opportunities around offsite and I think as people who sell in and try to win over these retail media leaders. 

[00:03:55] Todd: Being sensitive to the reality of their what their job is and how they have to live within these retailers [00:04:00] and convince their peers, especially on the merchandising side of the merchant side, of how retail media can contribute to the business. And that's another thing that, I think you'll learn from Mark, is that he's not being judged. 

[00:04:13] Todd: Retail media is not being judged on. Profitability and additional margin to the business. It's being judged on its ability to drive top line sales. It, he doesn't have a different goal. And I think Costco's got a pretty mature way of looking at retail media. And so I think we have to do a better job as an industry as we're selling into these folks and understanding the realities of their job. 

[00:04:32] Todd: Is there KPI to drive con contributory margin or is there KPI to drive top line sales? And then how is YouTube, how as you as a retail media product or platform or whatever, how can you contribute to that? And I think that's an interesting discussion and a more mature discussion as retail media settles in. 

[00:04:51] Tom: Yeah, I mean if we all started where, I think because retail media for a lot of these retailers started as offsite. Profit was the main KPI [00:05:00] and it was incremental. It had to be different. And I think some of the discussion that we hear from Mark is more about, no, we're thinking about this holistically. 

[00:05:08] Tom: What is it driving? Is it driving top line? Is it driving trial? And we're gonna, we're gonna think about that. We're also gonna think about it. In the context of clubs. So I'm excited about this discussion because this is the first time we get to think about club stores and how they're different. 

[00:05:23] Tom: And, he'll talk about it's different from grocery because you're not, ticking items off a list. It's more the treasure hunt. And so all of those things change not only the mechanisms that you use, the tactics that you use, but it also changes. It, it may actually. 

[00:05:40] Tom: Add to the level of technology and product capabilities you need to make sure that you're putting the right products in front of the right people. So yeah, so from that perspective, I think it's really exciting. 

[00:05:50] Todd: Mark is a, a fascinating person. He is, got tons of experience. This is not the first rodeo, it's not his first retail media leadership role. And there's a ton. I [00:06:00] think both operators who are building these programs can learn from his experience and listening to him as well as those looking to, sell in and help these retail media leaders build their programs. 

[00:06:09] Todd: And it it's a, it was a great conversation and Mark is just a wealth of knowledge and experience. 

[00:06:14] ​ 

[00:06:17] Tom: I am really excited that we have Mark Williamson from Costco with us today. I've worked with Mark in the past. Mark has both the vendor side, he was at Citrus, but he's worked at Sam's Club, Ahold-Delhaize, and he is now at Costco. So we are really glad to have him on the podcast. Welcome. 

[00:06:36] Mark Williamson: Thanks. 

[00:06:38] Tom: I gave you a tiny intro, but we would love to hear some of the things that you learned at Sam's Club and ahold that are driving, your new charge at Costco. 

[00:06:47] Mark Williamson: Yeah, that's a, I think a fairly common question. One I, I think about a lot, but, like whether I've worked directly for a retailer or have worked with retailers in other positions one thing is universally true. Retailers are retailers first. [00:07:00] And which means merchants and operators run the show. 

[00:07:02] Mark Williamson: I. And the rest of us just work for them. Like we, we are, we exist to support them as much as we possibly can. So I think like that's definitely what I've learned from each. And what I'm applying now at Costco is is that is not to think even though, even though retail media is a big deal, it's a nice shiny object. 

[00:07:19] Mark Williamson: It's prioritized, it's exciting, it's new. Ultimately retailers are, are trying to sell stuff. To our, to customers and run good stores, run good warehouses. That's what we do. That's the first first thing that I always have to remind myself, where I fit in the world. 

[00:07:32] Mark Williamson: But then beyond that though I. Going for having done this a third time now with a retailer every retailer's a little bit different. So there's definitely like best practices and similarities and technology and capabilities and ad products and that sort of thing that exist from retailer to retailer. 

