The Lowdown:

Based on conversations with people familiar with various aspects of Cartology's strategy, and analyst and media reports here and abroad, we know this:

• Woolworths writes circa $100m in high-margin revenue from what was set up five years ago as the "Woolworths Media Hub". It was primarily focused on in-store trade promotions.
• The new division, Cartology, is tasked with replicating Walmart, Target and Amazon's success creating lucrative, standalone digital and data media advertising operations.
• Woolworths completes circa 20 million omnichannel transactions each week. Similar trends are driving Amazon's explosive advertising platform growth in the US - eMarketer estimates Amazon's ad revenues will hit $15 billion next year, up from $3.3bn in 2017.
• Cartology, like Target's Roundel and Walmart Media Group, will heavily target media agencies and marketers to meet sales growth targets. Some estimates are circling of $100 million in high-margin, incremental advertising revenues in a few years.   
• It could be located in Surry Hills with the joint M&C Saatchi-Woolworths agency, Greenhouse, and WooliesX, the retailer's digital, e-commerce, customer loyalty and customer services functions, headed by Amanda Bardwell.      
• Cartology plans a major capex program in digital media infrastructure and networks, including in-store digital screens, likely to exploit a slowing but relatively healthy out-of-home advertising sector.

• Cartology could engage with other media groups, possibly in alliances.
• It appointed former Adshel and Eye chief executive Mike Tyquin as managing director, reporting to Woolworths group CMO Andrew Hicks.
• There's some industry conjecture about whether Cartology is better suited in the CMO's remit or WooliesX.

The US retail media trailblazers:

• Amazon's booming ad business is coming primarily from $178bn in US trade marketing budgets, according to Morgan Stanley.
• Amazon has seen rapid advertiser take-up of its search product after allowing brands and suppliers earlier this year to feature more prominently in Amazon search results. 
• Walmart brought its ad sales unit in-house this year from Triad, which WPP's programmatic media unit Xaxis acquired in 2017.

• The consolidated Walmart Media Group reaches 160 million visitors across its stores and online every week and tried tapping the ad market before via Walmart Exchange without much success. Its now booming e-commerce business has helped shift sentiment - online sales were up 45% for the three months to January 2019.   
• Walmart acquired San Francisco adtech start-up Polymorph Labs in April, which includes a high-speed ad server, a self-service interface, targeting capabilities and server-side header bidding.
• Polymorph's tech allows advertisers to target segments based on shopping behaviour - dog food buyers over cat food buyers, for example, then automate ad delivery and measure whether those ads led to sales via test and control customer groups.
• Walmart this month launched "Fifty-Two Sixty", an event for CMOs, agencies and brand marketers to meet with Walmart execs and discuss how brands should be thinking about their retail strategies.
• Closed-loop measurement is part of Walmart's proposition - advertisers can track whether shoppers who saw an ad bought the product online or in-store and compare them to shoppers who did not see the ad. KPIs include brand lift, per cent of exposed shoppers, search lift, product view lift, add to cart and return on advertising spend.
• Walmart owns online marketplace jet.com and video streaming service Vudu

• Target announced a rebranding of its Target Media Network to Roundel at the IAB New Fronts in New York this month, with a significant shift in resource to the retailer's in-house agency and media network.
• Roundel expands beyond Target's online and in-store advertising to a curated list of publisher sites in Target's network, and on TV and other channels.
• Roundel will create campaigns and content for brands and agencies, including brands that are not sold in Target stores.
• Target says media needs to be "re-imagined", striking a "new balance between analytics and empathy, code and common sense, IQ and EQ" and to reward platforms that reflect a brand's long-term vision over those chasing "vanity metrics" for quarterly reports.     
• Both Walmart and Target are distancing themselves from the big digital platforms with selling points around stronger brand safety and transparency thresholds... and first party customer data.   

Mi3 Takeout: 

• Trouble in paradise: while Woolworths is positioning itself in the sweet spot for marketers seeking to seamlessly target and track ad exposure through to a transaction, it's plans to extract more marketing dollars arrive as it faces unprecedented supplier boycotts for imposing tough trade terms, including refusals for price increases due to soaring commodity prices, a weaker exchange rate and other inputs. Dramatically, Nestlé and Mars withheld supplies last month as a result of the  stand-off.
• The relationship between Woolies, Coles and trade partners is increasingly fractured, with suppliers calling for the Australian Competition and Consumer Commission to investigate the supermarkets' behaviour and more stridently enforce the Food and Grocery Code.   
• Australian media and agencies expect WW's Cartology offer to take ad share primarily from Facebook and Google's "rivers of gold" in online performance, or response-driven, advertising. If there are marketer budgets to be had by Cartology, above the well-oiled retailer trade marketing programs, they're most likely to come from the tech platform's 'lower funnel' advertising offers. The prospect of trackable, advertising-influenced customer purchase analytics from data-rich retailers is compelling.
• Longer term brand-building programs, historically the domain of television, some digital video, out-of-home, cinema, news media and other legacy media channels, might fare better than performance-orientated media.
• Some industry observers says the retail OOH category could face up to $50m in diverted ad budgets to Cartology.
• Ooh Media CEO Brendon Cook remains upbeat. He argues the "discovery mindset" of shoppers in retail precincts means they are open to messages and products from brands they have not planned for. FMCG is only one advertiser category in retail OOH.
• Other media companies say there is opportunity to work with Woolies and Cartology to feed top-of-the funnel traffic to Woolworths customers and prospects by linking audience IDs to Woolies customer sets.
• Expect Cartology to be extremely active with media agencies and marketers in the coming months.