What you need to know:

• Former Carat CEO and current Nine Sales Director Paul Brooks will lead Coles Media, a new unit to tap traditional media advertising and integrate grocery trade marketing budgets.
• Brooks said retailer media is the new growth hot spot and would exceed estimates of a billion dollar market in Australia by 2025.
• Sector growth would come from legacy media, digital media and the Google-Facebook-Amazon axis, Brooks said.
• But Coles Media would not be a me-too of the rapidly expanding Cartology retailer media unit at Woolworths, nor was it playing catch-up to Cartology, Brooks added.
• Coles CMO Lisa Ronson, who Brooks reports to, said the strategy is to work with suppliers and partners “to grow their businesses through our business and the reach we have with our audiences… It's integrated but it’s not everything all at once".

The next big thing

Retailer Media is the hot growth play in marketing and the former CEO of Dentsu-owned Carat and current Sales Director at Nine, Paul Brooks, has read the tea leaves.

After an international search, Coles CMO Lisa Ronson, who has ultimate charge over the Coles Media remit, told Mi3 Brooks has the local capabilities, network and know-how to develop a more integrated offer to suppliers in-store, online and via existing owned media assets such as audio and Australia’s most read magazine, which claims some 5 million readers.

Brooks had some visibility on the development of Woolworths’ rapidly expanding media unit, Cartology, during his time as Carat CEO, which had the master media buying and planning contract for the Woolworths Group.

He since joined Nine as Sales Director but will exit to start his new Coles Media role in coming months.

Brooks batted off suggestions Coles was playing catch-up to Cartology or that it will attempt to mirror what its supermarket arch rival Woolies is doing with its in-store and digital media bundle.

“It's not just going to be a [Cartology] plus one, but red,” Brooks told Mi3. “It's going to be very different and it will be done in a Coles way. The inspiration is probably drawn more closely from what the likes of Walmart and Tesco are doing overseas with regards to what the model looks like here in Australia. And I think Coles has done the right thing in terms of not rushing into it. They've waited until the market is ready and sufficiently evolved to be able to deliver on it. That's been done in a considered and strategic fashion.”

Brooks said his move out of big media and big agencies into big retail was spurred by the realisation that retailer media is the next growth hot spot – which will come at the expense of legacy and digital media and the Google-Facebook-Amazon axis.

“When you look at the past ten or 15 years in terms of different spaces in different industries and where the growth has come from, this is the next one,” Brooks said. “Being at the heart of that growth journey is the thing that I find super exciting.”

A billion dollar market within three years

Brooks said estimates of a billion market for retailer media by 2025 are too conservative.

“I think it will probably be bigger than that. I reckon a lot of that thinking was done before two years of Covid and what we saw during the pandemic was advancement in the e-commerce space about ten times quicker than we would otherwise have done. That has helped retailers to be able to see just how big the opportunity is. So by 2025, I reckon it will be bigger than that.”

According to Coles December half earnings results, e-commerce sales were up 46 per cent on the same period in 2020 with revenues of $1.5bn.  

When asked about the mandate to bring all of Coles media assets, customer experience, loyalty programs, shopping baskets and unified customer identities together, Brooks admitted “there’s a lot of work to be done there”.

“My understanding is it’s fairly embryonic in certain parts of the business and more developed in others. But Coles has invested heavily in technology operations and CX expertise and that was with this role in mind,” said Brooks. “So to be able to put all the pipes in the right area to be able to unlock it all is huge.”

Coles CMO Lisa Ronson said the supermarket’s shift on its media assets was around building a “dedicated” unit.

“That’s the key word there,” she said. “We've been working in this space with our partners and suppliers for many years, but given the demand and the data that we've got available to us now, we can really help add value to our suppliers and our partners in terms of working together to grow their businesses through our business and the reach we have with our audiences.

“It's integrated but it’s not everything all at once, obviously. That will be part of Paul's role, to work through the phasing of the plan and where it lands for those different components and the different channels.”

Retail market moving 

Coles’ move comes amid predictions of a $1bn Australian retailer media market by 2025 – and a scramble to secure a share of the spoils, as evidenced by Publicis Groupe’s $200m-plus acquisition of retailer media tech start-up, Citrus ad.

The likes of Woolworths, Chemist Warehouse and Appliances Online are likely to face further competition as retailers in FMCG and beyond begin to build out owned media businesses in earnest, according to Omnicom-owned Resolution Digital. The firm thinks the likes of Bunnings could go next, or maybe Wesfarmers will go the whole hog and take a group-wide approach.

“Almost all retailers across all verticals are thinking about [building retailer media capability],” Mohammad Heidari Far, Chief Product Officer at Resolution Digital last year told Mi3. “This is not necessarily just CPG or FMCG, but consumer electronics, home and garden, apparel and even fashion.” 

Heidari Far forecast a 12-month lead time from committing to retailer media and launch, which means Australia may see a bow wave of emerging players within the next few months. 

Should that scenario play out, consultants think traditional media owners face a significant threat to ad revenues.

“This will be the money you plan first. It will take more money from the market,” said Tumbleturn Media Managing Partner, Jen Davidson, when interviewed for Mi3’s The rise of retailer media report. “The key [for all other media owners] will be making sure it doesn’t take too much of the pie.” 

Then PwC Partner Justin Papps agreed. “We're seeing more and more advertisers or product owners looking to do direct deals with the retailers,” said Papps. “There is no doubt that retailer media is growing in significance and revenue. The question we continue to look at is where the money will come from.”

Further publisher pressure

In the US, retailers have already displaced traditional publishers on the media plan, according to veteran analyst Jack Myers, founder of US-based MediaVillage.

“We’re seeing a huge shift of budgets from ‘legacy media’ to commerce-based relationships,” Myers told Mi3.

“What we're seeing is Amazon connecting media with part-commerce partnerships. We’re seeing Walmart introduce a similar model. Target has Roundel. Kohl’s, Kroger, CVS, Walgreens and a growing number of retailers are connecting product sales or product purchases to media,” said Myers.

“They're going out to P&G, Unilever, all the major packaged goods companies, every merchant that sells their product through their stores and they're connecting up promotional dollars with media dollars on their online platforms. And we're seeing a huge shift of budgets.”

“For everyone who sells through retail … that pool is going to be the first investment, the priority investment – and the rest will be distributed.”

Coles’ move comes as Amazon ramps up its Australian ad sales operation, tripling revenues to $63m in 2021. Agency execs think the juggernaut is starting to roll, and last week told Mi3 Amazon could easily maintain that growth trajectory in 2022.