As Australia looks down the barrel of a potential recession, retailers once again face a profound challenge – identifying and engaging relevant consumers in a rapidly changing data landscape. PHD Group Business Director Philippa Moig breaks down the three key disconnects between brands and shoppers with some practical solutions agencies should be championing.
The Australian retail landscape is undergoing a profound transformation as online shopping continues to surge. In 2023, 80% of Australian households made online purchases, with 9.5 million households participating. This shift towards blended online and physical marketplaces presents marketers with a new set of challenges. To overcome these challenges, marketers must collaborate closely with their media agencies and harness the power of data to drive innovation and success.
A rapidly changing shopping landscape
The retail environment in Australia is no longer limited to traditional brick-and-mortar stores. Blended retail experiences, where online and offline channels seamlessly integrate, have become the norm. Consumers now expect a smooth transition between digital and physical shopping.
Additionally, the Cost-of-Living crisis has disrupted traditional audience assumptions. Category lines become blurred as consumers trade off big ticket purchases for more affordable luxuries; while those once classified as traditionally premium shoppers now practice ‘strategic shopping,’ being more selective about when and how they purchase, especially around key sales events.
Australia's retail landscape is also uniquely shaped by regional growth. While metro areas like Victoria and New South Wales experienced downturns in 2023, regions like Western Australia and the Northern Territory saw significant growth. Baby Boomers (aged 60-78) are an incredibly lucrative part of society with rising year-on-year spending (discretionary spending for over 60s has increased by 5% YoY according to Commbank), particularly in categories like home and garden..
Finally, the looming threat of third-party cookie deprecation makes it harder than ever for brands to know who their customers are, whilst also disrupting established measurement practices.
Giving rise to three industry disconnects
1. Connecting Audience Insights to Activation:
Marketers need to be able to identify high value growth segments and understand their nuances to enhance the overall customer experience, before targeting them with the right message. The audience definitions that agencies traditionally use for strategy and planning are based on audience attributes, such as age and income; and attitudes, such as premium or value. Meanwhile the audience definitions that media is bought against are based on behaviours, such as web browsing and purchase history.
To be able to understand high value growth audiences, and accurately target them in media, marketers need an end-to-end audience view, enabled by using behavioural data within the strategy and planning workflow, and connecting these audiences to media inventory.
2. Connecting Campaigns to Commerce
The expanding number of platforms and media formats is increasing both the number of conversion points and the complexity of the retail ecosystem. Whilst media performance has traditionally been evaluated on delivery metrics such as reach, frequency and engagement; overall marketing effectiveness is evaluated on attributable sales, revenue, and share growth.
Innovative measurement solutions, such as agile MMM and closed-loop attribution using retail datasets are the key to connecting media outputs to business outcomes and enabling full-funnel optimisation across the full ecosystem of paid and owned channels.
3. Connecting Data to More Data
Data privacy and protection is a major issue for retailers and their customers. Many brands don’t have strong first-party data assets, and many that do are unable to use them in an effective and privacy-safe way. Meanwhile many agencies have proprietary data assets, making it difficult to leverage valuable 2nd Party partnerships.
Agency partners are pivotal in driving commerce growth by providing strategic guidance on clean rooms, data privacy, and compliance. An open, transparent and neutral approach to data partnerships is key, allowing them to connect different data sets to power sophisticated activation and measurement.
Navigating a complex ecosystem
In this exciting and rapidly evolving future, agencies have the potential to play an instrumental role in driving sustained growth by being as customer-obsessed as their clients.
Close collaboration between marketers and agencies is key to, harnessing the power of data, and embracing innovative technologies to navigate the complexity of the Australian shopping landscape. By doing this, we can create seamless shopping experiences that delight consumers and drive long-term success for brands.