Opinion is divided on whether Australia’s retail media market is approaching the point of consolidation. But there’s consensus that 2025 will see significantly more retailers come to market and retail media revenues potentially nudging $3bn by the year-end. Which means sharper competition and shifting structural dynamics.

Australia Post today confirmed it is launching a retail media network with oOh Media. Petbarn is likely next off the rank. Commbank is scaling its operation and Wesfarmers will be a significant play if executed beyond Bunnings at a group level. Amazon’s local results later this month will be a marker of its acceleration – with some predicting a $250m-plus ad take boosted by “exponential” Prime video ad growth and its DSP increasingly acting as the gateway for broader BVOD buys that tie brand ads to sales.

Retailers, big tech, holdcos, media owners and much of the digital ad supply chain are plotting defensive and offensive plays as the money moves faster.

“2025 will be a big year in Australia, quite a few of the large retailers are about to turn on networks,” according to Troy Townsend, US-based CEO of Australian-founded retail media platform Zitcha. Outside of Wesfarmers, spearheaded by Bunnings, “probably another five will launch this year, and they could be multiple banner groups”.

He thinks more retailers will soon follow.

“If you don’t have one, if you are not in a retail media network, you are in big trouble. The shift of how margin works in a retailer has changed.”

On the supply side, he forecasts “a lot of movement this year in M&A; there’s going to be consolidation globally”.

Who will drive the consolidation?

“I think it could be both the retailers looking to buy, depending on their scale and I think there will be other players coming in from adjacent spaces,” says Townsend.

“There’s definitely going to be movement from [agency] holdcos; the SSP and DSP players know the market is moving; I think you will also see some of the larger players – [i.e. the big tech platforms] looking at this space.”

But locally, others see headroom before fragmentation and competition force that kind of change.

“We still have white spaces in terms of categories in Australia,” according to Mo Heidari-Far, managing director AU at Flywheel, the commerce unit last year acquired by Omnicom from Ascential for $835m.

“We will see more networks coming online, that's not going to slow down. But [locally] I don't think we're close to the point of consolidation in a meaningful way.”

Jonathan Hopkins, cofounder at owned media specialist firm Sonder, agrees. Despite rapid growth – the firm has calculated which retailers have most potential and may be best placed to enter the media market – he points out that there are still a relatively small number of meaningful players. “When you compare it to the number of [traditional] media players, there just aren’t that many.”

$3bn market shifts

Sonder put Australia’s total retail media market value at $2.6bn for 2024 and cofounder Angus Frazer forecasts 10-15 per cent growth for 2025.

Hopkins argues that market sizing attempts tend to be “grossly undervalued” due to a lack of visibility on what actually makes up retail media revenues across trade and marketing budget pots in physical stores, across owned digital properties and out to off-site media powered by retailer data.

Either way, “$3bn might be a little high, but I think it will be getting close to it,” suggests Frazer, given new market entrants.

Zitcha’s Townsend forecasts “at least another 50 per cent of inventory and revenue coming into the space this year” and with marketing budgets pressured, “that money has got to come from somewhere.”

Fundamentally, Townsend thinks retail media will become the gateway through which an increasingly large portion of broader media spend will be funnelled.

“We are going to see money moving to these [retail media] channels. If I can spend my Meta money through a retailer and get the ability to see transaction or SKU-level transactions off the back of that spend, it's still going to hit the P&L at Meta – but you’re going to funnel it through a retailer to be able to see the conversion value,” per Townsend.

Likewise CTV and BVOD, with local TV networks at risk of being outsprinted by streamers, though Nine is understood to have struck a deal with Cartology.

“Retail will become the front door of media as brands look to understand what their direct conversion value is across ecom and in-store,” per Townsend.

In short, “the transaction is becoming the new structured cookie”, he suggests. But with “90 per cent of transactions taking place in store”, Townsend thinks unlocking retail media’s physical value has only just started – and may be why ecom pureplays like Adore Beauty now have a better economic case to open physical outlets.

“I think we’re going to see stores open up pretty heavily – that’s going to be a big one in Australia. The whole experience will fully digitise beyond ‘three screens in a store’,” he suggests.

