The roll out of digital advertising screens at Woolworths stores over the next few months is a clear sign of the arrival in Australia of a global trend by retailers to become media players.
Woolworths has for the first time revealed details on its plans for Cartology, its new retail media business.
The digital screen network is the first step in the supermarket group's commercialisation of its media operations to give "suppliers the ability to better engage with shoppers" instore, via digital and other assets including Woolworths' Fresh Magazine.
Cartology, formed by merging the existing businesses of WW Media Hub, BWS’s Tribe Media Services and the Quantium 1:1 Sales division, has kicked off an intense three month campaign to gain the attention of marketing divisions suppliers
What the supermarket operator is doing -- just like online retail giant Amazon where its advertising division is growing quickly -- is leveraging the data it has on its customer spending, allowing brands to finely tune campaigns.
Amazon is now third in the world for digital advertising, after Google and Facebook. According to eMarketer, Amazon Advertising has about 4.2% of the $US333.25 billion worldwide digital ad market.
Third party sellers on amazon are encouraged to buy advertising to increase their sales through the platform. One report suggested these third party sellers were told to double ad spend during Amazon Prime day so as to not lose market share.
Generally retailers don’t want other brands advertising on their site. But players such as Amazon have growing businesses allowing others to sell on their platforms.
Amazon ads sales revenue growth in the second quarter was around 37%. According to analysis by performance marketing agency Merkle, brand keywords play a crucial role on Amazon, accounting for 43% of Sponsored Products sales and 62% of Sponsored Brands sales.
And the rapid success by Amazon’s advertising division hasn't gone unnoticed.
WalMart, the world’s largest bricks and mortar retailer, earlier this year brought in-house its website ad sales, building the Walmart Media Group. Analysts estimate the spend involved could be as much as $US3 billion.
Its CEO Doug McMillon told analysts: "Our data has never been monetised, and we have a tiny ad business. It could be bigger."
Walmart believes its customer shopping information give it a compelling edge.
Wooloworths could easily say the same, especially with the data on customer behaviour it gathers from its Everyday Rewards program where loyalty is rewarded either by discounts or Qantas frequent flyer points.
And Woolworths has many brands wanting to increase exposure, other than on shelves, in store.
Industry analysts at IBISWorld say Woolworths and its competitor Coles have been stepping up their digital and data analytics games.
"Woolworths has been expanding its WooliesX division to garner more detailed consumer insights to develop increasingly meaningful communications with consumers," the analysts say.
"While the primary focus has been on unique customer promotions, it was only a matter of time before this spilled out into broader dynamic marketing."
Ben Willee, general manager at Spinach, says this has the potential to be a very big move for Woolworths.
“There is a lot of price and margin pressure on their core business so it’s no surprise they are looking for additional revenue streams,” he says.
Some estimates put the media spend on FMCG advertising in Australia at more than $650 million.
“This is much more than just advertising close to point of sale, it’s about using data to close the loop between exposure and actual purchase,” says Willee.
“Understanding large data sets and how to extract actionable insights for advertisers is much more difficult than it sounds. However the financial rewards are far greater if you get it right.”
Mike Tyquin, the managing director of the Woolworths unit and a former CEO of Adshel, says Cartology is a response to the changing retail and media landscape.
"We have the ability to reach customers everyday with personally relevant messages via our unique programs and our owned in-store, digital and social media channels," he says.
"With insight gleaned from over a billion transactions, we can help further support a better shopping experience for our customers across their retail journey at Woolworths Supermarkets and BWS.”
The Woolworths Screen Network will be rolled out starting from September. The Network will have a new digital screen at the front of every Woolworths supermarket across the country by the end of the year.
"The digital screens will be uniquely positioned at the front of each supermarket," says Mike Tyquin.
"They’ll be dynamic - allowing relevant messaging to be adapted to a specific store and also updated quickly if required.”
Another innovation available from next week is Cartology Promoted Products, where brands can be placed at the top of search results on Woolworths Online and BWS.com.au.
“Australian shoppers are searching Woolworths online platforms for grocery products more than any other digital platform," says Tyquin.
"Through Cartology’s Promoted Products, brands will have the ability for increased ‘on-shelf’ visibility in the digital shopping environment, making it easier for customers to discover new and relevant products.”
Cartology officially launched this month with 50 team members.
Have something to say on this? Share your views in the comments section below. Or if you have a news story or tip-off, drop us a line at adnews@yaffa.com.au
Sign up to the AdNews newsletter, like us on Facebook or follow us on Twitter for breaking stories and campaigns throughout the day.