Cartology, in buying Shopper, is taking a strong position on two advertising market sweet spots -- retailer media and out-of-home.
The retailer media business of Woolworths saw off a raft of private equity firms with its $150 million bid for Shopper, the retail out-of-home business founded in 2019 by Ben Walker who died aged 47 last year and the current CEO, Ed Couche.
In a rising market, post the depths of the pandemic, retailer media and outdoor advertising stand out because they both have structural advantages. They aren’t just part of a general rising tide.
PwC forecasts annual growth in Australian retailer media of 20.1% a year for the next five years to hit $2.14 billion in 2026.
Analysts say this stellar growth will be driven by Australian retailers further developing and growing their media offerings.
PwC, in its annual Entertainment and Media Outlook: “This revenue will come from a variety of sources — taking from other forms of traditional supplier trade spend, by competing for the media budgets of non-FMCG advertisers and, with the potential for most disruption, taking from other media channels.”
The out-of-home (OOH) industry earlier this month reported net media revenue up 14.8% in the June quarter to $249.5 million, from $217.3 million for the same three months in 2021..
Shopper spruiks that its taps into the shopping behaviours of Australians every day, who browse onlinbe but shop in-store.
And the digital side of outdoor media is forecast to smash general advertising market growth rates. PwC forecasts digital OOH (DOOH) advertising revenue to increase by a compound annual growth rate of 10.3% to 2026.
DOOH currently accounts for 53% of out-of-home revenue. PwC says it will rise to 66.3% by 2026.
The high margins retailers can get by selling ad space has seen a flurry of movement, first my Woolworths and now Coles. Chemist Warehouse is also said to be looking.
Shopper offers advertising through a national screen network of more than 2,000 screens in 400 shopping centres. Cartology’s digital advertising network has more than 1,500 screens.
Brian Han, equities director, Moorningstar: “Buying a business that analyses foot traffic flows and ad visibility in shopping centres, while also providing insights into how brands go about allocating their marketing dollars to the digital OOH environment, could be very useful for Woolworths.
“It should help the supermarket group’s efforts to better understand its customers (shoppers) on the one hand, and its suppliers (brands) on the other.
“Not sure one needs to spend $150 million to get these benefits.
“Then again, maybe we’re underestimating the upside in extending Cartology’s scope, from within the Woolworths supermarkets, to the wider external shopping centre environment.”
Cartology MD Mike Tyquin: “Shopper’s screen network offers advertisers outstanding retail context and proximity. Shopper has invested heavily in technology, helping the business pave the way for innovation in retail out of home media.
“The acquisition of the business is an important next step in further unlocking the growth potential of Cartology and accelerating our goal to become the trusted media partner of choice for brands and retailers. It will allow us to provide our clients more opportunities to reach their customers via seamless and targeted advertising solutions.”
Woolworths CEO Brad Banducci, said: “Retail media is developing rapidly and is an important part of the evolution of Woolworths Group. We’re excited about the opportunity to bring together the complementary capabilities of our retail media business, Cartology, with Shopper’s expertise in out of home media.”
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