Behind Best Buy’s New In-House Ad Venture
Best Buy Ads will help partner brands craft marketing messages in stores, online, and elsewhere. Best Buy Ads

Behind Best Buy’s New In-House Ad Venture

Especially at a time when many consumers have grown weary of advertising, what’s prompting Best Buy to launch its own in-house ad agency?

A longtime electronics retailer. Then, an outdoor furniture seller. Now, an advertising agency?

Richfield-based Best Buy Co. Inc. continues to move beyond its identity as a place for the latest tech gadgets. On Tuesday, the company announced plans to launch a new “in-house media company” known as Best Buy Ads. The company says it will analyze its vast trove of customer data to help other brands personalize ad messages.

To be sure, advertising isn’t exactly a new game for Best Buy: For years, the company has operated a division called Best Buy Media Network, which has created ads for in-store videos and online. Best Buy Ads is essentially a reworking of that network, but with a broader set of services for partner brands.

In a statement, company officials said Best Buy Ads will serve as another revenue stream for the company. According to the Best Buy Ads website, the division will help other companies craft video messages, social media ads, in-store ads, and more.

Best Buy isn’t the only Minnesota-based retailer to chase ad business: Target Corp. has operated an in-house media division known as Roundel since 2019.

What’s prompting these companies to double down on their in-house media efforts? Two words: Data and money.

“With the rise of e-commerce and customer loyalty programs, companies now have massive amounts of data on their customers,” said Steve Knapp, managing director of media and data science at Minneapolis ad agency Colle McVoy. “We know data now plays an increasingly important role in more personalized marketing. Companies are eager to monetize this data, especially those that have tremendous scale like Amazon, Walmart, Target and Best Buy, through selling advertising programs just like traditional media companies.”

Not to mention, in-house ad agencies can help cut down on the costs of hiring an outside agency, Knapp noted. “But that may not always be the case,” he said.

Plus, these days, retail giants like Amazon now essentially view themselves as media companies, Knapp said. They simply want to capitalize on the vast number of customers clicking on their websites and apps each day. “They have the traffic, data, and content to know how, when, and what to sell to consumers,” Knapp said. “And let’s not forget, advertising still works.”

In Knapp’s view, data-based advertising is “here to stay,” even as many consumers grow weary of invasive ad techniques. The key, Knapp said, is transparency, especially as governments around the world tighten regulations on consumer data collection.

“Transparency around data collection is now a mandate and brands must remind consumers the value of using their data,” he said. “Most importantly, research continues to prove that great creative drives more effect on sales than targeting or ad tech.”