[00:07:47] Mark Williamson: Down deep, every retailer has its own origin story. There's a unique purpose and culture. And realities on the ground that have to be addressed in order for a retail media program to thrive. So it's like we're an appendage of a, of an [00:08:00] existing business that has a story. 

[00:08:02] Mark Williamson: And the, it's not as simple as just copying and pasting what works. So we're looking at what another retailer is doing and saying, Hey, I like that. I'm gonna do that here. It's more about more about figuring out the right way to bring retail media to life within the context of any particular retailer. 

[00:08:17] Tom: And, now I guess we have to think about it in the club context. In ahold it was very much about promotions and there were, many visits to the store potentially every week. With Costco you got fewer chances to get at the consumer. And what is the role of, the store and your new digital products? 

[00:08:36] Tom: Like what, tell us a little bit about what's different there. 

[00:08:39] Mark Williamson: There's definitely uniqueness in the membership model and the thing that people usually go to is wow, you guys have a lot of data, a lot of first party data. And which is true. But to me the uniqueness of the model is more than just that. It's really, I. The membership model is about relationships and trust. 

[00:08:54] Mark Williamson: And that stems from our, the fact that our members pay to shop with us and we have a unique relationship with them. And a lot of [00:09:00] them have been members for a very long time, multiple decades in a lot of cases. And so like we we, we understand that relationship is very different. 

[00:09:07] Mark Williamson: I think it's far less transactional. For a lot of our members, it's a very unique and exciting experience to be inside of a warehouse or to consume products or to use products that they got at Costco. And so I think we like that. That to me is very different. It's almost like this elevated awareness of the brand that that me and my team represent. 

[00:09:25] Mark Williamson: Is much different than just trying to get inside of some kind of some crazy high, low promotional cycle where you're trying to to to win the week or or do something that's, I think, much more short term. In this case, we have to look at everything through the lens of. Of, of our member promise and of the reputation that we have with our members. 

[00:09:44] Mark Williamson: And yes, we do wanna reach more members. We wanna increase awareness of the great products and the great value that we have, and we wanna use data to inform relevant experiences and to do close of measurement. And yes, the membership model allows us to do that easier than I think other retailers can do it. 

[00:09:59] Mark Williamson: But [00:10:00] but the filter that we're using is this the right thing to do for our members? Does this feel like something that Costco would do to enhance the experience? And so it's, I would say like in general, it's a, I think, a distinct advantage for us. But it's, I think it's less about data and more about relationships. 

[00:10:13] Mark Williamson: I. 

[00:10:13] Todd: Costco and. You guys, and I guess you right, announced some new initiatives last year, right? Costco Retail media was, and it'd be good to understand the announcement and where it fits in, and I think it speaks to how you're building the retail media business at Costco. And so I think that's a good starting point to that's what pointed out, oh, Tom's oh, I know this guy, mark. 

[00:10:32] Todd: And so I think it's, useful Mark to give us some context of the announcement and what it speaks to. , what are you doing with and how you're building out Costco's re retail media business. 

[00:10:41] Mark Williamson: Yeah, so it's no secret we definitely view ourselves as having last mover advantage. We've been suspiciously absent from, I think the, from the broad retail media ecosystem for several years. Like Costco has done supplier partnerships for a long time, and so the merchant supplier relationship is sacrosanct around here. 

[00:10:58] Mark Williamson: A lot of what we accomplish [00:11:00] from a merchandiser perspective is because we have strong relationships with our suppliers, and an outgrowth of that is some form of marketing activation, particularly on, on costco.com and an email and kind of in that space. And so really what we've been chasing after is bringing Costco into the, I think the formal or what is now the conventional retail media conversation where we are better positioned to partner with brands and agencies differently than we have in the past. 

[00:11:24] Mark Williamson: I. And so, , we are hyper disciplined against our model and we work very hard to not get distracted on shiny objects. I think retail media can be definitely be viewed as a shiny object. What does it have to do with getting the highest quality product at the lowest possible price? 

