Argos is revaluating its TV advertising strategy after working with Sky Media last Christmas to combine the retailer’s sales data with the broadcaster’s consumption data, in a project it claims generated £7m in incremental revenue.
The partnership was born from Argos' desire, like that of many marketers, to understand the elusive connection of when (and how) a view of a TV ad converts into a sale. The result is a bank of insights into the viewing habits across 100 specific customer segmentations and radical rethink of how it plans and buys media across the organisation.
It’s all part of Sky Media’s plan to become ‘an advertising partner of choice’, after opening up its viewing data of over 500 TV channels through an analysis tool it’s dubbed ‘SkyAdvantEdge’, to brands.
While Sky is working with the likes of P&G et al to some degree, Argos’ investment into its digital infrastructure over the past three years has put it in a prime position to take full advantage of the tool’s potential.
The Argos website is the second most visited retail website in the UK and last year it saw mobile sales top £1bn. Overall, 50 per cent of the retailer’s sales originate from a digital channel. In the background, Argos has been working hard to dissect this data and understand shoppers better and define customer groups that are used across the business.
But for this project, Argos took its customer data (ie, who is buying what and when), anonymised it and matched it with Sky’s viewing data – showing who is watching what, for how long, and when – on a third-party platform. Where there were overlaps in the merged panel of 270,000 customer households, Argos and Sky interrogated the data
Initially, Argos thought it would be able to understand things like optimum frequency of the ads, spot length and weight but the “the real breakthrough” was on a more in-depth customer piece of work that came up with new target audiences, according to Nicki Brown, Argos’ advertising controller.
“We realised that the way customers behaved across the business as a whole was not a predictor for how they would behave after seeing a TV ad,” she told The Drum.
“Now, we segment audiences just for the purposes of TV targeting, based on their propensity to shop having seen a TV ad. It’s really helping us to be much more single minded in our channels and programming.”
In total, 100 customer segmentations were built based on analysis of over 256 million transactions and 1.4 billion viewing events each month. Brown declined to go into detail about the specific customer groups, saying it could give competitors an advantage.
But expanding on one of the consequences from the tests it ran during Christmas 2015, she said it now understands the TV programmes that Argos should be going after on media plans to target its new key customer groups.
Before working with Sky, it would have focused heavily on factors such as an ad’s appearance next to the top 20 most viewed TV shows. “We might now be actively avoiding some of those programmes, because in the past they might have included them as vanity spots, we now know whether they convert for us or not,” added Brown, who similarly declined to go into detail about which shows deliver for Argos.
So what does this mean for its media agency, Mindshare? Brown said that it’s been a “big shift” for the team to think about its media plan using these insights, but that Sky has made the process smoother by looking at its internal systems and processes to work out the best way to embed the data.
“It’s about stretching the thinking and understanding what the insights are telling you rather than fundamentally changing the ways of working on a day today basis,” explained Rachel Bristow, Sky Media, director of client partnerships (who joined in 2014 from Unilever to lead its client partnerships arm).
The result of the Christmas 2015 campaign, the first to harness this partnership, are evident. Argos claims that at least £7m in incremental revenue was driven and in the coming months, as it builds to Christmas 2016, the insights will be used across the marketing division to deliver well in excess of that figure.