Introducing the RE:Made retail media newsletter
Why it's time to get serious about Amazon; and Coles' Paul Brooks on Connected TV
Cat McGinn, curator of RE:Made - Retail Media Unmade writes:
Welcome to a special edition of Unmade, in which we introduce our new monthly newsletter RE:Made. It’s a sister publication to our retail media event RE:Made.
This first edition has gone to everybody who receives Unmade. However, you will need to opt in to receive future editions.
You can do that by adjusting your Notification settings via this link and opting into RE:Made - Retail media news.
Each edition of RE:Made will include a monthly Q&A with a key player in the retail media space. Our first guest is Paul Brooks, CEO of Coles360.
We will also feature a regular column from retail media evangelist and global consultant Colin Lewis.
As you may know, we held our first event in March, with Colin as our opening keynote. Afterwards, we received feedback that March was a crowded time in the retail event calendar, so we’re delighted to tell you that RE:Made will be returning to Sydney on Wednesday, 11 October. Early in the final quarter of the year will become RE:Made’s regular annual slot.
During the curation process, it became clear that many case studies and examples of best practices were almost, but not quite, ready to be unveiled at the first RE:Made. I’m looking forward to all the fresh examples of innovation and collaboration as we develop the next event.
The response to our first program was outstanding. It’s my privilege to now develop the second program with the assistance of an expanded advisory board. Our job at Unmade is to tap into the new trends in a rapidly maturing sector, and offer our audience the content that’s most useful and relevant in an increasingly noisy world. Being able to host and help to foster the emerging retail community is, frankly, a bonus.
Q&A - Paul Brooks: ‘A major evolution’
Every month we’ll feature a Q&A with one of the leaders of retail media. Our first is with Paul Brooks, GM of Coles 360.
Since we saw you at RE:Made in March, what has changed in terms of retail media in Australia?
It’s only been a couple of months since the RE:Made conference but it’s felt more like 12 months in the retail media sector. Following the inaugural event, there were a flurry of advertising conferences/summits with each one dedicating time and talent to discuss the continued rise of retail media.
To take a step back; firstly, the agency or brand (above the line in old money) advertising market has slowed down significantly, driven in part by the broader macroeconomic landscape and aggressive inflation. There’s more focus being placed on any marketing investment showing a ‘real’ return.
Secondly, we have witnessed the more public debate around the recent privacy review and impact on the use of data and personalisation for marketing and advertising purposes. Lastly, we are seeing the major legacy media under significant pressure to deliver an audience and therefore modern advertising solutions. Those macro trends and changes will help accelerate the retail media sector.
So for me, lots has changed but what hasn’t changed is the continued rise of this exciting and dynamic sector. I remain convinced that we are witnessing a major evolution in the media, marketing and advertising sector with huge structural changes coming for media owners, agencies and brand marketers.
What do you see as being the next focus area?
The next area of focus for the industry will be to accelerate and scale to meet demand and deliver on the sector's ambition and promise. The ‘evolved’ sector remains embryonic in Australia but we can take from global learnings and apply locally. The next areas of focus for the industry are improved targeting and personalisation to deliver relevant advertising experiences, product improvement and enhancement as closed loop reporting. Any retailer that can achieve that will deliver unified growth and ultimately lead the industry.
What recent work accomplishment are you most proud of? And what are you most excited about in terms of future plans and innovation?
On June 30 it will be one year since we officially launched Coles 360. While we have achieved everything we set out to achieve in our first year, the best is yet to come. We have established the business, refined our proposition and delivered an improved experience for supplier partners and customers. Continuous improvement will remain a focus. We have finalised our strategic and future plans and we look forward to implementing those as we move into the next exciting phase of our plan, underpinning our ambition to help brands create sustainable growth through more meaningful connections with our customers.
You mentioned Connected TV as an area to watch for retail media. What’s your experience of CTV so far?
Connected TV represents a huge growth opportunity for retail media networks. We are still in the early days of scaling our ‘off network’ offering. So while we have activated some CTV, watch this space as we continue to develop our off-network solution which will include CTV. The opportunity to bring together retailers and CTV providers with a data-sharing partnership at its core to deliver richer targeting and measurement is significant, and if done correctly will deliver growth for all parties.
What recent book, TV show, film or idea changed the way you saw the world, in a small or big way?
The last book I read was: The Other Hand by Chris Cleave. It reminded me how fortunate I am to live the life I do and live in the country I do, and secondly to never take that for granted. It reminded me to take a step back and look at the world through the eyes of others, whether that is in our day-to-day work life or what other human beings are facing.
We welcome suggestions for future Q&A guests
Is Australian media in denial about Amazon Advertising?