[00:11:37] Mark Williamson: We don't, like in gen, like we don't do marketing especially brand marketing. We let our products and our values speak for itself. And so the whole idea of retail media was actually viewed as outside of our core competency and something that we actually wanted to do. So what has changed is really this recognition of the fact that partnering differently with suppliers, brands, and agencies can drive new and different [00:12:00] engagement with our members outside of our own four walls, whether that's in our building, on our website and really thinking. 

[00:12:06] Mark Williamson: Can we can we start the conversation with our members even sooner in partnership with our suppliers? And so what we did when we put our strategy together for retail media was flipping around saying this is less about. Add revenue. And I, if I think about why my program existed with other retailers I've worked for, or the retailers that I would try to sell citrus add into, they're thinking about it as a revenue line and saying e-commerce is really expensive. 

[00:12:30] Mark Williamson: I need to short my margin. Or Amazon's making, I at this point, $75 trillion, I want my fair share, like the motivating factor is like it's more like fomo. I've got this, there's this revenue that I'm not getting and, and the merchants in us, or the capitalist industry Hey, like we have a right to win here. 

[00:12:46] Mark Williamson: Let's go compete. And that, that instinct just doesn't really work here. I. Because it's not clearly tied to the member value proposition. And so what really had changed was this understanding of saying yes, this could be a [00:13:00] source of ancillary revenue, but more importantly, the working media is the value that we're really chasing after. 

[00:13:05] Mark Williamson: If we can if we can deliver more relevant messaging to members, wherever they're consuming content, whether it's in our environment or outside of our environment, that should drive. Traffic that should drive shops and that should drive top line sales. And the two metrics we're most interested in is top line sales and growing our member base. 

[00:13:23] Mark Williamson: And so putting retail media in the context of feeding that flywheel is really what the game changer is for us. And then that is the. That's really the characteristics that we've adopted into our retail media program. And so we say no to certain things. We may not move as quickly in some areas, let's say like non-endemic advertising to us that's not moving traffic and it's not moving sales and it's not necessarily growing the member base because that's just more of a data transaction. 

[00:13:48] Mark Williamson: It's a little bit more it's outside of what we said we would do. And so in this case we're holding ourselves accountable to that, that that strategic. Imperative, which is retail media exists to [00:14:00] reach more members with relevant messaging to drive more traffic and more top line sales. 

[00:14:04] Tom: So if it is gonna be focused on where it can drive more traffic is it related to. The treasure hunt is retail media gonna help people navigate a little bit, make them a little more disciplined or 

[00:14:17] Mark Williamson: Yeah. I don't know how disciplined we want our members to be. We like it when they're when they're discovering the art of the unexpected find or discovering an item they never knew. They always wanted. That's definitely part of the experience. 

[00:14:28] Mark Williamson: And we have to be careful though that we're not so prescriptive that we rob them of that experience because that is what is quintessentially Costco. But what we, but I do think we have the opportunity to say can we help start the process of discovery sooner? And we see this today, like from a social media perspective, we have a very simple social media strategy. 

[00:14:48] Mark Williamson: Like 99.9% of the Costco content that anyone can see on Instagram or Facebook or TikTok or wherever. We have absolutely nothing to do with other than the fact that we produ that the item exists [00:15:00] in our warehouses. We don't collaborate with influencers. We don't pay influencers. We don't seed content that is all organic. 

[00:15:08] Mark Williamson: Good, bad, ugly, doesn't matter. All of that is organic, but we can see and feel when the discovery starts on a, on an item that goes viral in the social space, it does not take long for that start to flow through our buildings. If you think about in the past, like the way that we would talk to our members, that might be an email I. 

[00:15:24] Mark Williamson: Maybe a push notification and then we send out our, our coupon mailer roughly once a month. That's really it in terms of starting the conversation before the warehouse trip or before the website visit. What we're trying to challenge ourselves to say is can we capture that same essence of what we see happen to organically in the social space within retail media? 

[00:15:42] Mark Williamson: Can we find the right member and then go through our 35, to 4,500 SKUs? A lot of which are turning over and over where there's a lot of newness, a lot of freshness, a lot of regional buys. Within that, can we pull out the best item, the best five items, the best 10 items, and then surface that to our members where they're consuming content so they can start [00:16:00] the process of discovery before the physical treasure hunt happens in the building. 

