In a business where pioneers rarely get to retire gracefully, Best Buy finds itself in the curious position of tiptoeing away from the thing it built.

The retailer, which was the first in the United States to ship sponsored product ads way back in 2011 — a format that eventually spawned an entire industry now worth tens of billions of dollars — held its annual showcase this week and barely mentioned sponsored products at all. Instead, the company unveiled connected television inventory, a creator program featuring its Blue Shirt store employees, a production studio for brands and a TikTok Shop arriving in late October.

Patrick Albano, the chief revenue officer at Best Buy Ads, offered an explanation that any student of digital disruption might have predicted. "You're seeing more people start with LLMs and go directly to Best Buy," Mr. Albano said. "So that means the funnel is condensing."

(Translation: if a shopper asks an artificial intelligence assistant what television to buy and then lands directly on a product page, the browse-and-compare moment where sponsored ads live gets rather thin.)

The company presented research from Circana measuring two years of sales data and $2.3 billion in media spend. Best Buy Ads returned a return on ad spend 17 percent better than all other national media in the model, which sounds impressive until you read the brand-equity findings: the platform generated just 9.9 percent of measured brand awareness, preference and consideration. Very good at converting demand, in other words, and middling at creating it.

A retailer that has been tuning its ad auction for 15 years has limited levers left to pull. The available options — raise prices, lower costs, hope the enterprise marketing team can grow traffic — are not the stuff of growth mandates.

So Best Buy is reaching into what makes it distinctive: sports and gaming culture, its store footprint, and the trust consumers place in employees who actually know the difference between an OLED and a Mini-LED. These are the retailer's own assets, sold as media rather than rented from a results page.

Whether advertisers follow remains to be seen. But the earliest mover in sponsored products has decided that the future lies somewhere else entirely.

Original story published in The Drum: "Best Buy Ads’ showcase moves on from the sponsored product ad | The Drum"