Dive Brief:

• Macy's in August launched a media network that looks to generate an additional source of income for the department store retailer by selling ads to brands, executives said on a call discussing fourth-quarter results with analysts, a transcript of which was provided by Seeking Alpha.
• The Macy's Media Network has already brought in more than $35 million. Speaking to analysts, chief executive Jeff Gennette billed the service as "a new fashion and beauty publishing model."  An in-house advertising team runs the platform, which offers formats like sponsored product, website display and physical media ads, a spokesperson told Ad Age.
• Macy's Media Network combines the company's existing loyalty capabilities through its Star Rewards Loyalty program with digital advertising, a strategy that falls in line with how other retailers are trying to capitalize on the marketing gold rush for first-party shopper data.

Dive Insight:

Macy's, embattled for years amid a consumer shift to e-commerce, has identified a new way to buoy its business with advertising sales. The Macy's Media Network debuted last year to little fanfare but is already pulling in tens of millions of dollars for the retailer. That's small peanuts compared to the amount of spend commanded by platforms like Google and Amazon, but a potentially meaningful boost for the 162-year-old department store retailer, which is in the midst of an ambitious turnaround plan that puts a premium on digital services. 

"This venture has already grown to generate more than $35 million annually as a new income stream," Gennette said on the call with analysts. "Looking ahead, we see a lot of promise in our ability to expand our monetization engine, while cultivating greater customer engagement with more relevant and personalized content and offers."

Macy's joins a number of brick-and-mortar retailers, including Walmart, Target, Kroger, CVS and Walgreens, that are trying to convert troves of first-party shopper data into a draw for brand dollars. Like others in the category, Macy's is positioning its data as a way to reach consumers both online and in-store, creating an omnichannel experience that digital disruptors would struggle to match.

On its website, Macy's says the Macy's Media Network can create a "closed-loop analysis" that "won't give up until the ads work as hard as they can to generate online & in-store sales for your business." The media network appears to be angling for just a handful of categories, particularly beauty and fashion, giving it a narrower focus than other retailers' ad sales efforts.

Last February, Macy's introduced a "Polaris" turnaround plan that has seen the company shutter dozens of stores while directing more investments to digital channels. The coronavirus pandemic has amplified pressures on physical retail operations, but Macy's Q4 results indicated the company has been resilient in some areas. Macy's recorded its first quarterly profit in a year, per CNBC, while same-store sales still fell 17% year-on-year for the period. However, e-commerce sales were up 21% YoY, helping to bolster business around the key holiday season.