[00:16:05] Mark Williamson: And that's really, so I feel like we're trying to attach ourselves to the same, to the, to. The organic Costco experience without without becoming too, I guess road or routine. Again, which I think that's a little bit of a different experience than maybe a grocery, which is get on the list and then stay on the list and then repeat, re rinse, repeat, rinse, repeat. 

[00:16:24] Mark Williamson: With Costco, it's very different. We have a lot of in and outs. We have a lot of regional buying, and so like you've got a six week window or maybe an eight week window if you're lucky, a three week window to drive as much sales volume as possible. That's the, like we, we have to solve for that unique challenge. 

[00:16:37] Mark Williamson: And that's I think with the data that we have, with the relationship they, we have with our members and the power of the advertising technology that's available, we can we can become a part of that conversation. 

[00:16:47] Todd: Related to the treasure hunt aspect of Costco. And as we were talking in prep for this, you brought that term up, which I hadn't necessarily, as a non-retail guy I, I. I hadn't really necessarily heard that about Costco. It makes a total [00:17:00] sense having, how many times have we walked into Costco? 

[00:17:02] Todd: I just gotta run and buy a $20 thing and I walk out with $400, cart. And it's almost like we're afraid to go into the store sometimes, but one of the things that's interesting is that coming out of Shop Talk and in the world of retail media, one of the hot categories, I think is the rise of C stores. 

[00:17:17] Todd: And around retail media and the realization that retail media can drive impulse purchases, especially with in-store retail media and that, that, that would seem to align with the treasure hunt. The ability, like if I've got six weeks or eight weeks to move a crap ton of product, and really, it's almost every buys a test, buy it at Costco, if you're selling into Costco as a supplier. 

[00:17:36] Todd: And so it, it could seem like retail media could be an in-store retail media. It could be a real interesting way of how do I maximize the sale? An introduction of a new thing within that six to eight week window and helping drive that. It could drive impulses. And I think the C stores are showing that advertising can do that. 

[00:17:52] Todd: How, given that potential, is that sort of a conversation you've had internally within Costco as you've thought about, is it something that you're looking [00:18:00] to explore with regards to Costco and building out retail media? I think that's an interesting. A question and perspective that as we all start to, to look at the rise of in-store retail media and where does it fit in terms of a strategy and an appropriate place. 

[00:18:13] Mark Williamson: Yeah. And yes to all that and having worked on some strategy for a couple of different c-store in a previous life, like it is a different animal. And I think the opportunity is to leverage the uniqueness of their value proposition. So you have close proximity. You have high frequency of shop and you have these, single use bottles or snacks or whatever it may be. 

[00:18:31] Mark Williamson: And am I going to do an unplanned trip into a grocery store for us, for a bottle of Pepsi which is my poison of choice. Maybe, but probably not. Will I do it at a Costco? Absolutely not. But would I do at a c-store? Sure. Like it's, it, it's 20 feet away. Easy breezy. 

[00:18:46] Mark Williamson: That's fine. Even if, I know I'm paying twice as much per unit as I would at a place like Costco, but I may not be in the market for a 30 pack. And so but that's leveraging the unique value that they can deliver to their customers and to their advertising partners. [00:19:00] I think it's the same thing with Costco is like our thing is like, how do you drive trial? 

[00:19:04] Mark Williamson: As much as possible because there's so much, there's so many new items that we're constantly driving, trying to drive trial and extend people into maybe a different brand, another form factor, another flavor, variety. And and so the thing like, okay we don't do a lot in the, in in the, in warehouse space today. 

[00:19:19] Mark Williamson: We have, we've, for the last several decades we've run a a TV wall channel with our partners at PRN. We have some digitized tables up in the, up in our consumer lec electronic spot. We don't have a lot of signage. We don't have audio. Like we don't have a lot of, I think the more the more conventional shelf talkers or card ads or other things that I think other retailers have really leaned in on to build their, in, in where our, their in-store space. 

