This story originally appeared in the May 2019 issue of strategy.

Loblaw recently revealed it’s testing a digital ad service with a small group selected from the 18 million members of its PC Optimum loyalty program. Data collected from the program is used to target the group with ads featuring vendor brands, across publisher sites and social networks, in exchange for extra rewards points.

One of the pilot’s most enticing elements is that it uses first-party data that reflects customer purchase behaviour. This allows for direct attribution for online and offline sales and more accurate targeting than what’s provided by third-party cookie or social data.

While some are comparing the pilot to media offerings from Target, Walmart and Amazon, Jason Dubroy, VP and managing director of TracyLocke, sees similarities to Kroger’s strategy. The U.S. grocery chain’s two-year-old Precision Marketing offers co-branded ads, search, creative, targeted coupons, editorial products, a deep analytics engine, in-store sampling and events – all driven by loyalty data.

“It has changed the game, much more than Target and Walmart,” Dubroy says. “Kroger has migrated in-store and online media into one closed loop ecosystem, which is a term you’re going to be hearing a lot. It’s a continuous reinforcement of the retailer brand that allows vendors to participate in that brand narrative and captures more shopping by rewarding customers who are in that loop.”

The pilot on its own has a value proposition that’s attractive for brands in the broader PC Optimum program, and it goes beyond targeting.

Dubroy points out that if a consumer is a loyal Loblaw shopper, a brand that is part of the retailer’s narrative is being optimized to the consumer’s preferences. Plus, insights from first-party loyalty data could lead to more relevant creative, especially if ads go beyond the typical discounts consumers already get from other sources.

“If content is king, context is God,” Dubroy says, referring to a line by Gary Vaynerchuk. “Context means personalization, which makes shoppers say: ‘Hey, you thought about what I need based on what you know I like.’ Canadians tend to like that.”