Chewy Ads vs. Retail Media’s Data Hoarders: Why Transparency Wins in Retail Media

Chewy Ads: Data, Transparency, and Barbell Strategy === Kiri Masters: Frank Mulcahy is a Boston guy, and in the world he came up in, that meant defining yourself against New York. Frank spent the early two thousands running sales offices in a market that always felt like the smaller sibling to the one down the Acela line, the bigger, louder city whose reps would come up for every industry mixer and try and mug the local agency heads for their time. The Boston response, he tells me, was a posture.

We'll do this our way on the strength of relationships with a little chip on the shoulder. Frank says he hears an echo of the same thing in retail media today. One company sets the terms for everyone else, the nine hundred-pound gorilla whose playbook the rest of the industry can either copy or quietly resent, and the interesting players are the ones deciding to build something of their own instead. Frank Mulcahy is the head of Chewy Ads, the pet retailer's media network, and he is firmly in the build it our own way camp.

And just like the face-off between Boston and New York, he has strong views about the right way to do retail media. ~This episode is based on an article that first run...~ ~This episode is based on a... ~This episode is based on an article that first ran in my column for The Drum named Chewy's Ad Boss Thinks the Data Hoarders Have It Backwards.

Let's jump in Kiri Masters: Frank spent nearly two decades in digital ad sales at Lycos, Yahoo, Microsoft, a stretch standing up Apple's iAd business in New England before he crossed into retail at Wayfair in twenty sixteen, where he was recruited to build a retail media network from scratch there. after Wayfair, he spent a stretch at Mi- After Wayfair, he spent a stretch at Microsoft's PromoteIQ, selling retail media technology to other networks before landing at Chewy in twenty twenty-two.

Now, that seat at PromoteIQ, talking to the top retail media networks from the vendor side of the table is where his core conviction hardened. " It was as clear as day who got it and who didn't," he says. What separated the wheat from the chaff in his telling wasn't budget or scale, it was where leaders came from. Leaders who came up through advertising understood data sharing and transparency as the water that the industry swims in.

The ones who came up through retail often didn't, and that is why he argues so many networks still treat first-party data like something to be held under lock and key So there are two camps, two philosophies that we're gonna talk about today. is medi- Is retail media retail first or is it media first? Those are the two camps and both sides have a case. One camp holds that retail media is retail first.

The media business and the retail business are inseparable but the media ultimately has no value without the retail strength underneath it, the assortment, the customer base, the relationship, really the reason why anyone shows up. Mark Williamson, who runs retail media at Costco, said in a recent interview with The Drum that Costco existed before retail media and it would still exist without retail media. And retail media is, in his framing, something that should accelerate the retail flywheel that already works And he says explicitly, "We're not trying to build a media business, we're trying to make the membership more valuable."

Now, Frank Mulcahy's stated ambition is almost a direct rebuttal to that philosophy. He wants Chewy to be the biggest and most effective pet media company, not just a retailer with an ad business bolted on, but a media business that happens to be born from a retailer's data. In his view, a network should behave like a media company. It should share data, adopt standards, treat advertisers as partners rather than captive spenders.

And his own favorite framing of why this is the right read is something that he credits to Brian Monahan, the Albertsons Media Collective leader. And Brian says, "Retail media is the first time in advertising history that the publisher and the advertiser actually want the same thing. They both wanna sell more widgets." If we compare this to other media formats like television, you're trying to optimize for gross rating points, which measure the total volume of an advertising campaign's delivery.

In social advertising, you're chasing more clicks to feed the algorithm. But in retail media, according to Frank, the retailer and the advertiser both wanna sell more widgets. And if those goals are genuinely aligned, hoarding data from the people that you're aligned with is self-defeating. And to Frank, it's mostly a tell that someone came up in retail and never internalized how digital advertising actually is bought and sold The rules of retail media are being rewritten.

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He's describing a member first network that is transparent about being member first, and they are making a coherent choice about their value proposition rather than guarding a vault. The instinct that Frank Mulcahy is criticizing is something else. And in conversations across retailers and vendors serving them, I hear things like, if you give an advertiser genuine transparency, they might not like what they find. The incrementality numbers might not be very flattering.

And worse, a brand that truly understands what it's getting from one network can use that knowledge to negotiate harder with every other one or move the money where it performs better. Opacity protects the retailer from being measured honestly by the people actually paying for media, which is exactly what Frank Mulcahy is needling when he says the lack of data assumes bad data. If your numbers were any good, you would be happily happy to show them I'm gonna skip forward a little bit just to make sure that we cover off one important thing in our 10 minutes today, which is what Frank calls a barbell strategy around their advertising technology.

Back in March, Chewy launched three new products, one called Chewy Max, which is an objective-based buying tool, Chewy Marketing Cloud, and native incrementality measurement. And I really wanted to ask Frank about Chewy Max because I hear from brands and agencies that not everyone is a fan of these objective-based buying models. They consider them to be a black box And in fact, I ran a poll on LinkedIn a few weeks ago asking media buyers what their attitude was towards objective-based ad buying.

the findings were pretty interesting. Actually, nearly 80% of respondents said either they were interested in objective-based media buying if it was transparent, and they were skeptical, they want control, versus only about 10% on either side who said, "Yes, bring it on. I w- I want to use this," or having a hard pass against that concept. And so this overwhelming middle ground shows the same instinct.

Media buyers are open to it if they can see what is under the hood first, and Frank agrees with the notion that not everyone wants a P Max style black box automation. He agrees with that. So the tool itself sits alongside manual levers that can be used by more sophisticated media buyers with an algorithmic model that is available for smaller brands or those without media buying teams to give them a little bit clearer and better access to these tools than they'd otherwise be able to manage on their own So wrapping up here, this question of identity, whether retail media is retailer first or media first, is one that we could argue about over a drink.

The harder one, and the one that this barbell approach is actually trying to answer, is whether you'll let advertisers see what they're buying. And this is where the Chewy strategy stops being a philosophy and it becomes a bet. The bet on the clean room, the optional automation, reporting IROAS and direct ROAS side by side instead of only showing the most flattering number. None of that works unless the underlying performance can survive being looked at.

Sharing data is a bet. It's a bet that Chewy's numbers are gonna hold up. My poll suggests that this is the right bet. This is a crowd that wants to see what is under the hood first.

And the retailers that treat first-party data like a vault are in effect betting that their numbers can't take the scrutiny, and they're telling their customers exactly that. Frank Mulcahy is betting the opposite, and we'll find out who's right when the buyers either stay or walk.