• by Sarah Mahoney , Staff Writer @mahoney_sarah, January 10, 2024

With retail ad networks now numbering in the hundreds, the Home Depot is intensifying efforts to find a niche of its own. For Melanie Babcock, the company’s vice president of retail media and monetization, that’s meant turning her fast-growing team into experts on differentiation. She tells Retail Insider what’s on her mind.

Retail Insider: You’ve been in this role for almost a year. What’s changed most?

Melanie Babcock: The challenge is how to continue to grow and offer value to customers. How do you make advertisers, who we call suppliers, say, 'This continues to be a place where I choose to put my money’? What value do you provide beyond advertising? That means we’ve got to know customers better. We’re at an inflection point. While everyone struggles with standardization, the question is how to differentiate ourselves.

Retail Insider: What does advertising on the Home Depot give those companies now, beyond eyeballs on a page?

Babcock: Eyeballs and conversions are table stakes at this point. We also keep them connected to Home Depot's business. They need confidence that Home Depot is a growing company relevant to customers.

We’re unlike a traditional media company. There's a whole other side to this relationship. It’s bigger. A brand derives value just by being connected to the Home Depot, so suppliers succeed when we succeed. They need to know how we, as a company, maintain relevance in a consumer's mind. How are we connecting with the next generation of homeowners? How are we developing capabilities to support customer relationships?

That means working closely with our chief marketing officer, connecting creative strategies to different channels for our suppliers so they can connect, both with us as marketers and with our customers.

Retail Insider: That works both ways, right? If your brand reflects on advertisers, then their brands reflect on you. Do you have protective guardrails?

Babcock: We are not an open marketplace. I’m not against them, and it’s how some companies are very successful. But our merchandising team has hand-selected every supplier that enters the Home Depot ecosystem. That takes away a lot of risk. If we produce a bad customer experience with poor product quality, that reflects not just on their brand but on our company, too. Those with open marketplaces might argue that you provide value to the customer by increasing the number of selections. But our job is to increase the success of our suppliers, the Home Depot, and our customers.

Retail Insider: What do customers want from ads?

Babcock: Consumers are looking for a variety of content. So we need to think more about how to help our suppliers. Big companies often have wonderful banks of content. But our mid to small suppliers may not have the right video or photographic assets. This is an opportunity for us to help with creative and maybe even storytelling. How can we help with personalization? One person may want a 90-second video to help with a bathroom project. Another needs a longer video tutorial.

Retail Insider: How are you doing that?

Babcock: We used to have a lot of restrictions around accepting supplier creative. We wanted it all to have our look and feel. But we’ve done a lot of testing this [last] year, and now tell suppliers we want their creative. That's been a big relief and increased our speed to market. We have a mechanism to check that they are appropriate and high quality. This has been a massive help to our suppliers. They see it as a big win.

Retail Insider: How’s staffing going?

Babcock: It’s the greatest challenge. We’re at about 350 people now, and we're hiring a lot more next year. Retail media is new, so finding people with experience is hard. We’ve hired strong leaders, some from different retail media networks and also from other parts of the ad industry. We need people who understand the business and the technology stack, with expertise in client-facing roles. Lots of people in ecommerce don’t have that.

Retail Insider: How are you connecting retail media to the in-store experience?

Babcock: That connection is our biggest opportunity for growth. But it is challenging. Our stores are working warehouses. We have forklifts in our aisle. It’s not a high-end shopping experience. We want to produce a customer experience that lets advertising connect the dots. Projects often need multiple products. You can't just buy a can of paint; you need brushes and tape. Or you can't install something without a specific power tool.

We can bring retail media into our store in a way centered on customer experience. And while we don’t have cooler screens, like grocery stores, we have massive traffic. We are charting our own path here, including lots of testing on digital screens.

Retail Insider: How else is Home Depot different?

Babcock: In many stores, including grocery, people are very familiar with what they’re buying. In home improvement, people are researching and checking their app in stores – it’s a natural behavior. Connecting these things is the opportunity for us.