Sensitive commercialisation

Our research identified Travel, Finance and Telcos as sectors where organisations are increasing commercialisation of their owned media assets. Never at the expense of customer communication but there is a vast array of physical and digital media formats which are available for leverage with partner brands. On average between 30-50 per cent of media is being commercialised in these three sectors.

Marketers are clear about the opportunities available in commercialising owned media. Those that are not yet commercialising are exploring the possibilities – for whom Stuart Tucker, ex-Hipages Chief Customer Officer, offers the following advice: “Your first priority should be your own customer base, and then once you've nailed that then maybe you need to open up to third parties. Because you've got finite opportunities to communicate with owned, so what is the right ratio between messages from the company versus messages from third parties? How can you make sure they're personalised and relevant?"

Aligning agendas

It is common amongst retailers for owned media to be leveraged through the merchandise department and managing the transition into marketing or media specialists takes careful consideration. As this Retail CMO explains, "Merch are primarily responsible for driving the commercial relationships of the business. You have merch selling something, and they're looking at it through their own lens of their own category or business unit, and return generation through that lens, as opposed to from a marketing lens. It needs to have a really clear commercial and customer benefit. We tend to have fewer, bigger strategic partners but we're pretty protective. We are protecting our ability to talk to that customer exclusively."

Having recently launched a dedicated retail media business, David Jones Amplify, CMO James Holloman has first-hand experience of how suppliers respond to commercialisation, "A brand that has purchased out-of-home advertising or television in the past knows that you have a billboard in front of your store that costs money. Brands that haven't invested in media are more likely to ask, why are you charging me for that? You'll experience tension if you don't have a media mindset."  

Start with a valuation

The consensus amongst marketers interviewed was that whether you are using owned channels for your own communications or leveraging it with partner brands, you need to understand the value of your media ecosystem.

One retail media leader describes the internal interest once value is known, "The margin is the attractive point internally, in a lot of instances there's not a great deal of capital investment if you're already using certain assets for trade assets, to sell them in a different way. We have radio in our stores, so it's relatively cost effective in those initial stages to put a minimum viable product together and start making money from it. That looks great to the business, because you can get a return quite quickly."

Former Hipages CCO Stuart Tucker sees how placing a value on owned media changes attitudes towards it: "Valuation means that owned assets don't get treated flippantly. In the old days, it used to be this spreadsheet and people would just get in it and would take all the assets. But it could have been a million dollars’ worth of value, and that should be treated with the same level of discipline as buying a million dollars’ worth of TV ads, but it doesn't really happen that way."

NRMA Senior Manager of Customer Marketing, Lauren Bolling, underlined the importance of valuing owned media independently and was surprised at the value of its owned media. "Independent valuation lends credibility, because a lot of people would probably balk if we said, "this is how much an email is worth, and this is what you pay for it", but the reality is that is what it's worth. The value of the media across these different channels that we're running for different partners, it's extraordinary. It has helped to provide a tangible demonstration of what my team is doing.”

David Jones’ James Holloman was unequivocal in the importance of an independent audit, "Make sure to conduct a full audit of your owned media. It is extremely important to understand your inventory.”  

Navigating the barriers

The most common feedback on navigating internal management of owned media was that communication and processes between internal teams is often siloed and disjointed. One Retail Marketing Leader described the situation, "It's still very much marketing sit here, and merchandising and retail media sit somewhere else. The problem is, there's no gatekeeper who is rising above all of those different levels."

As with any type of change, legacy behaviours and apathy exist within these large organisations. As another retail CMO put it, "The challenge is that you can bring in people that understand the media side of things, but you also have to intimately understand the way our business works and the way our commercial terms work with trade partners. For it to succeed, it needs to be embedded in our business as opposed to something that happens off to the side.”

The foundation is laid for integrated owned media leverage

Increased sophistication in data and martech stacks have started to break down legacy structural issues and laid a foundation for integrated owned media leverage. Kate Blythe, CMO at Mecca, describes her experience, “We did a huge digital transformation project. We implemented a whole new tech stack, we re-platformed all our website, we built an app. So we were basically no longer a retailer with digital, it was less church and state, but is fully omni channel. So that was a gateway to doing things very differently.”

No doubt there are hurdles to overcome, however, as Woolworths, CBA, Coles, Endeavour Group and David Jones have proved, these are far from insurmountable.

James Holloman’s experience of internal change management with the merchandise teams is insightful, "We've created principles that align with our merchandising colleagues. Over the past two years we have collated the ownership of every single asset available into one place. We have empowered the team with a set of principles to place those assets. There will always be a phone call to say, why is that brand next to this brand? We have created a framework that enables us to adjudicate those moments that happen within the business."

Different sector, different leverage model

Owned media leverage models will be different for every organisation. About 50 per cent of the market are leveraging value without charging cash money; for example, to reduce investment in sponsorship deals or in paid media. The other half of the market are charging cash for owned media solutions provided to partner brands. Many organisations are doing both at the same time.

As a leading retail executive explained, "It's going to be a different story in different categories. You're going to have those brand partners that lean on the more conservative end of things, where they're trying to extract the most bang for their buck, or they're looking for media that has more accountability associated with it. I think that's where retail media is going to be lightyears above the rest of the pack, because no one else is ever going to have that transactional data."

"You also have marketers that would take the exact opposite approach, this brings me closer to trade, doesn't it make sense that we collaborate more, and we get more bang for our buck? Aligning with our key distribution partners could be beneficial, we might get one plus one equals three."

In the Utilities sector, membership growth is the main driver, as explained by Lauren Bolling at NRMA, "If we've got a new partnership, we put together a reciprocal marketing opportunity. We're going to do X amount of promotion on your product or service to our membership base, and it might also include a contribution of $. In exchange for that, we might ask them to be doing similar marketing if they've got a sizable database, to acquire new members. Leveraging that value of what we can provide in our owned media to make it an opportunity for growing the member base."

For David Jones Amplify, certain inventory was protected for their own communications and certain inventory was offered to partners for commercial leverage, James Holloman explains the importance of knowing when to charge, "You have to behave like a media owner, because someone in the primary benefit business will ask for it for free and you begin to erode its value. The opportunity cost is I could give it to you for free, but I have this person that wants to pay."

Another retail executive explains the transition to structured monetisation, "Historically there's always been brands within store, it's just never been seen as a fiscal opportunity. Because everyone's working in their own sections and merch were liaising with those people, then the opportunity to monetise that, to purchase marketing space, came up, and it was a bit ad hoc, no real process or planning. Now with the new supplier-funded team, that just means there are guidelines, a strategy with how that maps out on the calendar year."

In summary, all market sectors are finding their feet and excited about exploring what leveraging owned media means for their organisation.

Sonder’s full Annual Owned Media Report & Ranking can be downloaded here. 

Jonathan Hopkins is Founding Partner of Sonder.

sondermedia.com

Jonathan Hopkins is Founding Partner of Sonder which has helped unlock more than $10 billion in owned media revenue for corporations around the world including American Express, Virgin, KFC, Woolworths Group, Coles Group, Telstra, Optus, David Jones, CBA, Officeworks, BIGW, Rebel, AGL, Myer, Bing Lee, Mecca and Crown Resorts.  Jonathan has 25 years’ experience working in media and marketing and is passionate about helping companies unlock the value of their owned assets.