10 May What retailers can learn from Harrods
What retailers can learn from Harrods
Harrods, Woolworths Group and Amazon are three brands reshaping the retail sector and shining a spotlight on the incredible value of owned media and the possibility of unlocking multi-million dollar revenue streams.
By developing internal media business units, these companies, along with numerous iconic retailers, are placing a stronger focus on unlocking revenue by leveraging what all retailers have, but don’t necessarily recognise – owned media assets.
So what is an owned asset and why does it matters?
Simply put, owned media is basically any point of contact a business has with its customer, which they control. This can be everything from websites, in-store POS/screens, apps, customer databases and loyalty programs right down to staff and packaging.
Our research values Australia’s owned media market at $96 billion, with the retail sector accounting for nearly half (46 per cent) of that, equating to a significant $44 billion; yet just over 10 per cent of retailers understand the potential of these assets.
We see this as a truly powerful opportunity for business and this is backed up by the December 2018 Owned Media Monetisation report by independent consultants Forrester Research.
The report states that the serving of online ads to consumers facilitated opportunities for “commerce companies to deliver a superior customer experience, while also cultivating a rapidly growing new revenue stream with healthy margins.”
Forrester values global digital advertising at $219 billion in 2017, with 62 per cent of all global online advertising revenue coming from Google and Facebook and that Expedia now “generates 11 per cent of its revenue from advertising and media on its (own) properties.”
Amazon has been the latest big brand to launch its own owned media business, launching Amazon Advertising in Australia in early April, to generate a separate income stream by allowing companies to buy advertising space on their owned media including video ads.
“With Amazon Advertising, agencies and advertisers – regardless of whether or not they sell on Amazon – can deliver relevant messages to customers on and off Amazon, throughout their customer journey,” the company explained in a website blog.
“We are excited to continue working with advertisers and agencies to help them grow their businesses and meet their goals.”
In March, Woolworths Group launched Cartology as a standalone media business, which will tap into the group’s owned assets as part of a shift from its current model of using external agencies for their media selling.
Harrods Group did the same thing in 2011 when they launched Harrods Media which has set the benchmark for using owned media assets for luxury brands.
Back home, the launch of Amazon Advertising and Cartology herald a new awakening in Australian business about the potential value of using their owned assets. It has also revealed an appetite for a new way of working as Australian retailers start to position themselves to take advantage of the unlocked value sitting right under their noses.
So where to start?
Many senior retail leaders know the importance of owned assets however, most retail businesses in Australia still undervalue and under-leverage their owned media assets.
Some of this points to a lack of awareness about how to better utilise owned assets, some of it’s due to a lack of appreciation of the real value connected to these assets and some of it’s simply not knowing where to start.
To fix this, in my opinion, retailers need to:
Value: audit the media assets in their own organisation, understand the scale of their audience and define their media asset value. From there you can determine annual commercial potential.
Unlock: identify what needs to be done to existing assets to make them commercially viable and develop new assets. These assets must align with channels in-demand for advertisers, for example, a digital screen network. Also find ways to improve operations so that advertisers see them as a professional media owner.
Commercialise: develop sustainable commercial strategies that deliver a triple win: for their customers, their suppliers and their profitability. The growth in pop-up retail experiences is a good example of this triple win.
Retailers who avail themselves of this will be better positioned to utilise their owned assets and equip themselves with a very powerful weapon against digital disruption and consumer changes.
The opening of new owned media businesses shows the market shares my conviction that business owners who take the steps to utilise their owned assets will have a significant edge over their competition.
This article originally appeared in Retail Biz and can be viewed here: https://www.retailbiz.com.au/contributor/what-retailers-can-learn-from-harrods-and-woollies/