[00:19:42] Mark Williamson: But then if I really think about it though. We've been like we're known for our sampling stations and we have these carts that are set up and our members sometimes go for a meal and then they'll shop around it is that retail media? Is that in-store media? I'm like, yeah, absolutely. 

[00:19:57] Mark Williamson: It is. It's not a traditional ad impression, but [00:20:00] it's a mechanism to drive trial. And I think that's the framing by which we're gonna have to judge any of the opportunities for us to bring retail media into the warehouse is. Does it add to the experience? 'cause at some point somebody might have said, Hey, you know what, we're a simple warehouse. 

[00:20:12] Mark Williamson: We've got concrete floors and pallets and steel shelves. We don't need to put all that labor in handing out samples. Like I'm sure there were some detractors when that idea first came up, but here we are, several decades later. It's a big part of the experience and we know that it works. I think we're gonna have to go through the same exercise when it comes to, whether it's digital signage or print signage or something, we're gonna have to look and say what makes sense for this environment? 

[00:20:34] Mark Williamson: What do we think is gonna drive trial and drive top line sales? And what I'm confident of is if we can check off all of the necessary evils, the privacy reviews, the legal reviews, the operational reviews, the CapEx and the installs, and all the nuts and bolts of actually running media in the physical space that we don't necessarily have on in the digital space. 

[00:20:52] Mark Williamson: But if we can solve for all of that, if it drives top line sales, then that's an idea that I think we're gonna have to get behind. But you know what our journey is to [00:21:00] get there. I'm not sure, but I think we have our, I think we have our sandbox that we know that we can build within, because we can look no further than our sampling program for evidence. 

[00:21:09] Tom: Is this what you're talking about what you would call warehouse mode? We were talking about that before. I want to get into the real ethos of how Costco works. So tell us what that means. 

[00:21:18] Mark Williamson: Yeah so I would say, like we have a warehouse tools feature that has been added into our mobile app. And so a couple years ago, the company got really big behind a digital membership card. And so like this idea of putting a, you putting a card in a wallet, whether it's a credit card or an air, an airline ticket or whatever it may be. 

[00:21:32] Mark Williamson: That's not a new idea. But what but what we've done is we've we've put a warehouse tools feature in our app. And we have a high percentage of our members are utilizing the digital membership card, and there's a payment is attached like a payment card is attached to that profile. 

[00:21:48] Mark Williamson: So now that we're scanning cards on the way in it's a reason for members to get their digital membership card out. So they have their phone in hand, they have the Costco app up, they're scanning their digital membership card. And then from there we've recently introduced a [00:22:00] warehouse inventory lookup tool, which if you're like me and you've been in the warehouse and who cares? 

[00:22:04] Mark Williamson: Like from a way finding perspective where it is, I just wanna know if it exists, what does it cost and is it in stock? And this has been a very popular feature for our members, is to be able to actually browse. And they do it before the shop, but they also use it within the shop as well. 

[00:22:18] Mark Williamson: And so what we're looking at is there's a utility now within the app. And so we give our members a reason to have the phone in their hand and the Costco app up, which gives us the ability to maybe talk to them a little bit differently. And so whether it's featured products or or surfacing up deals or new items, treasure hunt items that they may wanna be on the lookout for somewhere in their warehouse. 

[00:22:37] Mark Williamson: It gives us the chance to really lean in on that. And we view that definitely as as physical in warehouse retail media, even if it isn't a dedicated piece of hardware or a dedicated sign or something else that we put in there. We like the idea of all of our members coming in with a smartphone. 

[00:22:51] Mark Williamson: We might as well help 'em take advantage of it so that, that's the warehouse mode that we're we're thinking about. 

[00:22:55] Todd: Mark. Another question about retail media and how organizations [00:23:00] structure it. I'm curious Costco's perspective on it. One of the things that, you know as we talk to different retailers is retail media something unique and separate from, let's say, digital or the merchandising team? Or is it one of the same? 

