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REmade: A second wind for retail media, and Colin Lewis explains Amazon
Welcome to Friday’s edition of Unmade. With the REmade - Retail Media Unmade conference just five days away, we offer a retail media-focused end to our week. And further down, the Unmade Index hovers on the threshold of a 40% decline.
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Back to the Future with Roger Dunn
In each REmade newsletter we feature a Q&A with a key player in the retail media space. Our guest today is CitrusAd’s senior VP of business development Roger Dunn.
What has changed this year?
Retail media has been in market for some time now, either in its original form of trade marketing that goes back many decades, or the new digitised version that is now rapidly expanding across the Australian retail landscape. However, it does feel like we’re having a second wind – perhaps we can call it retail media 2.0 - with the concept spreading to new verticals and delivering more diversity in the types of program we’re seeing launch. There are more meaningful and widespread conversations around connected TV and digital out of home being part of the inventory mix, with greater boardroom understanding and buy-in when it comes to investing in the people and infrastructure to stand-up monetisation programs.
What do you see as being the next focus area for the industry?
There are a number of areas I’m excited about. Firstly, as retail media moves up the funnel, it means more broadcast-style media like DOOH and CTV, but it also means new formats in existing on-site environments. For example, if executed thoughtfully and leveraged sparingly, video on retail sites could deliver highly effective advertising that adds a great deal of value to shoppers. Shoppable video, shopping guides and product demonstrations, combined with sponsored elements could be extremely effective. Unified platforms will offer advertisers a single entry point for all retail media opportunities, unlocking on-site, off-site and in-store placements from a single user interface.
Measurement is also clearly a hot topic – locally the IAB Retail Media Group has been expanding to include a great representation across advertisers, technology companies, agencies and retailers. Recently we launched the Glossary of Terms, but there is much more in the pipeline from both an education and standardisation perspective.
What are you most excited about?
As I’m relatively new in my current role, I’ve been busy ramping up and I’m excited about our technology roadmap, with some big milestones to come in 2024. We’re working to expand the adoption of off-site and working with retailers to offer an even more personalised experience for shoppers across their digital assets. On a personal note, it’s also been a busy period with the IAB group, advisory role for Unmade and I’ve also recorded a couple of podcasts – coming out soon! It’s also been rewarding to see so much engagement in the space, both in person and via LinkedIn – so many great conversations both in ANZ and across the APJ region, as the value proposition for retail media becomes clear across the industry.
How do you see AI impacting retail media?
Artificial Intelligence is very much part of retail media already with many solutions using elements to improve the targeting and experience offered to shoppers. It’s clear AI will revolutionise our world, and we are only at the beginning of what it will do for media and advertising. One area I’d suggest it might impact more quickly is in the analysis of data and surfacing of insights – retail media already has a hugely valuable data set, as it’s built on closed-loop reporting. However combing this with the additional firepower of AI, it could really be a goldmine of shopper insights.
What book, TV show, film or idea changed the way you saw the world?
I recently revisited the ‘Back to the Future’ trilogy – still stone-cold classics – and I believe we can still learn a few things from Marty McFly and the Doc:
Agility: Marty lands in a new (or old!) era and has to be nimble to survive. DeLorean out of gas? Where’s the nearest lightning bolt or steam train… he needs to act quickly to make it back in time – similar to the retail media opportunity for retailers, which is becoming a business imperative.
Embracing Change: It’s an understatement that going back to the 50’s is a huge shift, but Marty appreciates the differences and uses them to his advantage. In retail media we need to adapt technology and processes, but also as people and teams, in order to keep pace and ideally ahead of the curve in this rapidly evolving space.
Key decisions today will have an oversized impact tomorrow: Marty travels back and meets his parents when they were teenagers, with his actions in this moment potentially having a significant impact on both the present and the future. Retailers today are making a big decision to move in a new direction and launch a brand new business – setting up media businesses. It’s important to work with the right partners, to build a robust business case, implement the best technology, mitigate any risks, and collaborate to build a team and business that has the potential to materially transform both their operating model and bottom line.
Why Amazon is all about the acronyms
In his regular column for Unmade, Colin Lewis explains why Amazon is all about the acronyms
Amazon is full of TLAs – three letter acronyms. No wonder people get confused.
The starting point to understand all of these acronyms is that Amazon presents brands with the choice of selling to Amazon or selling on Amazon (or doing both if they prefer). Confusion can arise because Amazon lists all products – whether ‘1P’ or ‘3P’ – together on the website.
It is imperative that brands understand this concept, as the terms ‘1P’ and ‘3P’ are used by most marketplaces. Think of 1P as the label given by marketplaces to the exact distribution set up that most brands already have – selling through retail. 1P is the original Amazon ecommerce model.
Let’s look at the TLA’s that matter:
1P – “Selling TO Amazon”: Amazon buys the stock from the manufacturer and then re-sells it – also called Amazon Retail. When you sell to Amazon, Amazon is effectively the price setter.
3P – “Selling ON Amazon”: the Amazon Marketplace where companies sell direct to end-buyers via the Amazon platform
There are nearly 10 million seller accounts (3P) across Amazon’s 19 global marketplaces.
There are more than six million third-party sellers on Amazon Marketplace, over half of them in North America. It is the number of sellers that makes Amazon such a powerhouse in retail media.
Globally, more than 130,000 3P sellers surpassed $100,000 in sales on Amazon in 2021.
Consumers can only tell the difference between ‘1P’ and ‘3P’ by looking for the ‘sold by Amazon’ wording.
1P in Action
Amazon is now primarily a marketplace rather than a retailer of brands. If brands remove products from Amazon 1P and move to 3P where they control the sale of their own products, they also take more control over how their brand is sold on Amazon – particularly on price setting.
3P in Action
Many brands are now working on establishing a ‘hybrid’ model. This refers to selling products directly to Amazon (‘1P’) and at the same time selling goods on Amazon. The hybrid selling model has proven to be successful in regaining control over pricing, avoiding stock-outs and maintaining margins.
Increasingly, Amazon is favouring 3P growth over 1P. Having multiple sellers of a product increases supply and drives down prices. It allows Amazon to avoid the cost and risk of holding stock.
You can hear from Colin Lewis at REmade - Retail Media Unmade next week, next Wednesday October 11. He will examine the evolution of marketplaces. Colin will also be drawing on his work with a host of US and European businesses, including Kroger, Walmart and Amazon, and sharing what the Australian market should expect, based on global trends.
Unmade Index circles the 600 plughole
Seja Al Zaidi writes:
The Unmade Index, which tracks how ASX-listed media and marketing stocks perform each day, fell another 0.36% yesterday, down to 603.1 points.
The Index is now only just over the 600-point threshold which would signify a 40% fall since it opened on 1000 points at the start of last year.
Printing and marketing outfit IVE Group experienced the biggest drop yesterday - 3.57%, while Nine fell 1.74%, and Southern Cross Austereo 1.36%.
The Market Herald bounced back from Wednesday’s 14% fall, its share price rising by 23.26%, while Enero Group rose 4.65%.
ARN Media lifted 3.90%, Domain 1.06% and Ooh Media 0.76%.
Time to leave you to your Friday. We’ll be back with Best of the Week tomorrow.
Have a great day.
Publisher - Unmade