New year predictions are aplenty come the annual Christmas wind-down in the media and marketing industry, but retail media might just be the one to watch in 2024.
Fresh off a welcome holiday boost and record Black Friday spend, the retail industry is already gearing up for 2024 after spending much of the last 12 months navigating economic downturn.
Locally, Coles and Woolworths are continuing to ramp up their retail media offerings, while global players like Amazon strive to prove that consumers can tolerate an ad-dominated retail environment online.
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The global holding companies are well aware of the trend, with end-of-year forecasts from GroupM, dentsu and Magna highlighting retail media as a key growth channel for 2024 – forecast to grow 8.3% year-on-year by GroupM, while dentsu and Magna estimate YoY growth to exceed 20%.
Speaking to Mumbrella recently about the boost retail media channels sector saw during Black Friday, Zitcha CEO Troy Townsend said there had already been a substantial jump in retail investment compared to the same time last year.
He commended the innovation of the first adopters, suggesting that the year to come would be “pivotal” for Australian retailers.
“We’re cracking into multibillion dollar opportunity here in Australia,” said Townsend. “A lot of [businesses] are ramping up and getting their ducks in a row in order to see to see this value.
“Next year is going to be such an interesting time in Australia for media in general,” he continued. ” You start to get the narrative of [the market] being very focused on the Coles and Woollies opportunity’ calls and movies opportunity, but that wraps under the rest of the market in terms of what’s going to happen with media next year.”
Townsend suggested the biggest questions for the year to come would be how the retail channel would integrate into an evolving media mix, as more volume is shifted into retail media.
“What’s gonna happen holistically in the Australian media landscape?” he posed.
Troy Townsend is the CEO of retail media platform, Zitcha
In mid December, digital media measurement platform DoubleVerify published a report on the state of the rapidly expanding market in partnership with Sapio Research.
With a focus on respondents in the US, UK, France and Germany, the results revealed that brand’s and agency’s key goal in advertising with retail media networks were to “attract first-time customers”, followed by “targeting specific demographics and product interests” (40%), and “reaching consumers at the point of purchase” (37%).
For DoubleVerify CEO, Mark Zagorski, the research is testament to the “large share of advertiser ad budgets” that were being directed to the burgeoning channel.
“Brands are recognizing its value and effectiveness in reaching customers at the purchase point, especially with third-party cookies phasing,” he said.
Unsurprisingly, the research highlighted that the US was ahead of other markets in terms of uptake, with 87% of US respondents reporting to use retail media networks, and 83% planning to increase their retail media spend.
Given Australia’s tendency to follow the cues of the US advertising market, its reasonable to expect the local market to move in a similar direction.
So reasonable, in fact, that analysts at Morgan Stanley have warned that the rise of retail media networks could wipe $1.1 billion from traditional media companies by 2027.
“Retail media dollars will increasingly come from traditional media budgets,” the company wrote in a note to the ASX, whilst cutting its target share price for Nine, Seven, ARN, and SCA.
The analysts predicted that surging retail media uptake would result in around 40% “leakage” from budgets previously earmarked for radio, print, and television by 2027. However, they made clear that falling audiences remain the largest threat to the bottom line of traditional media companies.
The prediction aligns to the soaring revenues recorded by key retail media players in the last financial year. Results posted by Coles360 and Woolworth’s Cartology in August indicated a jump of more than 25% each YoY.
With advertisers increasingly looking to meet the consumer at the point of purchase, a new cohort of retailers are expected to cash in on the demand in 2024. As to whether they’ll compete alongside the more established retail media players, only time will tell.