“What you're going to see this year is the ability for the retailers to be able to track and report on not only what's happening on ecom, but also what's happening in the store. Getting to that omnichannel view of reporting is going to open up a lot of new inventory, but also new value.”

Cartology: Two-speed market emerging

How a potential flood of new inventory affects value and pricing dynamics remains to be seen.

But with “effectiveness and efficiency on everyone’s lips”, Cartology client partnerships and sales boss Tony Prentice sees potential for the emergence of a two-speed retail media economy – with the businesses that can play end-to-end winning biggest.

A large store footprint and frequency of shopper, he suggests, will be key.

“We firmly believe whoever is closest to the customer is likely to prevail … The end-to-end fulfilment of retail media sits largely with those who actually have a customer franchise,” says Prentice.

“If you don't have that customer franchise, then you'll be in retail media, but will you be end-to-end full funnel and be able to provide everything that someone who has the customer franchise does?”

Hence he acknowledges the impact of competition, as being felt to the tune of $150m by the likes of Chemist Warehouse. But the winners and also-rans will be “interesting to watch play out,” says Prentice.

“A lot of it will have to do with the frequency of the purchase intervals in relation to how relevant you are for how many brands. So I think there’s a natural order of things in terms of where the growth will go.

“I don’t think retail media has a single set of optics to it. I think that will change pretty quickly. There will be prisms and not all retail media will be equal by any measure.”

Standardisation holdouts?

An increasing number of retailers selling media will exacerbate fragmented cross-media measurement. The IAB has been making efforts to drive standardisation, but Prentice is not convinced retail media measurement can be homogenised.

“There's no one size fits all with effectiveness. Certainly the US experience suggests that people have pursued simplification and harmonising effectiveness, but it just doesn't work. At the category and subcategory level, everything is just so nuanced,” he says.

“So there will be industry bodies [pushing standardisation of metrics and currency] and that is what is going to happen now. But whether that is the solution, our point of view is there is not one size fits all … We will probably build a world for ourselves where we can customise things more at a client level.”

M&A incoming?

In the US, Walmart last year dropped $2.3bn to buy Vizio, effectively buying 18.5 million TV screens on which it can now sell ads (and a tonne of data on those households’ consumption habits, plus attribution through automated content recognition, or ACR). If Australia’s retail media market is moving towards an end-to-end and more platform-driven approach, will the likes of Cartology be eying similar acquisitions?

“Parallels between the US and Australian markets only go so far … I’m not sure they are as straightforward as people think,” per Prentice.

But an ambition to play end-to-end means there may be further Cartology deals in the offing with local TV networks, amid long-running talk of a mooted BVOD partnership with Nine. Cartology also has off-network partnerships in place with Youtube and Meta.

“It's a strategically important top of funnel inventory asset – clients obviously speak that language and understand it,” says Prentice. “Based on our customer franchise and the insights we have about those customers, our version of that inventory is highly valuable and in pretty high demand.”

As such, “we’ll build further partnerships”.

Coles: strategic shift?

Coles last week did not respond to Mi3's questions regarding the future-looking strategy for Coles 360 and whether any structural changes could be expected this year.

The retailer is seeking a new general manager for its retail media unit after Paul Brooks exited the business, following the prior departure of strategy and planning head Sam Hegg, who left in December to run Bunnings’ forthcoming retail media business.

Some observers suggest that retailers will likely “acquire tech or build it in house” as they become more platform-focused than media sales-focused, but don’t necessarily have the balance sheets to acquire the larger tech players.

“I think there will be a rebalancing [of sales headcount] with a platform supporting the buy and sell as opposed to massive sales teams,” per one retail media exec. “People will be talking about retail media platforms moving forwards.”

Prior to his departure, Brooks in November indicated that Coles aims to become a broader gateway for media spend, underlining that its deal with Nielsen for consumer segmentation and insights was intended to open-up off network audiences and revenues to “accelerate what we are doing with agencies and also what we are doing off-site.”

The intent behind that partnership, Brooks told Mi3 at the time, is “to be able to set ourselves up to be able to provide, hopefully over time, an end-to-end service with the ability to be able to prove outcomes across the entire sector.”

At the same time, Coles signalled a greater focus on the agency sector for 2025 with a “lift and shift” 20-strong team pulled out of loyalty program Flybuys ready to start. The former Flybuys Unpacked sales team has been rebadged as the Coles360 Agency Team, led by Chris Scudder. 

