What you need to know:

• Cartology, Woolworths’ retail media arm, has a team that can plan, buy and implement campaigns on its owned assets as well as the open web.
• Speaking to Mi3, Cartology Managing Director Mike Tyquin says agencies need to “build some muscle” and join his business in writing the playbook for retailer media.
• Cartology won’t prebuy blocks of media and arbitrage but will clip the ticket on external media on the way through.
• While Cartology has traditionally dealt with supplier trade promotion budgets, Tyquin says he’s increasingly seeing marketers coming through the doors looking to spend their brand dollars on Woolworths assets.

Selling ads and apples 

Woolworths’ Cartology says it can plan and buy media on the open web for its clients – with a small margin – but also insists it can work together with agencies to navigate retail media’s future.

Cartology boss Mike Tyquin says he is seeing marketing budgets either merge with trade dollars or independently spend with data-enhanced retail media and urges agencies to “build some muscle” and help write the rulebook for the sector.

“If you’d spoken to me 18 months ago, it was very much trade-oriented,” Tyquin tells Mi3. “We’re increasingly seeing that we’re accessing marketing funds.”

While Tyquin says he does not expect Cartology will arbitrage media for its clients’ campaigns, it will include “incremental” margins on open web media.

The retail media market in Australia is expected to exceed $1 billion within a few years, experts say, eclipsing the out-of-home industry.

In the US, Retail media is eating into big publishers’ revenue, according to media ecologist Jack Myers, who says there have been huge shifts from legacy media to “commerce-based relationships”.  E-commerce players are a huge part of the market in the US. Amazon makes $15bn from ads alone there, but just $22m so far from ads in Australia.

This shift poses a challenge to media agencies: if powerful data players like retailers can buy media directly on behalf of clients, it changes the relationship between agencies and brands. Cartology has previously said it is moving towards “brand activation” on both owned and external assets. Late last year, Cartology hired former IAG head of Customer Growth and Analytics Willem Paling to spearhead the push. In April, Woolworths upped its stake in data analytics firm Quantium in a deal that also brought the rights for data activation in-house. Tyquin says Paling is leading a small team of about 10 that can plan, buy and implement media spend on the open web.

“Increasingly, what will be happening is that those activation opportunities will shift across. We'll be able to work with agencies and we'll be working on an increasing basis directly with those brands,” Tyquin says.

“Where we are today as a business is the is the kind of first state of where we're going.”

Apples and agencies

Tyquin says agencies play an important role in Australia’s media landscape, and Cartology isn’t going to replace them any time soon. But they need to learn how to use retail media as it grows.

“There's a whole lot of things that are different, where [agencies] need to build some muscle around this. And we can help. We can help with the context. We can help them understand the customer context better. We can help them understand the data better,” he said.

“There are disciplines that agencies have got that a lot of brands themselves don't have, like search… So there are definitively things that the agency world can bring in retail media. And that's, again, what we're seeing out of US. Agencies are now very well invested, there's a nice kind of operating rhythm starting to emerge. But it's still early days.”

With the deprecation of third-party cookies and many organisations making a play for high quality, data-driven audiences, Tyquin says Woolworths is well-positioned, with owned (or on canvas) and external (off canvas) omni-channel assets, to bridge the gap between physical and digital advertising.

“There will be cost of margin differentials between operating on canvas versus operating off canvas,” he says.

“But, you know, we still think, incrementally, it's the right thing to do. It's a better outcome. We can deliver those solutions to suppliers… we think this is a really significant, viable business.”

Woolworths says its digital assets see 12.4 million visits per week – up 50 per cent from previous Q3, and 51 per cent of its 12.9 million Everyday Rewards members scan cards. Likewise, Woolworths stores see more than 20 million customer visits each week and online sales grew 90 per cent in Q3 last year – representing 9 per cent of total Australian food sales.

Mi3 will publish a detailed picture of Australia’s retail media market in early July.