Data compiled by US analyst Jack Myers suggests tech platform revenues are being hit hard by retailer media’s rise – and the softness in TV markets is no coincidence. Australian market dynamics differ, but Citrus Ad founder Brad Moran reckons Coles and Woolworths “could dominate the entire ad market if they wanted to”. Agency execs think search and social have more to worry about than TV networks. But some experts think the looming privacy overhaul – and ensuring compliance costs – may curb some retailer enthusiasm to monetise loyalty data via retailer media networks, while blowing a hole in the economics of loyalty programs themselves.

Retailers and the big digital platforms are talking up the collapse of the funnel and making a play for a greater share of marketing budgets. But Baiada Poultry CMO Yash Gandhi says marketers must always put top of funnel brand investment first, though he may yet spend more with the likes of Coles and Woolworths.

Retailer media is moving the needle for plant-based food firm v2food. But Head of Marketing Jade Lish said the supermarkets would take more of her budget if they could “show me the data.” Retailers positioning themselves as media suppliers "should be able to hold themselves accountable to the same standards that other media suppliers provide”. Plus, she rattles of a list of the stuff FMCGs like v2food actually need from retailers.

Nestlé is making a "fundamental shift" in the way its sales and marketing teams collaborate on ecom and retailer media to better align brand and trade marketing, according to marketing and communications boss Anneliese Douglass. While trade and marketing budget pots remain separate, a set up unlikely to change "in the near future", she indicated that trade dollars will now be treated with the same rigour applied to its marketing-led media investments. Which means Australia's retailers building media businesses need to step up. Meanwhile, increasing budget pressure means all publishers will face greater scrutiny on effectiveness, and Nestlé is investing in market mix models (MMM) to get a clearer picture of what's delivering returns, and what is not.

Only AI and automation can deliver an explosion in digital ad volumes further fuelled by retailer media's rise – and the next step is getting machines to make the ads entirely. WPP-owned Hogarth is already using AI to "predict which ads will work and the performance they will deliver based on past learning," according to CEO Justin Ricketts. "That is live globally and will be live in Australia within weeks." He claims "generating ads without humans" using ChatGPT and DALL.E "is only months away."

Coles is bidding to catch rival Woolworths in the race to become a major media business. But marketers are demanding greater rigour around measurement and reporting – to move bigger slices of budget, they want more data. Meanwhile, agencies risk being sidelined because trade sales teams have historically handled the money and owned the retail relationship. Coles 360 boss Paul Brooks and strategy lead Sam Hegg see structural shifts ahead. Here’s the plan.

Pepsico is increasing retailer media spend in the US, where the $50bn market is taking an increasing chunk of trade and marketing budgets. But CMO Vandita Pandey said the Australian retailers building out media businesses require far more robust measurement and bulletproof ROI before the big bucks start to move. In the meantime, she thinks agencies should prepare for disruption – and perhaps traditional media too.

“The reality is that legacy media has yet to wake up to the competitive threat from retail media. They’re attributing it to almost everything but the real cause of softness and stagnancy in the marketplace,” says Media Village analyst Jack Myers. If the US is a marker for Australia, TV, search, social and out-of-home could face significant disruption – with knock-on effects for marketers and agencies – as retailers start to scale. But FMCG brands say taking the big money will require big upgrades in data, measurement and rigour. Get the download via Mi3's new 74 page special report.