Up to $1.2 billion in revenue will enter the Australian advertising market via retailer media over the next five years, according to forecasts by PwC.
This will take the market to $2.14 billion in 2026 from A$850 million at a compound annual growth rate of 20.1% based on PwC’s mid-point forecast in its annual Entertainment and Media Outlook.
“Growth will be accelerated by ecommerce players led by Amazon, but will also be driven by Australian retailers further developing and growing their media offerings,” says PwC.
“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.
“It should be noted from the outset that the forecasts delivered in this report are an estimate only, based on PwC research and assumptions rather than third party industry sources.
“The nature of this sector is such that all retailers treat their media businesses differently with no standardisation of which assets are considered 'media' or otherwise.
“A breakdown of inclusions and exclusions would need to be agreed upon should this sector look to standardise as others have previously.
“Overseas, large retailers have been building out their media businesses from the late 2010s. They have developed around a centralised data capability, combined with broad store footprints and high traffic eCommerce platforms.
“Many have taken their data offering and made it available outside of their own network, being used for both audience targeting and measurement of purchase.”
In early 2022, Amazon included its advertising business in its reporting for the first time -- US$9.7 billion in global revenue in the fourth quarter of 2021, a 32% jump over 12 months.
Walmart also reported revenues from its advertising business of more than $2 billion in 2021.
In Australia, Woolworths, via Cartology, and Coles have been active, hiring media specialists and building advertising businesses.
PwC: “With Australia already having two leading supermarkets developing their offerings and Amazon expanding theirs, it is expected much of the growth will come from these three players, however we anticipate others across retail categories will build upon their media assets.
As has been the case in other developing segments, we may see the launch of some network businesses, connecting and creating scale for groups of retailers. This may come from within an existing holding company such as Wesfarmers, or an external standalone business.”
Established media may see this as a threat. However, PwC says there may be an opportunity to partner: to co-produce new media assets bringing together the media company’s audience and content production, with retailer audience, data, and transaction capabilities into a powerful multi-platform offering.
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