spenders of advertising dollars in the world and the Holy Grail for them has always been how close can I get to
the customer at point of purchase? So traditional advertising channels have always been able to get pretty close
to that Holy Grail, but no one has been able to get as close to the customer as a retailer can.
Prior to Retail Media Networks, vendors invested in digital and social media channels to drive preference with
customers. These were effective, but the connection from vendor to customer conversion was missing. And with
the advent of privacy laws and third-party deprecation looming, advertisers must turn to first-party data, sources of
first-party data in unique customer segments to ensure that their ads are delivered to the right audiences. So,
those that have first-party data, very clear signals and information about their customers will be the winners of ad
spend, and that is The Home Depot.
So take, for example, let's take a customer and we'll call her Grace. As she shops for a washing machine at The
Home Depot's website, we receive a number of signals from her. So we know Grace's brand affinity is for LG.
Last year she purchased an LG. So just imagine if you are LG and you know Grace is at the marketplace for a
new appliance, it is an excellent opportunity to showcase LG's entire assortment of washing machines and serve
her a bundle with a dryer. This is just one example.
We can leverage our trillions of data points that we have with our customers to better target their advertising
dollars to capture the right customers at the right products at the right time. And for our vendors, this results in
double-digit return on ad spend, which is why our vendors are shifting their ad dollars to The Home Depot. These
results explain the power of Retail Media+.
But what is most exciting about what we're building is the flywheel effect around this strategy, coupled with a
robust, interconnected business. So, think about it, the more that we invest in the customer experience, the more
that the customers come, we drive to our sites and to the store, the more this fuels the data that we have on our
customers, which we can then better monetize to drive a better experience, which in turn drives more business to
The Home Depot. It is a model that truly feeds on itself to create a win-win-win for our customers, our partners,
and for The Home Depot.
Another exciting opportunity that allows us to connect with our Pro customers in a unique way is our loyalty
program. So when you think about a loyalty program, whatever business you're in, what you're trying to do is
create a connection in a meaningful way with your customers in a way that helps them realize that the more they
spend with you, they will get more benefits, but also in a way that creates connectivity to the business, to the
brand, and to the people. And that is how we view and approach our loyalty program.
Late last year, we made some meaningful and significant changes for our customers. So in the past, we treated
most of our Pros essentially the same. We didn't reward our best customers for engaging more with us and
spending more with us. But today, our Pro Xtra program has a tiered membership that formally recognizes and
rewards all of our Pro customers, both big and small, in ways that are meaningful to each of them. The tiered
approach transparently outlines the benefits of being a loyal Home Depot Pro, while also encouraging our Pros to
increase their spend with us to maintain or unlock new elevated services.
One of the key differentiators in our Pro Xtra loyalty program is the preferred pricing model. So while we have
always provided just volume discounts for our Pros, our new model has been refined to more accurately reward
our Pros based on their engagement and spend. It aims to achieve a personalized everyday low price for our Pro,
while still differentiating pricing based on the level of their spend. And they can benefit from this personalized
pricing no matter where they're shopping, whether online or anywhere in our stores, whether they go through our
self-checkout or at the Pro Desk. And if they're online, they can see their preferred pricing without even having to