After more than three years in development, Best Buy has launched the Best Buy Ads retail media network in Canada this week.

Best Buy has always had what might be consider a “traditional” retail media program with things like co-op, partner and shopper marketing, but the new Best Buy Ads has been transformed into a modern retail media network with a full range of ad formats available via direct and programmatic buys. These include search ads, sponsored content and brands, display ads onsite and off, content ads, brand experiences and social videos, in-store video and signage, email and direct mail.

The retailer’s evolution began at the end of 2019 as part of the industry shift to digital. It also came with changes Best Buy made to its own media spend when it discontinued print, flyer and digital advertising, a decision made after it realized its most effective ad venue was its own website.

Tara Wilkinson, director of retail media and marketing at Best Buy, says the timing was extremely fortuitous because, in 2020, Best Buy’s web traffic exploded. She says it took three years to get to the point where the company really felt comfortable with its offering to launch.

“We had to learn how to be an ad network,” she says. “That was not in our DNA. We’re great at retail marketing, but ad networking is a completely different skill set. We had to learn what products perform well, what ad formats work, what page types, what positions within the page, and all of the programmatic landscape.”

Since July 2022, advertisers that have been using Best Buy Ads in Canada on an invitation basis have seen, on average, a 55% lift in conversion rates, an 85% lift in cart additions per visit and close to 10-time lift in internal search for the brand during its campaign period.

Wilkinson says that for sponsored products, advertisers are seeing an average campaign return on ad spend of 1,200%. Sponsored Products is a foundational retail media product that brands love because they can tie ad spend directly to sales and get rich SKU-level reporting that helps them optimize their content and pricing.

Best Buy customers are now making an average of one in three of their purchases online. Its website and app combined receive approximately 300 million visits per year and have 4.5 million unique email subscribers. Best Buy’s 160 Canadian retail stores welcome over 50 million visitors each year.

Wilkinson says Best Buy Ads works with four different types of clients. The first is its vendors, the major technology and appliance brands it sells in stores and on its website. “They are all leveraging Best Buy Ads in some form. Some of the brands that have very sophisticated digital marketing teams or agencies, like Google, Microsoft, Asus and Intel, are also buying programmatically or, in some cases, they’re buying through agencies for their brand campaigns.”

The second type of client are the third-party sellers on its marketplace platform. They are typically much smaller clients and use a self-serve advertising platform specifically for sellers. The third type is complementary brands that might not sell technology products, but still want to target the technology lovers that shop at Best Buy. They include early adopters, highly educated and high spenders that also over index on specific interests such sports, cars, travel, food and gaming. Other segments that are a strong fit for its customer base are banking and some luxury brands.

The fourth type of client is advertising agencies, typically working on behalf of top tier brands to manage national brand campaigns.

“I think our value proposition is really centered around technology enthusiasts, and the ability to advertise in the moments that most influenced their purchase decisions,” Wilkinson says. “That is really the exciting part of retail media that you’re able to advertise when somebody is in an active shopping mindset. Technology is at the center of nearly everything we do and it’s safe to say that no one knows consumer technology and has deeper relationships with those who buy it like Best Buy Canada does. It’s part of our mission to become Canada’s top ad network specifically for technology enthusiasts.”

Retail media networks are gaining traction in the industry. GroupM estimated that retailers globally earned $88 billion USD in revenue from selling ads last year, a number it expects to reach $101 billion USD this year – roughly 18% of digital advertising and 11% of all advertising. It further predicted that retail media advertising will grow by about 60% by 2027, exceeding that of all digital advertising

Wilkinson believes there are converging trends contributing to this growth. Number one is the shift to digital and changing habits for consuming new entertainment and second is the rise in online shopping accelerated by the pandemic. The third is the increasing privacy regulations in Canada and the deprecation of cookies, which is leading advertisers to turn to retailers who have rich first party data that can be tapped in a privacy safe way. The fourth trend is the development of powerful retail media platforms that are rebalancing how people spend, and how advertisers spend.