Morgan Stanley predicts traditional media to lose $1.1 billion to retail ads by 2027 By Investing.com

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SYDNEY – Traditional media outlets in Australia are facing a significant challenge as retail giants like Woolworths and Coles shift their advertising budgets towards their own retail media networks. Morgan Stanley analysts have projected that by 2027, around $1.1 billion could be redirected from conventional media budgets, impacting revenues for TV, radio, and outdoor advertising sectors.

The financial institution has adjusted share value targets for major media corporations, taking into account the potential revenue drop due to the rise of retail media networks such as Woolworths’ Cartology and Coles’ Coles360. These platforms are set to draw funds away from traditional advertising channels, exacerbating concerns over declining viewer numbers for these media.

The growth of retail media is underpinned by an annual rate of approximately 23%. Last year, Woolies’ Cartology generated earnings of $550 million, while Coles360 brought in $250 million. This surge is expected to cause nearly a $600 million shortfall for broadcasters by 2027. The value of the retail media sector could exceed $2.8 billion by then, with Woolies and Coles experiencing sales increases of up to 29% and 27%, respectively. These gains are attributed to their investments in innovation and rebranding initiatives such as Coles360.

Analysts have noted that traditional media’s high fixed costs mean that even small drops in revenue—ranging from $5 million to $10 million annually—could have significant impacts. As a consequence of these developments, share price targets for affected companies have been reduced by between 4% and 10%.

In an effort to adapt to the changing landscape, Nine has rolled out its RTLX program to engage with retail media. Similarly, ARN has produced tailored radio content for businesses like Chemist Warehouse and Woolies, indicating a strategic pivot towards more personalized advertising partnerships.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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