Australian retail media: ready for lift off as Coles takes the game to Woolies

With Coles pushing ahead with its retail media business, Coles Media, Mumbrella's Calum Jaspan looks at the emerging sector, Cartology's progress to date, and why we might see the sector explode imminently.

In June, Woolworths Group’s Cartology will turn three, in what can be considered a marked success to date under the stewardship of Mike Tyquin.

Now its main rival on the Australian supermarket and retail scene duopoly, Coles has entered the fray with its new Coles Media offering, led by Paul Brooks and Sam Hegg.

While retail media has not just reached local shores, it does appear as though it is now set to boom in Australia with the country’s two largest retailers leading the charge.

Retail media is essentially defined as the advertising of products that must be available for purchase at the same location or on the same platform they are being advertised on.

Cartology’s Tyquin with one of the business’ in-store screens

Tyquin, managing director at Cartology believes Cartology is developing very well, and says the nature of the business helps in making its clear progress evident.

“I suppose the proof in the pudding. As an advertising business are we helping brands? I think the answer is a definitive yes. Our ability to be able to very accurately measure results in a number of dimensions and look at everything from sales uplift to category performance to new customers is a really great reference point because it makes out progress very tangible.

Outside of just Cartology, he says the entire team feels “really strongly” about there being a huge amount of upside for retail media in Australia and New Zealand, “as is proving to be the case all around the world”.

For Coles, it has been quite the busy month or so, with chief marketing officer Lisa Ronson looking to firmly stamp her mark on the brand. Ronson has signalled she is willing to make wholesale changes to the marketing operations, waiting for the right moment since she took on the role in 2019.

On 28 February, Coles sent out news it had hired Paul Brooks, director of sales at Nine and former CEO of Carat to run its Coles Media business, with Mumbrella later reporting his former colleague Sam Hegg would also be joining the ranks.

The pair both have experience working with Woolworths during their time at Dentsu, and were in and around the business during the development of Cartology. It can be safely assumed they are both bringing some highly relevant expertise across.

Paul Brooks: Not the first retail giant he has worked with

Speaking to Mumbrella, Brooks said the opportunity to get in on the ground floor of Coles’ play in the retail media space was really exciting.

“If you look at what’s happened in other markets, you look at the US and the UK, and at what some of those businesses have been doing in the last two or three years, we’re still probably still at a relatively embryonic stage as a market [with regards to retail media], but it is just about to kick off really, and Coles have spent a lot of time getting ready for that.”

Taking into account the assets Coles already has at its disposal, streamlining it under Brooks will be a hefty undertaking, but one that seems a natural step after witnessing the success of Tyquin and Cartology.

By the end of 2021, Cartology upped its footprint with digital advertising screens implemented in 1,218 stores across Woolworths and Dan Murphy’s nationally, and in its 2021 financials, the business reported e-commerce sales growth of $1.5 billion, up 74.7% on 2020, totaling $3.5 billion.

The retailer also added 379 direct-to-boot sites, 125 ‘Delivery Now’ sites, and same-day delivery was added to a further 425 stores, in order to meet the growing demands of customers shopping digitally and remotely.

“If you take a step back and look at what Coles has got from an assets point of view, there is point-of-sale, in-store screens, Coles Radio, the Coles magazine which is significant, and Flybuys data,” says Brooks.

Starting his new role at the beginning of this month, he says Nine were “fantastic in regards to releasing him earlier’, because Coles have been keen for him to start “as soon as possible”.

On whether he will be bringing across some of those key learnings from his Dentsu days, Brooks says while there are obvious similarities as retail businesses, “our operating models and the way we monetise our media will be completely different”.

He will however be applying all of that experience in the process though.

“Being really frank, I’ll be drawing on all of my experience from the media agency side. I was fortunate enough to look after the Woolies business and saw Cartology at arm’s length, so I saw what they were doing, and I’ll be drawing on a combination of those experiences, the key contacts I’ve gotten from those relationships to set this up, and we’ll make sure that we certainly unlock all of the opportunities that sit in front of us.”

Coles’ Sam McLeod, leading the search for Coles’ new agency group partner.

On whether its marketing overhaul, which includes a pitch for a bespoke agency partner as well, comes as a result of looking over the fence at rivals Woolies, McLeod agrees, “it’s a natural mirror for people to hold up, so I completely understand why people might get to that conclusion. But I think we definitely didn’t do it for that reason. I think it’s much more about looking at what does best-in-class relationships and best-in-class work look like across the globe and across categories?”

“Woolworths probably go there before us a little while ago [in the retail media space], and again, we’re not entirely sure whether we’ll end up with the same kind of work model or not, but we’re probably looking much broader and internationally, across the pond and what some other people over there are doing.”

Conversely, on Coles following suit, Tyquin says Cartology has “very much enjoyed making the market for retail media”.

“That has actually been our number one job, to make the market for retail media and that doesn’t change [with Coles’ play]. At Cartology, we believe we’re the natural market leader for retail media in Australia and New Zealand.”

Lessons from abroad.

Coles will look to follow in the footsteps of retailers abroad, such as Tesco, the UK’s largest retailer, which went live with Tesco Media in the backend of 2021, as it looks to harness its Clubcard loyalty program, which is used by more than 20 million households, on top of a further seven million app users.

The brand said it aims to “create a closed-loop platform that will allow brands and their agencies to drive more interactive, two-way relationships with customers.”