It’s time to wake up to the scale Amazon is quietly achieving in Australia, marketer and global retail media specialist Colin Lewis writes in his first regular column for RE:Made.
Every country where Amazon ramps up first goes through a phase where it is incorrectly dismissed as irrelevant to the local market. Australia is currently going through that stage.
Globally, the Amazon Advertising business grew by 21% year on year in the first quarter 2023 - nearly $2bn. For context, the increase is roughly the TOTAL revenue that Twitter will do in all of 2023.
In 2022, Amazon achieved $38bn in sales from advertising. This remarkable figure is one and half times larger than the revenues of the entire global newspaper industry and almost $10bn more than the Netflix’ annual revenues. It’s close to double the revenues of the global music industry.
Amazon only began to break out the Amazon Advertising business in its 2021 numbers. $38bn is a small percentage of Amazon’s overall $500bn+ revenues, but as is the case with most retail media businesses, it has 50% operating margins, which mean advertising delivered as much profit as Amazon’s much-touted cloud business AWS (estimated at $20-25bn) but without the billions required in capex.
So, the Amazon Advertising juggernaut is not stopping – and, indeed, it is increasing as brands and sellers are spending more money on Amazon ads as inventory has increased. The advertising business is the make or break on getting the business to breakeven.
As analyst Russ Deiringer of Stratably writes: Improvements in targeting and leadership around measurement, particularly with Amazon Marketing Cloud, along with growing ad inventory are allowing it to continue to maintain the lion’s share of the retail media market."
Lots of retailers are spooling up retail media networks, yet Amazon continues to lead the industry and is benefiting from the secular shift of budgets to digital media.
What’s more surprising, according to Stratably research, is that brands are shifting more of their retail media budget to Amazon than alternatives, despite it owning 70-80% of the market already.
Amazon Advertising funds its eCommerce business models: Amazon is likely a quarter away from having a profitable retail business, helped substantially by its massive advertising business.
“But what about Australia?” I hear you say. Amazon is not that big here, so Amazon Advertising is not really something we need to think about.
We need to revise that thinking as the numbers are in: Amazon's Australian advertising business surpassed $100m in 2022, registering a remarkable 63% growth compared to 2021.
Furthermore, Amazon's total revenues in Australia soared past the billion-dollar milestone for the very first time, 46% growth year-on-year to $1.3 billion.
Before Amazon really ramps up scale in any given country, there is a constant theme from local retailers and brands: “Amazon is not relevant to our business”. Another version comes from the media, typically about Amazon being a terrible company that exploits its workers.
However, neither of these views correlate to the reality: shoppers like Amazon. Its reputation for fast delivery and customer service trumps all.
Much of the denial comes from not living in a country where Amazon is dominant. In the UK and the US, Amazon is part of everyday life. Amazon is one of the biggest advertisers on UK TV and their massive warehouses are visible alongside major airports and roadways at Manchester, East Midlands and on the M1 motorway, to name just three your writer saw while driving from Manchester to London.
Any consumer packaged goods brand in Australia just has to look at the teams of people their brand has overseas who have an Amazon-only team to know how important the retailer has become for them.
What happened to the adoption laggards in these markets? Hundreds if not thousands of smaller brands dived into Amazon and started selling. They did not have the existing distribution channels in place – nor any hang-ups about Amazon – they dived in and learnt hands-on how to succeed. Amazon claim to have 200m locally listed products.
A host of smaller Amazon-only agencies set up to cater for these brands – and developed the skills necessary. As a result, mainstream brands and mainstream agencies are still scrambling for Amazon talents and developing Amazon capabilities years after ‘mom and pop’ outfits captured all the virtual real estate.
Tuesdata: After five years in the market, Amazon is now Australia's biggest online retail player
A downwards swing for the Unmade Index
Seja Al Zaidi writes:
It was yet another near-flat day on the Unmade Index as the wider ASX waited for the US debt ceiling crisis to signal which direction the global economy will take.
The Unmade Index of local media and marketing stocks dipped back into the red with a 0.10% fall to 637.5 points.
Communications agency holding group Enero saw the biggest fall in its share price, by 3.06%. Seven West Media followed with a 1.32% fall in its share price,
HT&E was the biggest winner of the day after announcing that it would rebrand to ARN Media, following a shareholder vote. Its share price climbed 2.4%.
Media minnow Sports Entertainment Group rose by 2.27% yesterday.
Thanks for reading. If you’d like to receive next month’s RE:Made newsletter, don’t forget to opt in via this link
If you’d like to put yourself forward for the RE:Made advisory panel or suggest a session for the conference, please get in touch, or talk about partnership opportunities with We Think Media.
Tim Burrowes will be back with Best of the Week tomorrow, and I’ll be back with RE:Made next month.
Cat McGinn - Curator, RE:Made