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News 9 Jun 2022 - 4 min read

Australian retailer media hits $500m: ‘CEOs licking their lips’ as supplier-funded ad sales platforms arrive, Endeavour Group and new entrants pile in – US market shifting billions from publishers to retailers faster than forecast

By Sam Buckingham-Jones - Deputy Editor

(L-R): Endeavour Group's Lachlan Brahe, and Zitcha's founders Jack Byrne, co-founder of Melbourne indie Hatched, and Troy Townsend, co-founder of The Pistol.

Retailer media is already a half billion dollar market in Australia, and will likely blow $1bn 2025 forecasts out of the water. New players are entering the market behind Woolworths and Coles, which make up the lion’s share. Endeavour Group has named Lachlan Brahe as its new retail media division chief, while Hatched co-founder Jack Byrne and former CEO of The Pistol Troy Townsend have launched Zitcha, a platform to capitalise on the growth of the sector. They reckon retailers are just the beginning – soon everyone with first party data monetise audiences and compete for ad dollars. In the US, the market has moved much faster than expected just 12 months ago.

What you need to know:

  • Coles and Woolworths are $200m and $300m retailer media players already, per market estimates.
  • The big guns alone make up a half billion dollar market, indicating forecasts of a $1bn Australian retailer media market by 2025 may be undercooked.
  • Others are eyeing a share of the spoils: Endeavour Group has named Lachlan Brahe, former Criteo Retail Media exec, as its new Head of Retail Media.
  • Hatched’s Jack Byrne and The Pistol’s Troy Townsend say retailers are just the early movers in a sector that’s bigger than just Coles and Woolworths. They’ve launched Zitcha, a SaaS platform that links brands' first party data to sellable ad inventory across owned assets and off-platform on Google, Facebook and YouTube.
  • Proponents suggest every business with first party data will ultimately start selling their eyeballs, with high profit margins on owned media and 20-30 per cent on off-platform inventory.  
  • Boston Consulting Group says retail media will be $100 billion (A$139bn) by 2026 in the US.
  • But that too may be underweight: Jack Myers, US-based media ecologist and founder of MediaVillage, who flagged the displacement of traditional media dollars to retailers to Mi3 last year, admits the dollar outflow has been steeper than anticipated. “I was conservative in my estimates,” he states.

Retailer media in Australia is already booking north of $500 million and is set to easily eclipse forecasts of a billion dollar market by 2025. That prize is bringing new players to market, with the likes of Endeavour Group entering the fray and platforms bidding to broaden the focus from retailers to any owned media.

In other words, all owned media channels with sizeable audiences are now being prospected by groups eyeing a prize with growth prospects eclipsing all others.

Sources in the retailer media market estimate Woolworths’ Cartology business is making roughly $300 million, while new entrant Coles Media is said to have tapped suppliers for circa $200 million in commitments. Between other sizeable players – like Chemist Warehouse – there’s likely a lot more. And that discounts potential group-wide plays by the retail conglomerates.

US portents

International markets suggest analysts may have missed the mark on retailer media (PwC's annual media outlook has to date made no mention of the sector). Growth in the US has taken seasoned market watchers by surprise.

Jack Myers, MediaVillage founder and 'media ecologist', has been deep in US media spend analysis for almost four decades. Last year he predicted the larger players, led by Amazon – but also listing the likes of Walmart, Target, Kohl’s, Kroger, CVS and Walgreens would “cut across all categories and eat a lot of people’s lunches”. Retailers, he said, will be "the first investment, the priority investment", after which others, i.e. publishers, would be considered.

But a year later, the curve has steepened, with more retailers piling in.

“Available data projects that retail media is the fastest growing segment of the media business, accelerating at a faster rate than Connected and Streaming TV advertising,” said Myers.

“According to Forrester, retail media will grow to $50 billion globally this year.”

“I was conservative in my estimates, underestimating the number of major retailers that would launch their own media networks,” Myers added.

Endeavour enters 

Locally, Endeavour Group, the major listed hospitality and alcohol company spun out from Woolworths Group last year, has hired former Criteo Retail Media APAC exec and former Reprise Managing Director Lachlan Brahe as its first Head of Retail Media. It is set to formally launch its own retail media business in coming months.

Asked about the venture, the firm gave little away.

"Our retail media arm is a new capability within our business, which will leverage our extensive digital and data assets and capabilities to deliver great campaigns for our suppliers," per a spokesperson.

“Our retail media will use our extensive network coverage and digital assets to reach customers in targeted and meaningful ways.”

The market will be hoping its offering is more exciting than its comms. Either way, the group, which controls BWS, Dan Murphy’s, Jimmy Brings, ALH Hotels and Cellarmasters among others, is recruiting to fill the ranks.

Beyond retail

But ‘retailer’ media is just the tip of the owned media iceberg, reckon the founders of Zitcha, a plug-and-play trading platform. They think all companies with first party data and a web presence are ripe to become owned media networks.

Jack Byrne, the co-founder of Melbourne indie agency Hatched, and Troy Townsend, former CEO and co-founder of The Pistol, are now pushing the platform to retailers and other businesses they suggest can monetise owned assets through consumer data.

The pair co-own the new venture, which works with New Zealand’s The Warehouse Group and Australia’s Liquor Legends and Liquor Marketing Group. They claim to have a “decent sized pipe” of big retailers looking at opening a media network, which involves using first party data to monetise owned assets – e.g. websites and emails – as well as offsite inventory like ads on Facebook, YouTube and Google Search. Cartology, for example, announced last year it would be able to use Woolworths’ loyalty data to buy campaigns for FMCG brands.

Byrne and Townsend suggest retailers are just the “low hanging fruit”. While some may baulk at the prospect of annoying customers with ads, given the huge amount of money being invested in customer experience, the two think many CEOs and CFOs will be tempted by easy money in a world where people are increasingly conditioned to commercial recommendations.

“Think about beauty, think about pharmacy, think about building, real estate, there’s a whole heap of adjacencies that are probably going to be fast followers into this space,” Townsend said.

“Display homes might have the ability to target anyone who’s going to buy their first home… What becomes of the mortgage companies or insurers who really want to target first home buyers? I think what we’re going to see is an absolute focus on the data – anyone that owns first party data, and we use retailers as an example of that – they’re going to get very, very good at understanding the value of the cohorts they’re sitting on.”

Krill hunting

The big players are growing the category, but Zitcha’s founders are eyeing the long tail of businesses that they believe will emerge over the next few years. Experts last year predicted Australia's retailer media market would be worth $1 billion by 2025. But that number is likely to be an underestimate, per Townsend and Byrne. Adding other verticals, they say it may well double.

The US retail media market is set to grow to $100 billion (A$139bn) by 2026 and will account for 25 per cent of all digital media spend, per a report by Boston Consulting Group released in March this year.

“A particularly compelling aspect of this retail media opportunity… is the potential to achieve enormous profit margins,” Boston analysts wrote. “By our estimate, the $110 billion commerce media market will yield almost $75 billion in profits by 2026.”

But that kind of growth does not necessarily mean traditional publishers are facing faster declines, per Byrne, if they eschew the current trend of building walled gardens and plug their data into retailers.

“As an advertiser, I want to target the right person at the right time. If TV are happy to open up their inventory through our platform, there’s no reason they lose. It should be a win-win-win,” he said.

“It all comes back to the value of that first party data. Ultimately, what we’re trying to do in any media space is drive effective outcomes. And there’s no more effective outcome than targeting someone you know is an intended purchaser of a product," added Byrne.

“CEOs are licking their lips.”

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