[00:23:10] Todd: For instance, best Buy recently has merged the selling of retail media and trade. So merchandisers are, potentially selling both or what have you. And I'm curious to hear how Costco thinks about it. You come across as someone who's maybe more product oriented, like my job's to build a platform. 

[00:23:24] Todd: It's not necessarily to sell ads, it's about how do I build, the tools that can be used by the organization as well. And I think one of the things that, that. As maybe a follow-up is maybe the right lens between merchandising and RMN teams is endemic versus non-endemic, maybe merchandisers control, endemic relationships. 

[00:23:41] Todd: And RMN is really about non-endemic, but they're running across kind of a unified platform of what is quote unquote media inside, the retail environment. So I'm curious to hear how Costco thinks about that and your role, as the RMN team within Costco. 

[00:23:56] Mark Williamson: Yeah, so I I can argue both sides of this 'cause, and I've heard both [00:24:00] sides argued where, is it retailer or is it media? And yes it's both. But this is where, going to my, back to my first answer, which was, retailers will always be retailers first. And maybe there's some exceptions from some digital natives who have popped up in the last five years. 

[00:24:13] Mark Williamson: But like we will always be retailers to our core, which means the merchants. Are still the center of our universe. And and regardless of the source of funding. And so increasingly we're working more with brands directly and with agencies directly. It is changing the nature of the relationship a little bit. 

[00:24:28] Mark Williamson: But what happens is we end up in conversations where a brand definitely is interested in activating against a Costco audience. Their client has asked them to drive sales. At Costco, we fit their core demographic, whatever it may be like it's. It's easy enough to get that conversation to drive that, but then but it would be a dereliction of duty for us to just have an isolated relationship or transaction with an agency, even if everything works perfectly fine. 

[00:24:54] Mark Williamson: We are accountable back to our merchandising organization and this is where we go. Like our number one KPI is top line [00:25:00] sales. So I can say, Hey, we made a million dollars over here on this one cam on this one effort. I would expect our chief merchant to come to me and say, okay, so somebody invested money. 

[00:25:10] Mark Williamson: What did it do? What did it deliver? And just me telling how much of that we kept as profit margin is not gonna be a good answer. It needs to be. There was a million dollars of working media and it had a, on average of five to one return on ad spend. So you saw 5 million of top line sales attributed to the media campaigns that we ran. 

[00:25:25] Mark Williamson: And so at the end of the day, everything flows back into merchandising. The question comes down from a fundraising perspective, is the merchant, the face of the ask. Or is the retail media team the face of the ask? And that's where I think I think every retailer kinda has to figure out in their ways of working what's the best opportunity here? 

[00:25:40] Mark Williamson: And maybe you can try to do both. I, this is where I see my view as a retail media GM is to figure out how do we go to market in multi, in a multitude of ways. Because if we try to force agencies through a merchant conversation, it would be the end of the conversation. It would ne it would we would fail miserably. 

[00:25:56] Mark Williamson: But if we try to, if we try to treat, every supplier, like they [00:26:00] were an agency, we would also fail. And so what we've been really focusing on, so we put a, like our version of an account management team, we call 'em our growth team. And so it's our largest team and it's our fastest growing team, and we have growth managers and growth coordinators. 

[00:26:12] Mark Williamson: They're aligned to a merchandising vehicle, so they're accountable to a VP of merchandising and to all the buying teams within that vertical, within those departments. So whether an opportunity comes via merchant directly. And a lot of it, a lot of our demand still comes via merchandising. 

[00:26:25] Mark Williamson: That's just the relationship we have with our suppliers. So whether it comes through them, if it comes directly through one of our growth managers who's working their relationships, maybe with a shopper marketing agency or with a supplier team, or it comes via one of our DSP partners. And it's an agency trying to buy from trade desk. 

[00:26:40] Mark Williamson: We have a growth manager that is the connective tissue between all of those different forms of of activation. And they're accountable back to the merchant at minimum to keep 'em aware. One of our biggest issues, like we could, we may run tight on inventory, we may not be in a position to take more demand, and so we align before anything happens. 

