• by Sarah Mahoney , Staff Writer @mahoney_sarah, April 12, 2023

In the latest sign that companies are changing the way they're going after the explosive growth in retail media, Home Depot has named Melanie Babcock vice president of Retail Media+ and monetization. Formerly the vice president of integrated media, the Home Depot veteran explains what she'll be doing in her new role and what makes the company's retail media business different from the expanding field of competitors.

Retail Insider: Home Depot launched RM+ in 2019, and since then, spending in retail media has soared, led by Amazon. The latest estimate from Insider Intelligence puts the channel at $45 billion this year. What's driving the growth?

Melanie Babcock: Retail media feels like an overnight sensation, [but] we've been at it for about five years now. Our star rose in the last two to three years as suppliers got comfortable with the idea of investing in a retail media network. It's truly a business for us now, with its own P&L, not just another marketing function. I'm honored to lead it.

Retail Insider: What makes Home Depot's take on the business different?

Babcock: That's the right question. Just because a company owns first-party data doesn't mean it is better or special. In our situation, we are not mass retail. Mass retailers have a big wide-open space to define who they are. Our customer is very different. So even though they may be the same person as that mass retailer customer, they use Home Depot differently.

Retail Insider: How so?

Babcock: There are two segments. One is the consumer, who owns a home or rents an apartment, and the other is our contractors. And while we have many iterations within those, each comes to us to solve a problem. Everything starts with a research project. It can require intense research, like a bathroom renovation. But even if it's as simple as, for example, buying a ladder, you want to research it. This is probably the only ladder you're ever going to buy.

Many customers start their research journey on our website or app. That gives us so much information about their intent. For advertisers, that means they have a longer life cycle with the customer. I believe our retail media network will bring our suppliers, including some non-endemic ones, closer to the customer. We know who owns a home, owns a second home, is doing major renovation, and is downsizing. That kind of data is high value.

Retail Insider: Home Depot's sales are roughly 50/50 between the consumer and pro audiences. How does the retail media offer change for those two segments?

Babcock: They've got a very different life cycle of consideration. And even within the pro community, there are different segments. Someone just coming to us for the materials for a day's repair projects has other considerations than someone who owns many apartment buildings. We've spent years investing in our data and our ability to market to these different customers.

Retail Insider: What will change with your new role?

Babcock: A lot. I've had retail media as a part of my responsibilities since it started. Now, with this sole focus, we want to provide the best experience for suppliers. That includes not just the media they buy, but their business. How do we share more customer intent signals? How do we help them be smarter about their customers and their advertising? It's much more of a white glove or a personal relationship with our suppliers. It's not just them buying ads.

Retail Insider: How big can this business be for Home Depot?

Babcock: I can't comment. But we see a very healthy road in front of us.

Retail Insider: What has to happen for the road to stay healthy?

Babcock: While it's exciting because it's relatively new, it's hard. We are building a company inside a retailer with a different business model than retail. So how do we maintain the retail-media vision while still honoring the business we're nested inside?

It's a balance. And it's not just about customer data, although that's what most retail media networks start with. What will keep us winning is the health of our own company. And we need to provide a level of service that is better than what is currently offered in the industry. We want to be their partner, working closely with our merchandising team. That will always be the primary relationship holder.

Retail Insider: With merchandising so important, how does that connect to marketing within the organization? Who is watching to ensure the ad network supports the overall brand?

Babcock: I report to the chief marketing officer. And retail media networks cannot survive if you do not have a healthy brand and a healthy customer. That requires a solid customer experience. In our world, that means having a lot of personalization and a strong customer experience. If you come to me searching for organic mulch and I serve you an unrelated ad, that produces a bad customer experience. So besides working with merchandising team and our CMO, I work closely with the senior vice president of our online business.

We have healthy discussions about where an ad belongs, and in many cases, the answer is no. That harms me, as the retail ad person. But that's okay because it didn't hurt the customer experience or damage the Home Depot brand. Our job is to ensure Home Depot is successful, that our suppliers are successful, and that our customers feel taken care of.