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The Rise of Retailer Media 13 Sep 2021 - 5 min read

‘Almost all retailers are thinking about launching media businesses’: Why Australia must prepare for next wave, who's next and why Facebook and Google may have most to lose

By Sam Buckingham-Jones & Brendan Coyne

An Mi3 editorial series brought to you by
Resolution Digital

Resolution Digital

Mi3 Special Report: Australia's looming $1bn retailer media market

The Rise of Retailer Media

Expert analysis & market impacts for brands, publishers and agencies.

An Mi3 editorial series brought to you by
Resolution Digital

Resolution Digital
Mohammad Heidari Far and Des Odell, Resolution Digital

Mohammad Heidari Far and Des Odell: Shift happening and retailers poised to enter media market.

Almost all Australian retailers are thinking about launching owned media businesses, according to Omnicom-owned Resolution Digital – and not just within FMCG. The question is who will be next? Bunnings or will Wesfarmers go the whole hog, and will it spawn a raft of specialist retailer media agencies?

Mi3 Special Report: Australia's looming $1bn retailer media market

The Rise of Retailer Media

Expert analysis & market impacts for brands, publishers and agencies.

What you need to know:

  • Dozens of retailers are mulling owned media operations, selling ads directly to suppliers in order to drive sales.
  • That may put further pressure on traditional media owners – and agencies – and could lead to specialist retailer media shops emerging to service a single channel.
  • Resolution digital execs Des Odell and Mohammad Heidari Far say that would be a big mistake, and think the big digital platforms may have more to lose than Australia’s incumbents.

I think from a vertical point of view, whoever has the scale and diversity of products is looking at retailer media and monetisation of their assets very seriously, because of the margins that are involved. I see a lot of value in the home and garden [vertical], if a business like Bunnings wanted to enter this area.

Mohammad Heidari Far, General Manager, Resolution Digital

Brands and retailers poised, who’s next?

“We have a lot of retailers in our client portfolio and the general trend is that almost all retailers across all verticals are thinking about [building retailer media capability],” according to Mohammad Heidari Far, General Manager at Resolution Digital. “This is not necessarily just CPG or FMCG, but consumer electronics, home and garden, apparel and even fashion.

“I think from a vertical point of view, whoever has the scale and diversity of products is looking at retailer media and monetisation of their assets very seriously, because of the margins that are involved.”

“I see a lot of value in the home and garden [vertical], if a business like Bunnings wanted to enter this area,” said Heidari Far.

He also thinks conglomerates like Wesfarmers could take a group-wide approach with dedicated resource. “With the portfolio Wesfarmers has, this would create a huge opportunity for them to structurally actually look at this as another business unit that brings all of that together.”

But it may take a year or so for the next wave of retailer media operators to emerge.

“From thinking to going live, the technical element of it is really easy. It’s a two-to-three-month process, depending on what level of your channels you want to monetise. But strategically, making that decision is easily a 12-month conversation.”

But he thinks the market is starting to mobilise – and the likes of Woolworths and Chemist Warehouse will soon have competition.

“As we see other players and retailers entering different verticals, I think that will create a sense of urgency for other retailers, because of the margins involved in retail: it’s a game of trying to diversify and improve those margins.”

Challenges: All media operators take a different approach

The challenges for FMCGs and other brands eyeing retailer media channels will be fragmentation, suggests Heidari Far.

“The way you run a Citrus campaign with Coles is completely different from how you do it with Woolworths – because their implementations are different. Coles’ implementation is on a product grid. The first two rows are driven by CitrusAds, versus Woolworths where you have a pay then organic [aspect] in each of those areas,” he said.

“That has profound impacts on the auction competition, the cost per clicks across those and also the customer experience.”

Likewise, the way retailers provide data to brands varies widely: “For teams to have a holistic view of how their e-commerce is performing is really difficult,” he said.

To counter that challenge, Heidari Far said Resolution has built “API hooks” to extract data where allowed to by retailers, but in some cases the agency has to perform manual exports and uploads to visualise data in one place and determine performance on a channel by channel basis.

I struggle to understand how you can just provide a service around Amazon. The real value [agencies provide to clients] is the entire journey, and understanding the journeys that are doing better than others. I’d feel very compromised telling a client to put all their spend into Amazon.”

Des Odell, CEO, Resolution Digital

Standalone retailer media agencies? Not likely

While specialist Amazon and retailer media agencies exist overseas, Resolution CEO Des Odell sees no genuine scope for them in Australia – and thinks even standalone e-commerce shops will struggle.

“Firstly, there is just not the scale. Secondly, the path to purchase and the approach in Australia is multichannel. I struggle to understand how you can just provide a service around Amazon. The real value [agencies provide to clients] is the entire journey, and understanding the journeys that are doing better than others,” said Odell.

“I’d feel very compromised telling a client to put all their spend into Amazon.”

As such, Odell thinks brands will always need a full picture of the options available to attract and convert customers.

“If you are purely an e-commerce agency, how do you have those broader discussions around connected TV, digital radio, national TV? Our big clients are still spending on those channels. So I struggle to see how small standalone e-commerce agencies are going to be long-term players.”

Mohammad Heidari Far agrees. “If we narrow down to individual retailers or retailer media, we might be missing the bigger piece – the total journey.”

Facebook and Google have most to lose

While some predict traditional publishers – and potentially agencies – face further disruption from the retailer media operators striking direct deals with brands, Odell thinks it may be the digital platform duopoly has most to lose.

“I don’t see the entry of Cartology and other retailers coming to this space as a threat to agencies or holdcos. Actually, I think it makes the environment and the ecosystem more complex. The more complex it is and the more players there are in the market, generally, the more need there is for advanced digital planning, attribution, decision making and all that sort of stuff that agencies do,” said Odell. “So I don’t see [retailer media] as necessarily taking business away from agencies.”

On the flip-side, he suggested: “It’s good that Google and Facebook are going to have some competition.”

A version of this article appears in Mi3’s Rise of retailer media report, supported by Resolution Digital. To find out what’s in store, click here to download the report.

Mi3 Special Report: Australia's looming $1bn retailer media market

  • Australia's retailers are gearing up to become major media channels.
  • US retailers are already displacing 'legacy' publishers.
  • All retailers are eyeing media, not just supermarkets and FMCG.
  • Mi3 supported by Resolution Digital have produced a 28-page report with cross-industry views on what you need to know.

Expert analysis & market impacts for brands, publishers and agencies.

Get ahead of the curve. DOWNLOAD THE REPORT HERE DOWNLOAD your 28-page report here.

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The Rise of Retailer Media

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Sam Buckingham-Jones & Brendan Coyne

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