Why CVS Is Betting on Its 74 Million Loyalty Program Users to Stand Out in Retail Media

After building his résumé with stints at CBS and Spotify, Parbinder Dhariwal saw the growth opportunity in retail media before it was projected to gobble up $140 billion this year, according to Emarketer.

He headed up beauty for Walmart Connect before becoming vice president and general manager of CVS’ retail media arm, CVS Media Exchange (or CMX) in 2022. ADWEEK sat down with Dhariwal to discuss how the pharmacy chain is building a retail media business into a 61-year-old retailer.

This interview has been condensed and edited.

ADWEEK: How is the retail media network driving growth for CVS?

Parbinder Dhariwal: We don’t break out the revenue for CMX. That’s not to say that we won’t in the future. CMX drives consumer engagement and that drives growth—it drives footfall and incremental growth for products and brands.

A retail media network, done in the right way, should be a mechanism to engage consumers and enable them to discover products that they wouldn’t have discovered otherwise. We constantly see that within the CVS environment. People go, “Oh, I didn’t know you carried that brand at CVS.” You discover that when you’re in the physical stores. We’re trying to bring that level of discoverability to consumers in the digital environment as well.

We’re built on a loyalty program [ExtraCare] that understands the consumer as they move from physical to digital to physical, wherever they start and end their journey. There are 74 million ExtraCare consumers that we’re working with on a day-to-day basis. What we’re looking at is understanding consumer behavior and how they’re interacting with our brand and purchasing products. And then, how do we drive growth for that brand? And how do we drive brand switching for that brand based on the attributes and understanding that we have of that consumer across the categories within which we operate, which are beauty, personal care, health, wellness and general merchandise?

We’ve heard a lot about the internal challenges that retailers face when building out a retail media business because the goals of the RMN can sometimes conflict with—and overlap with—the merchandising and sales teams. How is CVS navigating those organizational challenges?

I don’t believe any retailer has fully figured it out. We’re still working hard to make sure there is consistency, collaboration, and a cohesive way to keep the consumer at the center of everything that we do. It’s not easy setting up a retail media network. You have to have a robust data set, and we have that with ExtraCare. We also need strong alignment across the leadership team, which I have both within my leadership team and within the merchant organization.

There are three legs of the stool to make a retail media network incredibly powerful: it’s working in conjunction with the merchant organization, in conjunction with the marketing organization, and having those things working in tandem to drive great experiences for the consumer.

As retail media networks get more sophisticated, you’re going to see that moving outside of traditional trade funds and into brand dollars. As cookies start to deprecate, you’re going to see us supporting brands to help them understand what’s happening from a consumer standpoint.

People often talk about retail media “collapsing the marketing funnel.” And while that’s a buzzy statement, it poses measurement challenges. How is CVS approaching measurement and metrics to ensure that you have the right tools for advertisers?

I’d go as bold as saying it’s already collapsed. We are right next to the consumer. Measurement is really important to us as we go through that process and continue to collapse the funnel.

Transparency is a really important part of what we stand for at CMX. We were one of the first retail media networks and the first health and wellness retail media network to implement the IAB standards, four weeks after they were published. We implemented high standards around the practices of showing match rates and making a lot of the metrics visible to our suppliers.

Earlier this year, we launched Pinterest as a platform. When we see an ExtraCare consumer on Pinterest and they click on or engage with an ad and then come back into the CVS ecosystem, how do we measure that? You’re going to see more partnerships in the marketplace to drive transparency around how dollars are being spent.

How is CVS working to differentiate itself in an increasingly crowded RMN landscape?

Differentiation for us will come consistently in the loyalty program because of what we have access to. We have that at scale through CVS pharmacy, which is 9,000 locations and 5 million people engaging with those locations every single day, and a pretty significant footprint when it comes to CVS.com.

We launched self-serve [ads] with The Trade Desk. We’ll go into a closed beta environment with a certain number of suppliers very shortly.

Transparency is a differentiator for us that we will continue to provide the market—whether it’s how we’re targeting, which sites we’re using, how we’re building measurement solutions, how we’re driving incrementality metrics for our suppliers and so on. There are 200-plus retail media networks. We want to capitalize within the categories that we operate with given our breadth and trust in our brand.

How is CVS investing in in-store ad placements?

It’s an ongoing build. Last year, we put in probably close to 2,000 screens at the pharmacy counter. Select stores will continue to build upon that in 2025.

There’s a three-minute-plus dwell time at that pharmacy counter that gives us the ability to put CPG advertising or beauty advertising while a consumer is there waiting for that prescription. How do you think about moving that consumer through to other parts of the store and other parts of the aisle? How do we add value to that consumer journey?

We have audio in all of our locations. We’re looking at bringing that to market in a programmatic environment, and there are innovations that we will look at.

We see the store footprint as an important part of how the consumer shops omnichannel.

In-store is a brilliant, enormous canvas for us to think more creatively about how to bring brands in. We’ve got to be careful and selective about how we use the environment, but it’s the creative part of our role as a retail media network to bring the store to life.