What you need to know:

• Amazon and Big W have bigger potential commercial opportunity from owned media than Chemist Warehouse, according to Sonder’s latest owned media valuations report.
• Finance is powering, up 19 per cent as banks and credit card providers rethink the media mix in a bid to personalise and cross-sell to millions of customers via their own channels first before considering paid media. Some are restructuring processes as result.
• Across the piste, brands, banks and retailers are using owned media revenues and trading to fund paid channels as retailer media’s rise has opened eyes and minds as to the value previously being left on the table, per Sonder co-founders Angus Frazer and Jonathan Hopkins.
• News Corp Commercial Content boss Mike Connaghan backs that view. Trade is brisk, he says, both in creating commercial content and helping to sell space for brands building out media businesses.
• But brands – and marketers – tempted by sizeable financial returns available from monetising owned channels must tread carefully, warns Sonder’s Angus Frazer, or will get burnt.
• Here’s a breakdown of the potential owned media commercial value available across sectors, which firms are the biggest players – and which brands are the ones to watch – plus the channels likely to provide most upside.
• Get the full download via this week’s podcast.

Retail media therapy

Retail media gets all the attention but owned media has far larger commercial potential in Australia – circa $4.3bn per latest estimates by specialist valuations consultancy Sonder. Co-founder Jonathan Hopkins suggests it could top $5bn in the next 12-36 months, but underlines it’s not all about flogging space.

At the top end of town, the likes of Commbank, ANZ, Telstra are taking different hybrid approaches, using their owned assets – emails, publishing, websites, apps, and in-store (or branch) – to first hone customer experience and engagement before extracting value from third parties keen to tap those customer bases.

Commbank is now making overt returns from its owned media, this year launching a new ad-funded magazine. Telstra has been investing in its retail store assets to commercialise marketing opportunities for handset suppliers.

ANZ meanwhile, is pushing to fully leverage owned assets first instead of putting paid media at the top of the plan. CMO Sweta Mehra sees “hundreds of millions” of dollars in value by properly leveraging its owned channels, but selling that space to others is “my smallest upside opportunity”, dwarfed by greater ability to engage, personalise and cross-sell to its existing customers.

Per Sonder’s new study, the financial services sector has seen the biggest owned media commercial potential growth over the last 12 months, up 19 per cent to $180.6m.

That said, Sonder acknowledges that retail aggregators and their media networks are the biggest single chunk of the market – while the rise of retailer media, driven particularly by the more mature grocery, liquor and chemist operators – has awoken the market to the true value of their owned assets.

“The data smarts that are demonstrated by the likes of Cartology is training supplier brands to expect more from owned media sellers,” suggests Hopkins. “So for example when L'Oreal sees the targeting and reporting they are getting from Woolworths, they'll expect that from both pharmacies and department stores where they range their products as well.”

Either way, he suggests the broader owned media market is now at a “tipping point” as businesses and brands are under pressure to extract better value from assets and partnerships while being pushed to cut marketing investments. Owned media, per Hopkins, can help solve both of those challenges.

“Marketers are now getting that leveraging owned media channels can save them money on their paid media investments, and it can retain and attract customers that can be leveraged for indirect or direct revenue. So something that saves you money and generates you money is pretty compelling.”

'Only getting bigger'

Mike Connaghan, MD at News Corp’s Commercial Content division – which generates about $150m in revenues as a hybrid outsourced publishing partner for the likes of Coles, Bunnings, Officeworks, David Jones, Chemist Warehouse and Qantas – confirms the owned media market is booming.

“The efforts we’re doing for these clients are only getting bigger,” says the former STW and GroupM AUNZ CEO. “The Coles magazine is now massive. It expands well beyond the print product, but those [supermarket] print products are the biggest magazines in the history of Australian publishing,” at north of 200 pages and with a readership of “five million and growing”, per Connaghan.

He sees no sign of a slow down across retail or broader owned media, in turn fuelling the content and sales arms of News' main commercial content units, Medium Rare, Storyation, Suddenly and Visual Domain.

“A lot of these clients have massive customer databases with really sophisticated first party data. So not only can they market their own initiatives through those channels, but many of their partners and suppliers want to get in on the action.”

That’s because they can see the results. “You immediately see incremental sales that can be quantified through their sales data,” says Connaghan, with Coles' magazine a prime example. “Coles can see through its scan data that people not only take that magazine home, but they shop the recipes in that magazine right down to the fine detail … So it's a really powerful story.”

Windows of opportunity

News, via Medium Rare, is helping monetise assets for David Jones, the latest retailer to launch a media business, by bringing in brands that wouldn’t usually be ranged in its stores.

“The windows of David Jones are high street, high profile and with highly valuable customers walking past. So out-of-category opportunities for someone like David Jones through travel, through auto, are there and live,” says Connaghan.

