Digital Transformation Brand Strategy

Marketers react to Tesco’s big media move: a ‘strong start’ in the data arms race

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By John McCarthy | Media editor

December 8, 2021 | 7 min read

Tesco unveiled a major new media offering at the end of November that it promised had the equivalent reach of Sky, Channel 4 and Facebook. The retailer is wooing media agencies with data unit Dunnhumby’s new ‘Media and Insight’ division offering. The Drum gauges how said agencies responded.

Tesco

Will Tesco be a success in the media sphere?

There’s a new advertising gold rush as media owners see “surprising” ad revenue growth. What Google did for search, Facebook did for social and Amazon’s currently doing for retail media – but it’s not alone. Supermarket Tesco has joined the club, packaging data, insight and media to agencies that may soon be mystified by the erosion of tracking and third-party cookie capabilities.

Tesco says that the Clubcard accounts for 80% of its transactions, accounting for around 20m households. And it boasts a huge reach across numerous media. Online, there’s website display and sponsored search to target some 65m visits a month. In-store, there are 11 million weekly shoppers soon listening to in-store radio (new), looking at ads on scan-as-you-shop devices (could be geotargeted by aisle) and gazing at in-store digital display. Partnerships with the other big media players, co-branded ads (buy these biscuits at Tesco), email and the Real Food media brand offer additional options.

Read more about them here.

It’s a comprehensive offering – but is it of any use to media agencies?

Industry response

Rob Sellers, head of retail at VCCP, believes that “not much seems to be genuinely new” and that Tesco’s Clubcard is quickly becoming just another source of customer data (it once had a genuine market-leading advantage). He wonders how CPG brands will feel informing the Tesco machine. It’s a media platform but it also can create its own private labels to compete with those spending on the platform – the Amazon conundrum.

“Lots of CPG owners are trying to counter this themselves by investing heavily in creating their own first-party databases and communications platforms. They won’t need Tesco to tell them what their shoppers want or how to trigger purchase.”

Shane O Leary, head of media and performance at Accenture Interactive Ireland, wrote on LinkedIn that “by far the biggest and most relevant reason for the burst of retail media launches focuses on CPG’s desire for better data.”

Numerous privacy-centric waves, be it GDPR and CCPA, Google’s cookie culling or Apple’s ATT, turn the tide against tracking, hindering everything from targeting to attribution. Retailers, be it Tesco, Amazon, Walmart or Boots, “in most cases own a lot more quantitative, behavioral data about a CPG brand’s own customers than the brand itself.”

Andy Stephen, managing director UK for retail media at Criteo, believes “media agencies will certainly bite” to combine brand and retailer data to activate across online and physical environments. “It is an extremely powerful proposition unrivalled by most media networks.”

James Bailey, chief executive officer of iProspect UK, says Tesco needs to exhibit an understanding of context. Shoppers on its sites and in its stores have a high propensity to purchase – they are, after all, in or on a shop. It’s a mindset missing from search and social generally and a new environment to plan in.

But retailers are in their infancy in setting up and managing media advertisers. There will be a lot of “handholding required” to onboard clients with the promise of planning across channels in a “very precise fashion.” For the FMG brand it answers the question, ‘if a customer bought this are they then likely to purchase my product?’

These models are tried and tested in the United States, particularly through Amazon’s advertising suite. Bailey adds: “You can understand a customer through their purchase history, promote products that appear to be in their interest, in an environment where they are actively purchasing, and drive them quickly to a point of conversion.” Bailey caveats that even Amazon was slow to invest in its advertising product because it was but a small part of a bigger machine. Will Tesco have such reservations?

Bailey wonders how much customer visibility Tesco will provide. The media product “will never be a significant revenue stream next to retail,” but the income could subsidize some competitive pricing in the future.

Johnathan Lewis-Jones, managing director, Publicis Commerce, calls it a retail “arms race” under way, with the attempt to build credible media businesses – Tesco’s announcement will be merely the tip of the iceberg. Reach isn’t the core component (although it did make the Facebook comparison). A lot of its media is addressable and a lot of its data is shopping-orientated. The power of addressable screens and contextual ads on in-store scanners in the retail environment are still being probed.

Lewis-Jones calls it a “strong start” that starts to make the (often) theoretical world of omnichannel marketing a reality. “With the growing sophistication of retail media channels and associated attribution models, brands will be able to optimize more activity at an individual product level.”

Dunhumnby will offer two lanes of data – shopper insights and SKU (individual product) level performance. “The ultimate goal here for agencies is to be able to plan both consumer media and trade media together against a common audience, but before this can happen there are a lot of legacy ways of working that need to be ‘unlearnt’ – whether that’s around commercial agreements or the way in which marketing and trade teams work together in brand organizations.”

From a SKU perspective, he reckons Tesco will one day offer brand data feeds (Amazon already does this). “This has to be the nirvana,” he concludes.

James Parnum, head of planning at Mediacom UK, says the move shows how digital is helping brands move from sequential planning to singular models. The Tesco proposition threatens to touch much of the marketing funnel.

“In the real world shoppers don’t move from awareness to consideration to conversion in a linear sequence, but in a manner that their implicit or explicit minds choose. The brands that will win in the current digital age media environment are those where the stages are live all the time and can be optimized easier within platforms, such as Tesco’s new media offering, rather than in silos.”

On Tesco’s offering, Parnum concludes that it is only a matter of time before it creates a fully-closed loop funnel for brands to buy into.

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