Since retail media network UB Media launched in May 2022, the company has secured 300 brand partners and increased brand investment by 35% annually. Now, the beauty giant is partnering with e-commerce technology company Rokt to introduce AI non-specific advertising, allowing companies like Hulu and PayPal to surface relevant offers to Ulta’s 42 million loyalty members while they browse. There is. Non-specific ads are not directly related to the host platform’s products or services, allowing advertisers to reach audiences outside of their usual categories.
Rokt’s AI-driven system aims to make ads feel less like traditional ads and more like a curated and rewarding experience for Ulta shoppers, said Rokt’s vice president of retail partnerships. said Laura Cosgrove.
UB Media offers a variety of advertising placements across digital and in-store channels. These include display ads on Ulta’s websites, app placements, and off-site media. Shoppers may encounter ads from Ulta or its partner brands while streaming content on streaming platforms, for example, as part of targeted advertising powered by Ulta’s first-party shopper data. Ads are selected by AI, so customers who don’t want to see irrelevant ads aren’t targeted, at least in theory.
“In some cases, Rokt’s AI may decide not to show you any ads at all,” she said. “Instead, it may drive adoption of strategic first-party initiatives, such as installing the Ulta app, booking a beauty service, or signing up for Ulta Beauty Rewards. This technology will help customers take advantage of it. We compare the value delivered by these efforts to advertising revenue based on their potential.”
With the evolution of its retail media network, Ulta aims to gain an edge over its competitors. Target was one of the first companies to launch a retail media network with Roundel in 2016, and expanded its range of partners beyond its own brands in 2019. Meanwhile, Sephora has launched “Sephora Media” in the spring of 2022. RMN leverages influencer marketing, display advertising, and audience targeting to increase brand visibility and voice share. Sephora plans to expand its media offering over the next 12 months and may invest in more comprehensive solutions to enhance its existing capabilities, according to industry insiders.
Retail media networks often give brands access to data beyond impressions and expected sales growth. So you can more easily track the impact of changes in your ad spend and leverage A/B testing to optimize clicks and sales. You can then make strategic budget decisions accordingly.
According to research firm eMarketer, retail media networks are expected to be worth $166 billion by 2025, accounting for 20% of all digital media spending this year.
Ulta and Rokt’s partnership aims to create what Brandi Pitts, Ulta’s senior vice president of marketing and media, calls “an enhanced and relevant end-to-end experience” for consumers. . The company declined to say how much it is investing in the retail media network.
For the first six months of this year, Ulta Beauty’s net sales increased 2.2% to $5.3 billion, compared with a comparable sales increase of 0.2% as reported in September. Because of the weaker-than-expected results, Ulta revised its full-year guidance and now expects net sales to be between $11 billion and $11.2 billion, with comparable sales down 2%. Despite new store openings in the second quarter, gross profit decreased, and net income and operating income also decreased.
At the company’s investor day on Oct. 16, CEO Dave Kimbell said Alta’s challenges this year are due to several factors. The beauty category has returned to slower growth levels, consumer behavior has become more unpredictable and competition has increased, especially in the prestige space. To address these challenges, Ulta is focusing on new brand partnerships, expanding its loyalty program, and offering personalized promotions. In addition, demographic changes such as increased spending on beauty by men, Gen Z, and Gen Alpha, as well as a growing Hispanic customer base, are expected to drive the company’s long-term growth.
In an industry where impulse purchases account for 85% of online purchases, customized advertising increases customer loyalty while also driving sales and other company priorities.
