Assembly expects revenues from retail media to triple over next year

The media house’s UK boss, Dan Clays, said the partnership, following other pacts with Criteo, Walmart and Instacart, was vital for efforts to “reinforce and expand OMG’s position as a global leader in connected commerce.”

But bridge-building isn’t the only way to expand a service offering. Stagwell-owned Assembly is also working to build up its retail offering in Europe. It has just formally launched a retail media division based around a small Madrid-based team drawn primarily from Polish subsidiary Brand New Galaxy. It’s an attempt to capture some of the spending around retail media and shift its center of gravity south and eastward.

• Omnicom Media Group’s Florian Adamski discusses retail media growth

Though most of the agency’s clientele is based in continental Europe, much of its staff is in the UK. That’s due primarily to history – Assembly’s European presence was originally anchored around Forward3D, a British company Stagwell acquired in 2017.

Matt Adams, chief executive of Assembly’s European business since March, says the company is focusing on hiring flexibly near bases in Poland, Spain and a handful of key European capitals – where clients are and where they’re likely to move or stay for the foreseeable in the long wake of Brexit.

“Local connections are overlooked,” he tells The Drum. “I can’t do business in Milan without being in Milan, but we can offer clients centers of excellence and scale those platforms quite nicely and easily.”

Adams says revenues from Assembly’s retail media business are “relatively low” but expanding fast. Though it currently counts for “less than 10% of revenue,” he expects that revenue to triple over the next year.

Retail media channels have become increasingly helpful for brands looking to reach mass audiences near the point of purchase, especially in the context of declining faith in TV advertising and the hunt for alternatives to cookie-led digital advertising.

But for Assembly’s European clients (primarily luxury retailers such as Belstaff and Estée Lauder), Adams says retail media is an avenue to kickstarting their direct-to-consumer sales and disintermediate retail vendors.

“You want to control supply, you want to control price, but your wholesale vendors can buy your products and effectively undercut the brand,” he explains. Estée Lauder or Belstaff can’t cut out middlemen vendors outright, but their media strategies can emphasize direct sales channels and, in turn, build DTC revenues through owned channels and platforms such as Amazon, Adams argues.

“If your wholesalers are undercutting you, your paid media has to work that much harder,” he says. Assembly’s recent work has focused on matching paid retail media with a broader retail strategy, fuelled by merging Polish sister agency Brand New Galaxy into the broader Assembly organization. “We support clients not just with paid media but in understanding their analytics, where the leaks are and how they can refine their wholesale strategy and control price better. It’s now a consultancy offering.”

So far, Assembly has been using its package of retail media options to expand briefs with existing customers. The agency’s European business, Adams says, had grown through “chance, coincidence and acquisition” and, accordingly, had begun to sprawl. But those conversations have moved faster since it consolidated Brand New Galaxy and clients are not faced with bringing in a constellation of different businesses.

“We now have a proper, robust, scaled, really strong offering we can take to our clients. It’s easy for us to plug it into our existing contractual framework.”

It will need to staff up to expand this portion of its business. Assembly’s retail media team currently numbers just 25 people across the continent. Adams says hiring will primarily occur in Europe rather than the UK, with Warsaw earmarked as a city to focus on. “We’ve found that there’s some great talent, particularly in Poland,” he says.

Stagwell’s recent cuts to staff numbers in the US won’t get in the way of hiring on the other side of the Atlantic, he adds. “Stagwell is a business run by entrepreneurs, so you’re entrusted to run your business. I’ve got a P&L to deliver, but if this is the way I want to run the business… the attitude is, ‘cool, get on with it.’”