Retail-owned media will take $1.1 billion from traditional media by 2027
“A step change is underway,” Morgan Stanley analysts warn, saying that the rise of retail-owned media will take $1.1 billion from the traditional media companies by 2027.
“Retail media dollars will increasingly come from traditional media budgets,” a note by Morgan Stanley reads, predicting that point-of-sales promotions and in-store advertising controlled by the retailers will result in around 40 per cent “leakage” from budgets previously earmarked for radio, print, and television by 2027.
The result – $1.1 billion lost across traditional media – with TV advertising down $45.2 million, radio down $147 million, and the out-of-home industry losing $56.5 million by 2027.
The biggest earners from retail media this year are the two big supermarkets, with Morgan Stanley estimating Woolworths made $550 million from its retail media play Cartology in FY23, with Coles360 netting $250 million. Last year, Wesfarmers — Perth-based parent company of Bunnings, Kmart, and Target — launched its OneDigital retail media division
“What is key is the characteristic highly fixed cost base of most media companies, which means even the loss of an incremental, say, [$5 million to $10 million] in revenue per annum really hurts,” the note reads.
“The cumulative impact is potentially significantly negative.”
Morgan Stanley cut their target share price for Nine, Seven, ARN, and SCA, although they note that falling audiences are a larger threat to the bottom line of traditional media companies than a nascent advertising competitor.
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Nathan Jolly is the Deputy Editor of Mumbrella. He joined the team in July, 2023.
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Makes total sense!
People arent loyal to supermarket brands, so why waste budget on mass media?
Who even looks at the full page ads in newspapers anymore?
Who even reads newspapers anymore??!!!
As someone who HAS been influenced by in-store POS countless times, this is a positive move for consumers and a pre-extinction message for the dinosaurs.
“Down, down, comms checks are down”
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