Likewise Qantas is thinking outside the box, running “thought leadership” courses for its business customers that Connaghan says are “self-funded”.

“It’s offering Qantas’ base an amazing opportunity to be in a room with thought leaders and be deep in content that is valuable to them and their careers or their lifestyle,” says Connaghan. “There are so many different ways to think about your own channels.”

Bunnings is another example harnessing content and its own assets to drive returns.

“Bunnings used to be a completely clean in-store environment. But customers … need information, they need utility content served up to them,” says Connaghan. By taking that approach “I’ve seen significant sales uplift, to the point where a brand in the home DIY category that advertises through [Bunnings' owned] channels, saw a 1000% uplift in sales. So it's educational, utility, it's putting something in somebody's hands – how do I use this? What do I use it for? Bunnings is a classic environment to do that in … and it’s a win-win for everyone.”

Owned fuelling acquisition?

Sonder’s Hopkins and Frazer and News’ Connaghan disagree that putting owned media first reduces brands’ focus on acquisition or filling the customer bucket.

While owned media by nature focuses squarely on existing customers, the money brands save by properly harnessing their owned channels for their own communications can be then recycled into paid media, they underline. Plus, any revenue unlocked from owned channels can then help better fund paid media.

Meanwhile, focusing on creating better content and experiences within owned channels that works for existing customers “by default is going to attract people like them who aren’t your customer”, argues Sonder’s Hopkins. “So create that content, serve it through your own channels, judge what works and then put that through earned media and paid media to attract more customers.”

Plus, he says, banks and retailers with outward-facing digital screens within their physical stores and branches can use them for acquisition: “Why would you be investing in paid outdoor media in those locations?”

Sonder’s Angus Frazer though says the “triple win” within owned media must always start with creating content that improves customer experience and helps partner brands grow through those owned media assets before pushing to monetise those assets. “If you want to succeed in this game, you need all three and you have to do it in that order: customer, partner and then your own profitable revenue. That is the triple win.”

But Frazer cautions any brands "tempted by by some fairly significant financial returns around monetising owned media" to tread carefully and not "try to run before they can walk, or even crawl". Put the right processes, people and structures in place before all else, he says, or risk damaging relationships.

Owned's major players

Retail aggregators – i.e. physical and ecommerce retailers that sell lots of types of goods – are the biggest owned media category at $1.4bn per Sonder’s latest estimates. It’s largely retail media in one form or another. Per the report, Amazon is perceived to be the biggest player in terms of commercial potential. Sonder's report notes Amazon's ad business notched 63 per cent growth year on year (though that percentage increase actually represents Amazon Ads’ 2022 growth versus 2021, taking its Australian ads business to $102.7m for calendar year 2022).

While Chemist Warehouse has a huge and mature retail media business that contributes the lion’s share of a reported $600m revenue line, Sonder also ranks Big W as a bigger owned media beast, at least in terms of commercial potential. Officeworks and David Jones make up the top five. Bunnings, Accent Group, JB-Hi-Fi, Mecca and Kmart are the retail aggregators to watch per the firm.

Although it ranks Amazon as the largest player by commercial potential, Sonder suggests in-store physical assets (23 per cent) represent the single biggest opportunity for retail aggregators, along with emails, followed by publishing (22 per cent). Websites represent just 10 per cent of commercial potential and apps only 1 per cent, according to Sonder’s calculations.

Grocery and liquor – retail media players Woolworths and Cartology also make up the big beasts of the grocery and liquor category, which Sonder reckons has $1.2bn in commercial potential, up 12 per cent on last year’s value estimates. Dan Murphy’s, BWS and Liquorland make up the top five businesses in terms of owned media commercial potential, with First Choice and Vintage Cellars deemed ones to watch.

In terms of channels, in-store (37 per cent) and publishing (30 per cent) represent the biggest potential sources of owned media value. For the grocery and liquor players, websites represent 8 per cent of potential commercial value along with email, and apps just 3 per cent, suggests Sonder.

Finance – Sonder’s report finds finance has made the biggest gains in commercial potential from owned media, up 19 per cent to $180.6m over the last 12 months. Email (37 per cent) offers the highest commercial potential by channel, followed by in-store/branch (23 per cent), websites (16 per cent) and apps (8 per cent). While Commbank this year launched an ad-funded magazine, Sonder suggests publishing represents only 1 per cent of commercial potential within finance.

Get the full owned media story with Mike Connaghan, Angus Frazer and Jonathan Hopkins via this week’s podcast and download Sonder’s new valuation ranking report here.

For a deep dive on retail media, Mi3’s 2023 Retail Media Next report unpacks implications for brands, budgets and the broader market via in-depth interviews with 25-plus marketers, retailers, platforms, agencies and analysts.