In a fragmented media market, retailers are getting in on the action, selling advertising solutions and even setting up their own media agencies. We look at the big trends in the growing retail media sector.
There are few parts of New Zealand’s media industry younger than retail media. If the agencies involved were people, they would all be in kindergarten. The main players are Woolworths’ agency Cartology (a wizened three years old), Foodstuffs’ equivalent Precision Media (an 18-month-old toddler) and Marketmedia, which launched as The Warehouse’s unified retail media group in late 2022.
But what does ‘retail media’ actually mean? Sally Tobin, Managing Director ANZ at Mars United Commerce (formerly the Mars Agency), defines it as any form of media that is owned by the retailer themselves. “I think just defining it as ‘owned assets’ probably covers your in-store and out-of-store assets. When it comes to ʻsocial amplification, we just refer to that as their off-platform partnerships.”
The concept of retail media was pioneered globally by the likes of online retail giant Amazon, which realised the value of its huge customer base (and first-party data) to other advertisers. Tobin says New Zealand’s retail media sector is still in its infancy, but she picks it to have a “much more rapid evolution” than elsewhere in the world.
“That’s because they’ve taken a little bit of a different approach, in that a lot of the people running the media networks actually have come from media agency backgrounds, so they are hitting the ground running. It’s a very different way to how the US established retail media, where it was very much retail-centric experts starting in the retail media space.”
The benefits of youth
Mars United Commerce recently launched its Retail Media Report Card in New Zealand, examining 62 key capabilities across five performance areas – targeting, measurement media opportunities, innovation and partnership. Tobin says one benefit of New Zealand’s retail media scene being so young and comparatively small is that agencies can learn from all around the globe.
“They’re not the first market to go in, so they’re actually able to understand all the best tech stacks and all the best ways of working and offerings from global business models, and they’re able to adapt that quite quickly.” The relatively small size of New Zealand’s retail media players also means they can experiment, she says.
Tobin uses the example of Zitcha, a self-service retail media ad platform developed as a joint venture between MarketMedia and an Australian digital agency. “No one’s done that level of platform in Australia, but we’re a bigger market and everyone’s moving at pace and the idea of self-service was quite risky. New Zealand can lean into innovation a little bit more heavily and quite quicker with less risk in some sense.”
Alex Lawson, Head of Strategy & Media for MarketMedia, says that while there is plenty to learn from big international players like Walmart, Aotearoa is leading the world in some aspects of retail media. “Because New Zealand is small, because we don’t have the budgets that are available to others, we have a much better mentality,” he says.
“As a country, we’ve got a No. 8 wire mentality. We’ve always been a test bed from a marketing perspective; we’re one of the most creative marketing countries in the world, and we’ve been leading the world in a lot of this development.”
DIY approach
Lawson says MarketMedia decided to build Zitcha after engaging with several major global platforms looking for the tools it was after. “But they didn’t do everything we wanted them to do, and they wouldn’t engineer it because we weren’t important, so we did it ourselves.”
They have received positive feedback on Zitcha when travelling abroad to meet others in the industry, including from some of the world’s biggest retailers, Lawson says. “A person from Walmart said to our face, ‘You are massively ahead of us in a tech platform base.’ Now, they are ahead of us in other places, but in certain areas we have that ability to play and to develop things, because we’re in New Zealand,” he says.
“We can do it, we can try, we can fail. It doesn’t cost us as much. It’s like, ‘Okay, that didn’t work. Let’s pivot it and do this, move it that way.’ Whereas if you’re at a Walmart or somewhere like that, if your project fails, you probably get fired.”
Kim Leybourne, Head of Precision Media, says one of the biggest drawcards for retail media is data, particularly at a time when third-party cookies are due to be phased out. “When you’ve got first-party data, you have a great opportunity to be able to connect with consumers. And by connecting with those consumers, we can close the loop on how we report back on their behaviour.”
Leybourne says Precision Media’s philosophy is to create a “win-win-win” situation with its advertising. “It’s a win for the customer because we are putting the right messages in front of them at the right time to be able to give them that relevancy of product. It’s a win for suppliers because we’re able to provide new customers for them and give them a sales lift. And it’s a win for our store owners, which is super important for us because it’s all about them being able to deliver category growth.”
Standardisation is key
As the retail media industry grows, Leybourne says one issue that needs to be resolved is standardising the way results are measured. “This is critical for us as an industry to get right. They still don’t have it right globally. I think that makes it really difficult for suppliers to understand and measure how certain retail media networks are working versus others.”
However, Leybourne is confident the key players in New Zealand can work together to find a solution relevant to our market. “Across the globe, they’ve got these big forums where they’re all getting together and it’s all quite dramatic. I don’t think we need to be like that. I think there’s some really easy wins for us to come together as a team basically, team of five million and all that good stuff.”