[00:26:57] Mark Williamson: We align with the buying team to say, Hey, are you good with the [00:27:00] supplier? Are you good with this item? Are you good on supply? And then we walk 'em through what the plan is like. Like we don't over involve them in the process ' cause that would be a bad use of their time. But we do wanna make sure that they are consulted on the front end and that they're aware of what happens on the back end Over time. 

[00:27:14] Mark Williamson: Like I really view our growth team as the, as the marketing arm of merchandising. To where they do what they do best. They go source great items and they squeeze as much cost out of that item as possible. So we can offer to our members at the lowest possible price, but then we, they use our team as more or less their, their marketing arm to drive trial to drive awareness, drive trial, and then drive, repeat, purchase, or go after go after those more surgical strikes, like lapsed users or lap users that look like maybe they're. 

[00:27:43] Mark Williamson: Their purchase patterns are starting to change, or we may be bleeding them to other other retailers. That's the thing. Like they don't have that time or the expertise to do that kind of that kind of marketing. But that's where I really wanna view us as that strategic partner of theirs. So you guys buy, you buy great items, make sure it's a great price. 

[00:27:58] Mark Williamson: We'll go help tell the story [00:28:00] in partnership with suppliers, brands, and agencies. Short answer to your question there's no way around the merchants I, and especially here. 

[00:28:07] Todd: I think you actually, it's a great that was super fascinating because I think that's one of the biggest questions that we see across the landscape is what's the right organizational structure, where does retail media fit in? And I think that's what a lot of retailers are starting to wonder and question, like what's the best thing? 

[00:28:21] Todd: It's interesting. Another comment that you've brought up again multiple times that I think is really fascinating, which is our job is to drive top line sales. Whereas a lot of retail media teams, it's about capturing margin. It's about. The media dollars. It's about anything but that. And I think, therefore you are, by starting that way to exactly what you said, you're aligned with the merchandise team on day one. 

[00:28:42] Todd: It's not like they have a goal and you have a goal and you're competing at loggerheads to an extent. And I think that's an interesting aspect to where a lot of retailers are struggling a bit to, how do I structure this correctly? How do I make sure there's not conflict? And it's interesting in terms of the judge, the success has been.[00:29:00]  

[00:29:00] Todd: Mainly this, are you hitting 1% of GMV as media dollars versus you don't, you're not even bothered with that. You're just, am I helping drive? Top line revenue and we're another pathway to help that. And maybe reaching a different audience that can le like you're talking about agencies as a non-endemic audience for merchandisers as an example to my endemic versus non-endemic comment. 

[00:29:18] Todd: But I think it's super fascinating because I think the lesson there of are you all aligned to the same North Star or not? And maybe that's part of the root of the conflict that we've heard about from other organizations and how they try to build retail media out. 

[00:29:31] Mark Williamson: Yeah, no, a hundred percent agree with that. And I don't know if there's a silver bullet here at all because this idea like, and I've definitely been involved in the, 1% of sales or whatever it may be. I think there's some merit to that. There may be some best practices or some benchmarking that says our most healthy suppliers are reinvesting X percent of GMV in, in marketing. 

[00:29:49] Mark Williamson: There's prob there's some efficiency or best practices within that. But you're exactly right though. Like it's been said the beauty of retail media is that everyone involved has the same desired [00:30:00] outcome, we think, and as long as we keep that true. The one thing that we all have in common, the retail media team, the merchandisers, the operators, accounting, finance, whoever, like the, whoever it is. 

[00:30:12] Mark Williamson: We all want the same thing. We run into some issues, like if an agency, maybe their number one KPI is roas which may or may not translate exactly to top line sales, or maybe it's not as clear or maybe they're trying to hit a CPM target. But like, where I think where retailers get up get sideways in this conversation is if you're trying to hit a margin target. 

[00:30:27] Mark Williamson: 'cause then you start, it, it impacts your rate card or maybe you emphasize one channel over another channel. And so you may try to skew more media into your higher margin channel. When in fact, the better opportunity is some other channel that may be lower margin. And so this is a bit of a change for us, especially as we go into digital media spaces that we don't own, which means that there's a lot of cost associated with that. 

