Dive Brief:

• CVS Pharmacy is creating a digital advertising network that will let brands place ads on CVS.com and other platforms that use the drugstore chain's data. The CVS Media Exchange will have display and search ad formats, and placements on digital platforms such as Google, Facebook and Instagram, Digiday reported, citing people familiar with the plan.
• The fully managed service will include media placements along with strategy consulting and creative services. The offering also has a dynamic creative platform, a media buyer told Digiday. Dynamic ads automatically combine several creative elements like photos and text to personalize their appearance to target audiences.
• The launch date for the CVS Media Exchange isn't known, but the pharmacy chain has been presenting the platform to media buyers in the past few weeks, Digiday reported. The company also has several related job listings on LinkedIn, including a marketing director.

Dive Insight:

CVS reportedly developing an online advertising network will give marketers a chance to connect with the drugstore chain's online customers when they're most ready to shop. With the coronavirus pandemic forcing millions of homebound consumers to become more reliant on e-commerce, advertisers need to be visible as shoppers search through online stores instead of browsing the aisles of brick-and-mortar stores.

Based on Digiday's reporting, the CVS Media Exchange appears to be quite sophisticated with dynamic advertising that marketers have grown to expect on digital platforms like Facebook and Google, along with newer entrants in audio streaming like iHeartMedia, Pandora and Spotify. Rather than blanketing consumers with the same sales pitch, dynamic ads let marketers set up more personalized marketing messages based on demographic criteria, time of day and even local weather. Like Amazon, CVS has data about its customers, including their shopping histories, that is crucial to ad personalization and targeting.

With the launch of the CVS Media Exchange, the drugstore chain is joining the ranks of retailers that are pitching media buyers on their advertising services, including Amazon, Kroger, Target and Walmart. It's not clear how much advertisers are spending on these ad networks, but the coronavirus pandemic has forced researchers to revise their estimates of media-buying activity amid major disruptions like the suspension of live sporting events and lockdowns on business activity.

Amazon for the past few years has provided some indication of how quickly its ad sales have grown, with a 41% jump to about $4.8 billion in Q4 from a year earlier. The e-commerce giant will provide more recent information when it reports Q1 earnings, as expected next week. However, the pandemic's effects on its sales won't be known until it reports results for the current quarter, the first period that started with lockdowns throughout the U.S.