Leybourne says Precision Media always focuses on awareness, conversion and retention, and they have certain products or assets within both their store and online environment that align to those. “If you were coming in with an NPD [New Product Development] as an example, we would look at all of our banners at point of shelf. We have digital screens at front of the store, so we would look at attracting your attention at the front of the store.
“And then we always talk about how do we close that loop? So how do we come back through something like an EDM once we know that you’ve either purchased the product or that you potentially are in that interest category. We obviously look at online as well. As of the 1st of May, we have a homepage banner, which is super exciting. And our sell-out rate already is 100% up to August.”
Changing customers
Samantha Osborne, General Manager at Cartology NZ, says customers have changed, and they are in control like never before – in control of the media they consume, brands they engage with and the products they buy (as well as when and how).
“They are harder to reach in the traditional ways we have in the past. No longer is a TV spot in primetime going to capture your audience. Audiences are digital-first, streaming, skipping and scrolling. And in a cookie-less world, understanding who your audience is has become even harder. We are talking about real customer understanding, not audiences, cookies or inferred customers.”
Customers are also harder to impact and harder to measure, says Osborne. “We’ve seen the return to privacy. With the decline of cookies and IDFA tracking changes, consumers are more in control of how their data is managed. These changes mean having true 1:1 relationships with customers is deeply important.”
In a more competitive environment, innovative brands will increasingly use store media to build deeper connections with customers. The connected store offers brands the opportunity to tell a cohesive brand story where their customers are, speaking to them at every point on their journey, Osborne says.
“They can inspire at the entrance, inform between the aisles and influence near the shelf. And while every channel serves its own specific role, they are more powerful combined – enabling brands to reinforce their value across a varied creative canvas.”
In an average supermarket today, thousands of products are on promotion at the same time, Osborne says. “Shopping budgets are under pressure, and the popularity of own label continues to grow. ‘Sleep shopping’ is commonplace. In short, competition is everywhere, and brands can’t rely on price alone to stand out.”
Osborne says one area Cartology has focused significant resource in is its digital product and platforms. “Working in conjunction with the WooliesX team, we have been able to build, test and launch a variety of new exciting products that help our clients find new to brand customers, returning customers, but most importantly drive overall ROI.
“As this part of the business continues to grow and customers become more demanding in how they shop and what they expect through personalisation we are at the forefront of ensuring we create products that enable our clients to capture these customers.”
Context is Queen
Retail media has opened new ways for brands to connect to customers, but are they making the most of the opportunity? Ben Partington, CEO of retail marketing and media agency Hyper, says: “If content is king, context is queen.” While retail media has dramatically increased the number of media touchpoints and formats available to advertisers, he says best practice use of these channels is in its infancy.
“We’re finding that while media agencies and brands are excited by the opportunity to speak more directly to shoppers, based on the context of these environments, it seems that creative agencies aren’t currently part of the conversation, making supply of environment-specific content rare.”
Significant growth
Hyper has achieved significant growth over the past year, underpinned by the signing of five new retailer partnerships and the deployment more than 500 new digital screens nationwide. “As the network has grown, so too has our utility to agencies and brands, leading to a sharp uptick in revenue in 2023. We were delighted to observe 176% growth in new advertiser categories and over 70% growth in gross media sales,” Partington says.
“Our expansion has been complemented by the integration of programmatic trading via Hivestack and Vistar, which, together with the rollout of a new proprietary inventory and campaign management system, has significantly enhanced our audience targeting, delivery and reporting capabilities.” Despite this, Partington says brands can do more with what retail media offers them.
“The bulk of the campaigns we’re serving are generic brand or trade communications. In order to harness the true power of contextual relevance, agency villages need to come together more effectively in the planning phase. We believe that DCO [Dynamic Creative Optimisation] will become more prevalent to reduce the operational load for agency teams and drive cost efficiencies for brands.”
Lawson, of Marketmedia, echoes the need to get your creative right to get the full benefits of retail media. “If you spend any time in media agencies or creative agencies like I have, you know the stats will be anywhere from 70% to 86% of the effectiveness of any ad campaign is down to the creative.
“And in retail media, it’s no different. In fact, you could argue it’s almost more important because if you’re directly able to track results of a campaign at a sales level, back to individual units of media.”
Lawson says it is important to work with advertisers to establish what they are trying to do, and advise them on the best ways that retail media creative works. He says some suppliers have had disappointing results and blamed the channel itself, when the problem may have been their campaign execution or even misinterpretation of data.
“If you’ve got somebody who’s going, ‘Hey, I’m going to literally decide whether you provide value or not based on the sale that happens,’ and then they’re putting out a totally bland piece of creative with no call to action, no incentive for somebody to pick up at that moment and buy or anything like that, then you are between a rock and a hard place right from the start.”
This was first published in the 2024 June-July NZ Marketing Magazine issue. Subscribe here.
