What you need to know:

• Goodman Fielder has combined trade marketing and media budgets, aligning sales and marketing spend in a bid to unlock bigger bang for buck across brand and retail media investments.
• CMO Christine Fung thinks the approach presents a major growth opportunity for both brands and agencies.
• Less than five per cent of retailer media investment is currently handled by agencies. Initiative is bidding to shift that balance, aiming to build a dedicated retailer media unit in the next financial year.
• Strategy and product chief Chris Colter thinks FMCG and grocery is just the tip of the iceberg.

Sandwiching spend

Goodman Fielder has handed trade marketing investment to Initiative following a structural overhaul 18 months in the making. The move marks the FMCG giant as an early outlier as industry re-engineers for retailer media. CMO Christine Fung thinks it may be the shape of things to come – and says combining above and below-the-line spend represent a major growth opportunity for both brands and agencies that can cut new turf.

Trade and marketing budgets have historically been siloed – with sales handling the former and leveraging spend in negotiations with retailers for shelf space.

The challenge is making those investments work together to drive both awareness and sales while ensuring cohesive comms. Fung said that is about to change for Goodman Fielder.

Initiative will now oversee trade dollars invested with the likes of Coles, Woolworths-owned Cartology, and ultimately IGA owner Metcash, as well as traditional media investments across the broader market. That shift puts both Goodman Fielder and Mediabrands-owned Initiative into a niche club: circa 95 per cent of Australia's retailer media investment is handled by brands directly rather than via agencies.

Neither brand nor agency would be drawn on the quantum of trade investment, but sources suggest it could equal media spend and depending on category, surpass it. Goodman Fielder's main media spend was reported to be circa $12m annually when Initiative won the business in 2020.

Collapsing silos

Fung said the firm’s sales function retains responsibility for its trade budgets and targets, but that “planning and strategy sits with us [marketing] – and now Initiative … so we are spending holistically”.

Linking above-the-line or brand spend with below-the-line or retail spend is the primary goal. Fung said the industry has erected “false barriers” between the two. She thinks they should be torn down – and said Goodman Fielder’s top brass agree.

“Having [trade and traditional media investment] centralised fully though-the-line is another step in having the entire team aware of the impact of every dollar spent – and ensuring it is connected [across brand and retail]” she told Mi3.

That theory is well expounded, especially by Australia’s grocery duopoly now seeking a greater share of FMCG budgets. Aligning sales and marketing resource, however, is harder in practice. But Fung, who has both shopper marketing and activation under her remit, said the shift, while taking time to work though processes internally and with its media agency “was less of a challenge than I anticipated.” That's partially because Goodman Fielder's retailer media activity to date has driven double digit growth for brands such as Wonder while bringing new customers to the table. But she said having executive buy-in also focused the collective mind.

Cannibalisation vs. incremental

Fung said a key “stumbling block” to clear in building the business case was working out “recycled” spend versus additional spend that will be allocated to retailers – i.e. cannibalisation of overall trade and marketing spend versus incremental investment. “The other concern was duplication of reach – are we reaching new buyers or paying more to reach the same people? That was tricky to work through, but that is why we think agencies are best placed to handle that aspect – they have better tools [to stitch those things together].”

Asked how much more the FMCG will now channel through Initiative in dollar terms, Fung said the quantum varies by category – some spend more on brand investment, some spend more closer to point of purchase. But she suggested trade spend, given the rapid rise of retailer media, “is a significant opportunity for agencies”. Fung said agencies shouldn’t sweat about having all the answers before making a play for trade budgets: Once they have established relationships with trade sales counterparts within both brands and retailers, she suggested, “agencies start to see [retailers] are just like any other media provider”.

Metrics challenge

A challenge facing both brands and agencies is that retailer media-derived ROI, analysis and reporting remains immature – as flagged by marketing leads interviewed for Mi3’s recent Retailer Media Next report. Per V2foods marketing director, Jade Lish: I would invest more if retailers could give me more data.

“I’d agree with that statement,” said Fung. “Reporting that is robust and comparable is the final piece – and that is probably the biggest thing we all need to lean into.” Moreover, she said the “end game beyond reporting” is access to actionable data that doesn’t carry an exorbitant price tag.

Ultimately, said Fung, Goodman Fielder wants both “highly targeted messaging without wasting spend as well as broad brand investment, in line with Ehrenberg-Bass principles. So reporting is one of the key issues. That said, it’s not like you get the same set of reports from every other publisher; there is some synthesising of key metrics across platforms and providers.

“So we – suppliers – are pushing that agenda with Coles, Woolworths and hopefully Metcash, to develop the key metrics we want to see and we are holding them accountable,” said Fung. “They are willing to get there, but ultimately it’s about what metrics they can create for everyone that are universal.”

Bigger slice

Initiative Chief Strategy & Product Officer, Chris Colter, said it is “bewildering” that aligning trade and media spend has taken so long. But he admitted that getting to grips with trade rules and roles is no mean feat.

He said Initiative has had to deploy additional resource to handle trade spend as well as media for Goodman Fielder, but that equates to “a handful” versus headcount equivalent to its existing media component for the brand.

Colter agreed comparing retailer media apples with apples remains a key industry challenge, with Coles and Woolworths requiring separate approaches. “Within the broader media market, there is relative standardisation. Coles and Woolworths … differ quite widely,” he said. In the long term, if retailer media is to hit the multibillion dollar growth projections forecast by the likes of PwC, “it’s hard to realise the dream of through-the-line ideas executed at shelf and in culture unless you have unified measurement”.

But Colter said retailers have significant impetus – and media revenue targets – to solve that challenge, and Initiative, which recently won Sanitarium’s media business, plans to lift the retailer media template it has now built with Goodman Fielder.

“It’s definitely an opportunity. We want to scale to a dedicated [retailer media] division within the next financial year,” said Colter.

Beyond FMCG

Colter thinks the opportunity goes beyond FMCG. “We’re having deep conversations with multiple parties in different categories around leveraging retail media as a category entry point,” he said, citing IAG telling people how they can stock up on supplies ahead of bushfire season as a theoretical example.

“There is an untapped marketing opportunity for non-endemic brands [those not normally found in supermarkets] that can create cultural relevance and mutual value within the stores,” per Colter. He predicts retailer media will expand beyond the big grocery retailers, with other retail chains now seriously evaluating media market entry – because there is a growing pile of money on the table.

“Marketers increasingly see value in through-line planning, ideation and execution and leveraging media skills to enhance trade efforts. Those conversations [and budgets] shift how we talk to media partners – which shapes the future of what agencies deliver,” said Colter. “That’s quite an exciting prospect.”

Find out where Australia's retailer media market is headed via Mi3's 2023 Retailer Media Next report.