Like most major retailers, CVS Pharmacy has entered the media business with the intent of broadening and deepening consumer engagement, working with CPG companies to better serve shoppers and grow categories, and establishing a new revenue stream. CVS Media Exchange, or CMX, is leading the charge, teaming up with suppliers and developing targeted, omnichannel campaigns — on social media platforms, streaming video providers, CVS-owned properties, and more — to amplify the company’s traditional strengths.
Established in August 2020, CMX has in recent months hit its stride. Headed by vice president and general manager Parbinder Dhariwal, who joined the company in November 2022 after almost four years at Walmart Connect and a quarter century in digital advertising, CMX is beginning to move the needle in front-end product segments across CVS’ 9,000 drug stores and digital platforms.
“If you think about our scale and the way in which we want to connect with consumers within the health vertical, and you think about that connectivity around convenience and the trust that we have with the consumer, CMX was really created in order to enhance that,” said Dhariwal at the Consumer Electronics Show in Las Vegas last month. “As we think about giving consumers more choice, giving consumers access to an awareness of products, that’s really how CMX would predicate. So we’re built upon the ExtraCare loyalty program, which reaches about 74 million consumers right now.
“That level of connectivity and the high-fidelity data it generates gives us a very clear understanding of how consumers are behaving within the front-store environment. Then we need to determine how can we message to them in order to drive more transactions within the CVS ecosystem.”
CMX utilizes a variety of tools to communicate with customers. Paid search and display ad placements are seen by visitors to CVS Pharmacy’s website and app. Targeted messages also reach consumers on such platforms as Facebook, Hulu and The New York Times website.
“We’re able to reach the ExtraCare member in those offsite environments, and do so from a behavioral standpoint, which is very relevant to their experience and shopping behaviors within CVS,” Dhariwal explained. “That messaging is actually co-branded with our supplier’s message as well as the CVS message.
The final weapon in CMX’s arsenal is in-store media. Within CVS Pharmacy’s footprint — which includes at least one location within 10 miles of 85% of the U.S. population — the company operates 1,600 digital video screens and a chainwide audio network that intersperses music and advertising.
All of CMX’s efforts are designed to engage customers and influence purchasing decisions. The hope is that by fostering synergies between the retailer, CPG suppliers and consumers, all three will realize tangible benefits.
“I talk to my team all the time about those three components and how they form three legs of a stool,” said Dhariwal. “Delivering the right message at the right time to consumers — that adds value to their journey at CVS.
“For example, if I’m a consumer and I go onto the CVS website in order to look for shampoo, the brand has an opportunity to surface a particular product that is relevant to that consumer whilst they’re shopping. It’s contextually relevant. We’re delivering them shampoo as they’re searching for shampoo. From a supplier standpoint, the opportunity there is about helping them win or maintain share within a category, and ultimately to grow their business within CVS.
“If we do our job effectively, we have a consumer that is happy because they’re being delivered choice. We have a supplier that is happy because they’re continually growing their share. CVS benefits as a result of that as well because we grow our business. All ships rise together.”
The resources that CMX provides for the retailer’s merchandising team is a potential game changer. The enhanced means of communication enable merchants to call attention to new products and influence shopping patterns.
“We give our merchants an opportunity to think about products that they really believe in and want to drive within category,” said Dhariwal. “We also enable them to think about innovation within the category, and then we bring that innovation to the consumer. Having been in the advertising ecosystem for a long time, retail media really brings that promise to bear.”
As previously noted, a growing number of chains, including several that compete with CVS in health, wellness, beauty and consumables, are now involved in retail media. Despite the increasingly crowded field, Dhariwal is confident that the company’s knowledge about the customer will serve as a differentiator.
“The piece that wraps this all together and proves the efficacy of CMX is the way in which we report results,” he said. “The engagement that we have with the consumer and our understanding of the way in which they make purchases at shelf, that’s our sweet spot, because we have ExtraCare. We understand the consumer, we understand the behavior. We also understand when they’re purchasing — be it digitally or in-store. At scale is a very, very exciting value proposition.”