Agencies, platforms, caution

Cartology’s Prentice says agencies “will increasingly play a role” in helping brands navigate an expanding and fragmenting landscape. But within Cartology’s current set up, that role is largely limited to planning and insights.

“Our posture with the holdcos is pretty straightforward – we're here to help them make more informed planning decisions so that the clients we share get the best possible outcome. It’s not something everyone is going to do, but I think it’s the most sensible approach.”

He doesn’t rule out working with agencies beyond planning in future.

“Everything's in scope. At the moment, I think we're all just trying to figure out what the best first steps are. Currently we think that is led by and informed by better insights and better plans before we get to anywhere else.”

In the meantime, Prentice says trade and marketing budget pots are starting to align.

“Clients are increasingly coming to us with brand money and trade money to say ‘it's marketing investment, how do we spend this better?’” As such, he suggests the separation between above- and below-the-line campaigns is being erased. “Clients are saying ‘we don’t think there is a line anymore’.”

Prentice thinks those mulling platform approaches over boots on the ground and commercial intelligence may find it is not that simple.

“We have to be careful of the US experience, because it is largely based on digital [retail media] whereas this market has a very large, well established and effective in-store part of its economy,” he says.

“The understanding of trade plans, pricing and promo is not something that’s well understood outside of the actual retailers. So I think it's very difficult if you are a digital-only supply chain partner in retail media.

“You can choose your own adventure: You can partner deeply with the holdcos, or you can run your own race; you can do what you want.

“But I think it's very difficult for anybody who's not the owner of the customer franchise to be able to do everything without the deep knowledge, experience and expertise that we've got around the actual trade component of the planning. It's hard, because it’s really [just] one side of a pool.”

Agencies: retail smarts required

Zitcha boss Troy Townsend suggests agencies are playing catch-up on a critical aspect.

“I think one of the biggest problems with agencies in this space is that they don't really deeply understand retail. They understand media really heavily, but not how retail actually works. That is a very hard thing to do at scale across the agency groups. So as a starting point, they need to bring in people with deep retail expertise,” While he says the likes of GroupM have started to do that locally, “in Australia, there’s generally still some headway to go.”

Townsend sees “a big opportunity for independents to leapfrog some of the larger agencies in this space”. 

He points to Retail MediaWorks, founded by Redworks, Cartology and Quantium stalwarts Tom Small and Mark Rogers as a standout example (Redworks was a key player in building out Coles360 and the founders’ new iteration is now bringing more retail media players to market).

“If you classify them as an agency, they are probably one of the fastest growing in Australia,” per Townsend. “That starts to become pretty interesting.”

Either way, if retail media becomes the gateway for broad marketing investment, “it’s going to be problematic for holdcos if they are not playing in this space”, says Townsend.

Publicis, he suggests, “is doing a good job of buying out the market”, acquiring data and identity backbone Epsilon, retail media platform Citrus Ad and latterly commerce marketing agency Mars. "The challenge is bringing the component parts into a cohesive offering – and I think that is the part they are going to find pretty difficult,” per Townsend. “You get friction if one part of that isn’t growing at the trajectory they were meant to grow at.”

Amazon accelerates

Omnicom last year completed its biggest ever acquisition, paying Ascential $835m for Flywheel to deal itself into retail and commerce media.

Flywheel Australia boss Mo Heidari-Far said it’s already pitching with the broader Omnicom Media Group and working with circa 10 clients, a mixture of global and locals across CPG, pharmacy and consumer electronics.

Heidari-Far sees a $3bn retail media market as “achievable” by the year end based on the current trajectory and pipeline of new market entrants, with Wesfarmers alone taking a significant chunk if it makes a fully-fledged group play beyond Bunnings.

But he thinks Amazon is now making the running.

Flywheel has longstanding Amazon partnerships which means it gets early insight and access to things like a five-year lookback windows within Amazon Marketing Cloud – which means brands with longer purchase cycles, or those that sell across multiple categories, get a much more granular view. “That is coming to Australia,” per Heidari-Far.