[00:30:50] Mark Williamson: But what we wanna be able to say is what, like we wanna say if Supplier X invests $500,000 in working media. What did it do? What needs to be [00:31:00] done to drive the most growth? And it may be within our own operated properties, it may not. And I think like even just understanding the impact of each channel versus each other becomes absolutely essential. 

[00:31:11] Mark Williamson: And the good news is that with Costco, we have a strong foundation. We know what an end cap delivers, we know what our front end fence delivers. We know what our multi-vendor mailer program delivers. And we have a pretty good idea of what our website delivers. And so like we, we have a good baseline to grow off of. 

[00:31:25] Mark Williamson: So if someone says Hey I've got a hundred thousand dollars, what should I do with it? First? I'm like have you tried to get an end cap? Because those work pretty well. Have you tried sampling? 'cause that works pretty well.  

[00:31:33] Tom: I wanted to get to the role of competition because if you add, and I was really excited when you started to have the Storetail / Criteo ads where there's display next to sponsored search, because if that starts to work well. You start to get people like my wife, wondering whether or not we should buy five pounds of mayonnaise or 40 pounds or whatever, whatever. 

[00:31:51] Tom: That crazy example you shared on LinkedIn was. But I feel like it's share of car. Like it's not just share of wallet, it's what can we fit in the car? And if mayonnaise [00:32:00] gets in there first before, some air conditioner or whatever, like how is competition really working at Costco .  

[00:32:06] Mark Williamson: In terms of like competition, like one of our items against another one of our items, like  

[00:32:11] Tom: It should be like not only does the treasure hunt get you to buy random things, but you could potentially get people excited about buying something and push something else out. 

[00:32:20] Mark Williamson: Yeah, it, there is, whether it's share of cart, share of car share of wallet, like there is this, there's always this this unexpected find and this unplanned purchase or multiple unplanned purchases. But yeah I think this idea of, I. Of, whether it's maintain share of voice or share of attention or whatever it may be. 

[00:32:38] Mark Williamson: Or even just and I think the way that we need to position retail media is like, how do you get on the list before the trip? So knowing that there's going to be an impulse purchase, how do you not be an impulse purchase? You're yes, you're impulse, but you're a planned impulse, or whatever it may be. 

[00:32:51] Mark Williamson: There there's something to that. I think like for us, it's, we look at it and the value of having upper funnel and mid funnel awareness media paired with conversion [00:33:00] media. The real power in that is like driving maybe like usage occasions or whatever it may be. 

[00:33:05] Mark Williamson: So if you have more mayonnaise than you normally buy, what could you possibly do with it to justify that? And that takes storytelling. It does. It doesn't matter on a per unit basis or per ounce basis. Yeah, it's a great. Price, but what would I possibly do with it before it was bad or whatever. 

[00:33:20] Mark Williamson: And I think that's the idea is just inspiring inspiring use occasions or inspiring desire. Like my wife just, she's at the warehouse earlier today and she sent me a picture of a kayak and and she's in a smaller car and she's okay, so you're going to like, like this weekend, go get him. 

[00:33:35] Mark Williamson: Like it won't be here this weekend. And so I think that's a big part of, it's it's share of time, share of whatever it may be is like it, that's really how Costco works. If you see it, you buy it. 'cause if it's not there, it's gonna be gone. And I think can we feed into that as much as possible? 

[00:33:47] Mark Williamson: And yet, like for the media publisher competition's great. It drives up CPCs and all that kinda stuff. But more importantly though. Can we fuel the excitement that is shopping Costco? Can we replicate that more effectively on our website [00:34:00] or in the open web or wherever it may be? So that's the, that's really the, I think the energy that we're going for is there's, I think there's always gonna be that competition, but what role we play and I guess it's TBD. 

[00:34:10] Tom: Thank you. That was a great episode. And keep in touch on this 'cause we want to keep this, the conversation going about in store and Costco, so thank you. 

[00:34:18] Mark Williamson: Yeah, likewise. Take care.  

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