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Inside the Sainsbury’s and Argos ‘one-team’ digital model powered by Essence

The digital team have already been working closely with the brands' creative agency, including Wieden & Kennedy

Earlier this year, Sainsbury’s appointed Essence to help it execute a “single-minded” digital marketing strategy. The Drum speaks to the brand’s head of digital marketing to find out why and what the new hybrid setup looks like.

When Sainsbury’s bought Argos for a cool £1.4bn in in 2014, the pair’s marketing teams remained very much distinct. Then in 2019, the brand combined the marketing roles for Argos and Sainsbury’s under group marketing officer Mark Given, giving the first sign they were set to integrate deeper.

Fast-forward one year and Sainsbury’s has recently revealed it has appointed Essence to help advance its digital transformation across the entire group. The move – which follows on from Essence having already won Argos’ digital media account in 2019 – will see the pair work together to create a single customer experience, under one digital agency, across the business’s three brands: Sainsbury’s, Argos, and Tu Clothing.

At the heart of the model is what Sainsbury’s has described as a “digital centre of marketing excellence” which will focus on using consolidated customer data and insights to deliver “relevant, dynamic and highly targeted digital experiences to customers”.

The partnership will see in-house experts from Sainsbury’s work with specialists from Essence to build a single view of customers and put them “at the heart” of everything the brand does, says the retailer’s head of digital marketing Dave Harding. Essence is managing display and social as well as providing technology and consultancy to Sainsbury’s growing internal team.

PHD is understood to be retaining the rest of the company’s media planning and buying duties, which were not part of the review.

An opportunity to ‘surgically’ target consumers

Harding reveals that “a few months before the pitch process” Sainsbury’s, Argos and Tu had already united their digital brand teams.

For him, key to the success of the partnership will be pooling data across all three businesses to better capture customers online.

“Leveraging our own data will be crucial here. It will allow us to be surgical in the way we target customers, which is critical to success for all or our brands. The way we use that data might be different for each brand – they all have different objectives and challenges they need to lean into,” he explains.

Key too for Sainsbury’s will be delivering a “much better” customer experience while driving the efficiency and effectiveness of its media.

“Ultimately, that should result in a better commercial performance for our brands too,” Harding adds.

Ryan Storrar, senior vice-president of media activation for Essence in EMEA agrees that this will be a priority and offers some deeper insight into what leveraging this data might mean.

“Sainsbury’s has a huge data footprint that we’re able to work with. The data landscape is changing very quickly at present and we need to think about how we build strong value propositions for customers.

“It means being much clearer about how we target customers so that every piece of communication is relevant. It means we need to make every piece of communication meaningful, instead of scatter gunning ads.

“Sometimes the most effective thing you can do is not serve an ad and by aggregating data we can start to get that overall view and put the customer at the centre.”

The time for change is now

Sainsbury’s is one of the UK’s biggest multi-brand, multi-channel retailers with over 1,400 Sainsbury’s supermarkets and convenience stores and almost 900 Argos stores in standalone and supermarket locations.

On a yearly basis, digital now accounts for £6bn of the group’s £32bn sales performance.

However, it’s growing even larger – with online sales having doubled over the past four months owing to Covid-19 restrictions. Sainsbury's first-quarter trading statement for the 16 weeks to 27 June, released in July, noted that online grocery sales grew 87% year on year.

Argos initially was a strong anchor for Sainsbury's with group sales boosted in the year after the takeover to £29bn. up 12.7% “mainly as a result of the Argos contribution”. But profits have steadily declined which Sainsbury's has linked to "cautious customer spending".

In January this year, total retail sales from Sainsbury's were down by 0.4%, and like-for-like sales decreasing by 1.1%. General merchandise sales, which includes Argos, declined by 2.3%.

As it rolls towards the crucial Christmas trading period, Harding is reluctant to give away any details of what either brand’s marketing plans look like. However, from a digital marketing perspective he returns to the need for precise targeting over the festive season.

He also hints at doubling down on dynamic creative: “Once ads have reached a customer, want we our ads to dynamically serve them something that’s relevant to them."

For now, Argos and Sainbury’s have different creative partners in The&Partnership and Wieden & Kennedy London. Both Harding and Storrar feel it’s imperative that these agencies collaborate with Sainsbury’s new digital centre of excellence. Essence has already been doing just that.

Harding explains: “Creativity and media working hand-in-hand is crucial to that success. We need to couple creative with targeting to drive impactful and personalized communications across all of our touchpoints. For me, the relationship between creative and media agencies has never been more important.”