Costco is getting into the ad business to keep up with Walmart and Target

Costco Wholesale is working to turn all the shopping data it collects into an advertising machine. The retailer aims to strike a deal with an ad-tech firm to ultimately charge advertisers to reach millions of its paying members, said Mark Williamson, Costco’s assistant vice president of retail media

Williamson told Marketing Brew that Costco is currently using audience data on its more than 70 million members to run beta tests. The tests are intended to reach users when they surf other websites, he said, adding that Costco will look to use the strategy on its own site later on.

The third largest U.S. retailer hasn’t decided on which advertising company it plans to work with yet, Williamson said, but it is considering offers. That could be a bold move for the company, which has been known to operate without a public relations team. Even if it is a little late to the advertising party, Costco could be making the move in an effort to keep up with its immediate rivals, such as Target and Walmart, each of which have their own retail media partners.

Should a partnership happen, Williamson said that the retailer can help an advertiser reach a Costco member “in the right context based on past behavior.” That could happen in-store or online, and can be done largely because Costco shoppers must own a membership to purchase items, he added.

Costco’s glossy eyes for retail media were made clear after the company realized it could simultaneously “drive increased value for members,” while “keeping prices low,” Williamson said. The executive said the investment could one day help the company compensate for freight costs and keep its 3 lbs. rotisserie chicken at $5. Its beloved hotdog combo remains unscathed.

Technology (not so much books) will be one of Costco’s key priorities moving forward, Roland M. Vachris, Costco’s chief executive officer said in May during the company’s earnings call, according to FactSet.

Vachris said the company wants to improve member engagement and the relationship it has with shoppers at its brick-and-mortar warehouses, as well as online. He added that technology will also help the company drive a lot more business.

“We see a great opportunity for data. We have expanded our group there. We have a significant program now with retail media and we see some great upside potential,” Vachris said.