Visibility across the Amazon piste – DSP, search and retail – cuts both ways and Heidari-Far says the ecom juggernaut is moving rapidly through the gears locally. It posted $150m of ad revenues locally last year. Heidari-Far expects results due by the end of this month to show “$250m or more”.

“Amazon's pace of advancing their adtech and capability to be more upper funnel with Prime Video and the integration of their DSP with more of the Amazon Marketing Cloud has overshadowed the pace of everything else that we've seen locally,” says Heidari-Far. “There's a big global solution behind that effort – and I think that's paying off.”

While the broader retail media market is skewed heavily to on-site revenues versus offsite (“I’d say 80:20, and that could be generous”), he says Amazon is the caveat.

“Now they've got Prime Video, the spend in that area is growing exponentially … The inventory is good, the measurement is really exciting, especially for endemic clients [i.e. those that already sell on Amazon.com],” says Heidari-Far.

“Being able to plan full funnel from video from an awareness perspective, all the way down to seeing the impact of that on purchase is really, really exciting – we're tracking all of that.”

BVOD ‘Trojan horse’

Amazon’s rise has broader impacts for Australia’s incumbent TV networks.

“For some of our endemic clients’ activity, where their Amazon business is large enough, we're actually seeing Amazon’s demand-side platform becoming a really attractive DSP for them to use for all their BVOD activity – because of how the buying measurement now helps them,” says Heidari-Far.

“They're bringing all of their BVOD activity over to Amazon DSP so that they can frequency cap and everything else – but also see the impact and measurement on Amazon sales.

“That goes beyond the current ecosystem and can impact the overall BVOD market. So that is the Trojan horse, I would say, for a lot of endemic clients.”

David Jones: $35m target ‘on track’

David Jones is seeing the streamers come the other way – with the likes of Stan and Netflix advertising across its network. CMO James Holloman said the firm – with a reported $35m-plus annual growth target from retail media – is “absolutely on track” to hit it for FY25 with “over a thousand brands participating right now”. Big international beauty brands and fashion houses in particular are spending “right through the funnel”, per Holloman.

A year into the retail media play, and after completing a 314-screen rollout, the firm’s revenue split is circa 80:20 in-store to digital, “though the digital space is where we’re growing the fastest.”

That said, Holloman underlines that lately “in-store assets are seeing a resurgence”. Where that conversation starts, per Holloman, depends on where the demand is coming from.

“A direct client relationship, that conversation usually starts in store [whereas] an agency discussion usually starts with what they are more familiar with … and they are less familiar with the in-store environment.”

For 2025 and beyond, Holloman sees growth being driven by non-endemic advertisers, i.e. advertisers that are not existing suppliers – like travel, lifestyle and auto brands. But he acknowledges competition for both its existing supplier dollars and those new advertisers is heating up.

“The retail media market is absolutely intensifying. There are some great players launching and expanding their inventory base and moving [from ecom pure-plays] into omnichannel [via bricks and mortar].”

That’s “healthy competition,” per Holloman. “But we're pretty confident in having the biggest audience of premium shoppers in our market.”

$250m upgrade

Meanwhile, the firm is moving to head off that competition.

Holloman said David Jones’s board has given the green light to a $250m “transformation” investment across in-store and online. “So retail media will benefit from us elevating both environments, allowing for big, high impact moments”.

For the 12 months ahead, David Jones is eyeing a larger cut of the cake.

“The ambition for 2025 is about scaling,” says Holloman.

“It's about scaling into new categories, but also evolving our data capabilities – richer insights, closed loop attribution, expanding our self-service automation and improving the ease of buying and execution.

“So absolutely evolving data capabilities – and we have a couple of great partners in mind that that we would like work with.”

For retailers mulling market entry, Holloman said the biggest challenge will be "educating internal stakeholders on how retail media fits with a legacy retail business". But he batted away any suggestion of lingering trade and commercial friction.

"The retail media team is completely autonomous, making all of those key decisions that have all been pre-defined. So we are operating as a full media owner and the business is fully aligned. There's just always a journey to explain to stakeholders how this [approach] better improves the customer experience."

"We've come leaps and bounds since we officially launched a year ago. There was a change management process that was two years prior to that – and now I can honestly say we are now operating like a reasonably slick media owner."

