The news: Costco’s recently rebranded retail media business, Costco Velocity, is partnering with ad tech firm Moloco to launch its first major onsite ad product, Reserved Display. The format will roll out in beta in Q2 across high-traffic placements like the homepage and search results, with additional formats expected as part of a broader onsite expansion.

The move highlights how Costco aims to differentiate its retail media offering by focusing on merchandising, rather than monetization alone, in a crowded space. As Mark Williamson, associate vice president of Costco Retail Media, put it in a LinkedIn post: “We aren't building a media network to hide margin. We are building an engine to move merchandise.”

The details: Framed as “digital endcaps,” Reserved Display placements try to replicate the product discovery associated with Costco’s in-store experience in an online environment.

The ads are powered by Moloco’s machine learning, trained on members’ real purchase behavior, using deep neural networks to match products with shoppers in real time. The system uses Costco’s first-party data to predict product relevance based on current and past behavior, rather than relying on session-level signals alone. Unlike traditional display ads, optimization is tied to sales, with an emphasis on incremental growth.

The platform is also designed for simplicity and speed: Costco says advertisers can launch campaigns quickly, use automated bidding and targeting, and monitor performance in flight. It also integrates directly with Costco’s identity and audience tools, enabling brands to activate custom audiences without additional setup.

Implications for brands and marketers: The launch signals how Costco plans to monetize its first-party data through retail media.

It also reflects a broader shift across warehouse clubs seeking new retail media revenue streams. For example, Sam’s Club is making in-store sampling more measurable through app-connected kiosks and digital screens, while BJ’s is deploying interactive endcaps at the shelf.

Warehouse clubs see a clear opportunity to carve out a distinct lane in retail media that’s focused less on ad load and more on transaction-driven outcomes. Their closed-loop data links identity to purchase, making incremental sales easier to prove. Even as Amazon and Walmart dominate the retail media landscape, there is still room for platforms that can clearly demonstrate ROI.