The area has been trailblazed by US giant Walmart, with advertisers increasingly looking for ways to reach consumers as shopping further moves online, and with extensive first-party data already in their possession, more retail giants, like Coles, are looking to capitalise.

In its 2021 financial report, Walmart revealed its media business, Walmart Connect made US$2.1 billion (A$2.8 billion) for the ‘big blue’ brand across the year, with US site Morning Brew reporting nine of the ten top retailers in the States already have their own owned media business.

Walmart has built a giant in Walmart Connect

Of course, many of these are attempts to compete with the final boss of retail media, Amazon.

If Brooks is right and Australia is only a few years behind the United States, then we can expect brands like Bunnings, K-Mart, JB HiFi, Kogan, Myer, and more to follow suit pretty soon.

Tyquin says, for Woolies, now it has taken the steps to “really activate its ecosystem from a media perspective”, the next is to unlock the data it holds for planning, as most of the activities so far have been focused on unlocking it for measurement.

The other big next step, he says is centered around brand solutions. He says Woolworths is a “top ten publisher in our own right,” with heritage in driving trade results, highlighting the opportunity it has through its “enormous platform and customer base”.

“94% of Australians shop at Woolworths throughout the year and we have over 20 million store visits a week.”

The data at play is the key, which as Tyquin says, allows the brands to be increasingly accurate, harking back to an earlier point.

This allows them to be accurate in measuring audience behaviour, who responds to which ads, what ads work on who, at what time of day etc. The data increasingly helps the business build a picture of its customers, which can then be used to drive better sales with direct partners, or other advertisers.

Within its search for a new group to create a bespoke agency model, Coles invited Omnicom, WPP and Publicis to the party, with each proposal to be based on operational capabilities, not on creative ideas.

Coles and Lisa Ronson’s search for a bespoke partner has been shaken up, with the addition of Accenture Interactive.

McLeod who is at the forefront of the pitch says while its had success with its current partners, it is time to find a model fit-for-purpose for what the brand needs to deliver “not only today and tomorrow, but is future-proofed”.

“No matter how well different agency groups work around the table together, we want to move away from having lots of different agencies, to having one group of people that has a home together with a shared vision to deliver for our customers, and that we can get a potentially new way of doing things.”

What comes next?

Now that WPP has dropped out of the race, Accenture Interactive added to the mix, and with Ronson shaking things up in 2022, will this mean restructuring the media relationship with wherever its consolidated account lands.

“I think to be honest it’s just coincidence with those two coming together,” says Brooks on the suggestion the pitch and building out Coles Media are aligned.

McLeod says the two sides of the marketing division are “pretty different workstreams” as part of the total marketing transformation Coles is going through.

“Of course they will work alongside each other, and there are moments they will be coming together, but they are separate pieces of work. So I don’t really see that our media agency relationship will have a whole lot to do with our Coles Media offerings to be honest.”

“One is about partnering with our suppliers and making sure we’re delivering great solutions in our own media environment for our customers, and the other is about making sure we get to show and get all our messages as a brand out there in the best possible way.”

One industry executive put forward the suggestion that in building out their own media business, there may be a point where both Coles Media and Cartology replace the need for a media agency partner entirely.

McLeod rejects the suggestion, however, and doesn’t rule it out at some point.

“Definitely that isn’t the intention at this stage. [..] They’re obviously interlinked, but I do see them as separate things, so that is definitely not the intention.”

The retailers have an enormous amount of data made available to them, and leveraging that has the potential to be extremely lucrative.

“Any business with ‘bricks and mortar’, that being data, digital assets or an audience” has the opportunity to monetise and commercialise that,” says Brooks.

“I do think that given the size of Woolies and Coles, they’ll certainly be spearheading that challenge, but I do think there is opportunity probably for lots of other businesses as well”

Brooks also points to other examples, including Samsung setting up its own media business, as well as the potential for airlines “given the data they sit on amongst some of their assets”.

“So there is opportunity everywhere, but a lot of work to be done to realise that potential.”

Furthering the duopoly?

While some have previously suggested the Coles and Woolies duopoly has proven detrimental for the wider Australian industry in bringing about the demise of some iconic Australian brands, both Tyquin and Brooks reject the notion that further control through owned media channels will put added strain on the relationship between the retailers and their stocked FMCG brands, and squeeze out competitors.

Through assets such as Cartology’s ‘Promoted Products’ feature, brands can increase their online and in-store visibility. Brands can be placed at the top of search results on Woolworths website, and also have the ability to get increased “on-shelf visibility” or see their products being promoted as the last thing shoppers see as they walk into a Woolworths stores.

McLeod says it will continue to strengthen Coles’ relationship with its brand partners, giving them the “opportunity to speak to customers directly” within its own growing media footprint with “a direct access point to customers when they’re in a ‘very close to purchase’ mindset”.

Tyquin says it is an “over-simplistic view” to paint retail media as putting a strain on certain relationships with FMCG brands, as industry sources have suggested.

“There’s no doubt people have tried to paint retail media as just an extension of the commercial buying activities of, in our case, Woolworths supermarkets. That is a gross oversimplification of what we do and how we do it, and that is true of retail media around the world.”

“If we didn’t believe that we could add significant value to the best supply brands, then we wouldn’t have made the progress that we’ve made over the last couple of years and you wouldn’t see the progress that’s being seen globally, where in some markets retail media businesses are emerging effectively as national ad platforms.”

While Aldi continues to make big strides, the next step in cracking the historical duopoly might lie in a venture into retail media.


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