CMO view: Christine Fung, Goodman Fielder

Goodman Fielder broke cover on a plan to combine trade and marketing budgets in April 23, while handing a larger chunk of responsibility for retail media planning and spend to agency Initiative.

At the time CMO Christine Fung said the firm’s sales function would retain responsibility for its trade budgets and targets, but that “planning and strategy sits with us [marketing] – and now Initiative … so we are spending holistically”.

How has that panned out?

“It’s definitely been a learning exercise for everyone – how the process works, keeping all stakeholders looped in. That’s not done and dusted, because it’s a new way of doing things. But we have definitely started to make inroads.”

Is it delivering?

“We can see a future where the investment in the process is going to pay back.”

Has the overall quantum invested into retail media increased over the last year?

“I wouldn’t say it has significantly increased. It very much depends on category.”

Given ongoing commercial negotiations, Fung is perhaps reluctant to state categorically that Goodman Fielder’s approach and investments have delivered the incremental growth and efficiency touted by retailers. Either way, implying that there is more juice to squeeze keeps all parties on their toes.

“We still believe that this will be the most efficient way to plan and develop holistic media strategies,” she says.

Data cost challenge

When announcing the plan to centralise trade and marketing investment through the line, Fung flagged “robust and comparable” measurement and reporting – plus access to actionable data that doesn’t carry an exorbitant price tag – as “probably the biggest thing we all need to lean into.”

Who drives standardisation of retail media locally is up for debate, but Fung says the retailers “are clear on what we’re looking for … they are definitely saying they are working on it”.

Is she confident of obtaining reasonably priced data from the major players within the next 12 months?

“I'm not confident, to be honest. But I do still believe they have some of the best targeting and segmentation capability in the market. So I guess ‘reasonably priced’ for us is relative.”

Full funnel?

Can retail media genuinely deliver both longer-term brand building and immediate lower funnel sales as claimed by the likes of Coles and Cartology? Fung said Goodman Fielder’s early findings – working via Kantar’s brand growth framework – suggest for some categories double duty is possible.

“It’s not cut and dried that retail media is purely lower end short-term performance,” she suggests. “We absolutely can see that, in some categories, it plays back into longer-term brand equity in the same way that our packaging and recognition on shelf does long-term brand equity job.”

Goodman Fielder’s retail media investments to date have been with Coles and Woolworths, though Fung said the firm likewise invests in with IGA-Metcash, which is building out capabiltity.

Metcash: liquor and tools incoming

Metcash’s retail media play is now live across grocery and gearing up for full scale launch. This year it’s planning to add liquor and hardware, per Sarah Minassian, head of Metcash’s LocalEyes retail media business. The group aims to carve out a $30m Ebit opportunity (net of retailer benefits) across 5,600 independent retailers, which would represent a 6 percentage point earnings boost on 2024 Ebit. “There is a significant financial opportunity,” per Metcash CEO, Doug Jones.

Minassian didn’t directly address questions about a mooted deal with oOh Media’s REO business to handle its screen rollout, but did say a partnership announcement is “imminent”, along with adding more screens and technology to the fledgling Eastern seaboard supermarket network.

Flywheel’s Mo Heidari-Far said some Omnicom Media Group’s clients are now active on the Metcash network, though it is “early days” and the retailer’s media growth trajectory “depends on what inventory comes live”, and how quickly.

Amazon eyes krill

While the larger retailers are plotting their own path, Amazon has perhaps one more curveball for retail media.

The firm last month touted Amazon Retail Ads Service in the US, which effectively lets retailers use its pipes and wires to serve ads on their sites – easily dipping a toe in retail media for little outlay – but with Amazon clipping the ticket.

“It’s interesting,” per Heidari-Far. “On one side, you’ve got some of the best, if not the best tech in retail media. On the other side, the hesitancy that this is from Amazon. So my personal view is I just can’t see the larger networks giving their data or retail media tech to Amazon … so if it gets any traction, it's going to be smaller players.

“But from an advertiser perspective, it could possibly be quite interesting – if it gets good uptake from retail media networks and essentially the ad tech is consistent across all your retail partners, then to run a campaign, to get the training done, to get the tech integrations done, it all becomes so much easier ... So that [mooted] aggregation play can become reality.”