We delve into the broadcasters’ deals with Tesco, Boots and Sainsbury’s to find out more about the emerging TV/retail media trend.
But how do they work?
Using the purchase data from the retailer’s loyalty accounts, audiences can be segmented into groups, for example, customers who regularly buy vegan products or chips. Broadcasters then compare IP addresses from video-on-demand (VOD) logs and match them against emails collected by loyalty accounts to serve targeted ads.
In the case of Channel 4, it compared its 24 million All 4 users to Nectar’s 6 million members and carved out 80 audience segments.
After the campaign, the broadcaster and retailer then provide a brand with proof of who bought that product after being exposed to the ad, a process called closed-loop analysis.
What is driving the trend?
Partnerships between broadcasters and retail media are positioning themselves as privacy-first solutions to remove cookies. The economic recession also influences the reduction of marketing budgets. Marketing managers need to eliminate waste, and this service is guaranteed to reach viewers with a propensity to buy.
Liz Duff, Head of Business and Operations at Total Media, says: “Retail targeting is a growing channel as customer data becomes scarcer due to the deprecation of online data, so this is a really smart move by both broadcasters and retailers, as consumers tend to look elsewhere for better value goods when budgets are tight.”
Sky Media has already been using the retail media model for around seven years, combining proprietary data with millions of Sky billing addresses. Sky Media also has deals with Tesco’s Dunnhumby and Nectar, and other alliances with Mastercard, Experian Health & Beauty and Game.
Sky Media has been operating this service across 100 channels across Sky and Virgin TV and online devices, also extending it to partners such as Channel 5 and Discovery.
For Channel 4, its deputy director of digital innovation and 4Studio, David Amodio, says the broadcaster saw a “gap in the market” to cater to consumer goods brands that don’t keep their own data. “Mass consumer goods do not have their own data, but [Channel 4] We build our entire suite of data products based on either the 4’s own data or the brands’ own data.”
So how do you buy it?
Media agencies can go to broadcasters or retailers to buy, but buyers tell The Drum they prefer to deal directly with the broadcaster to better assess media buying. Channel 4’s marketing proposition is to allow them to drive the entire process, from segmentation to delivery of results. According to Channel 4, all brands have to do is choose the most relevant segment for their campaign.
Channel 4’s Senior Platform and Programming Leader David Cottell explains how brands don’t have to worry about the complicated and time-consuming part. “As sophisticated as a data product is, the experience for a brand is the same as buying any other campaign,” he says.
How much is it?
Advertisers will pay a premium for using data matching. The more guidance you request, the more money broadcasters can collect. Ed Cox, Founder and Managing Director of Yonder Media, explains how a typical adult ABC1 linear purchase can cost £15 or £25 per 1000, but data matching can double the cost to £35-£40 or even £50 pounds.
At Channel 4, each of the 80 segments has a price attached to it, and premiums are set based on the niche an advertiser wants to reach. Both ITV and Channel 4 have yet to set prices as both are still in the testing phase until early 2023; Pricing will be determined based on the effectiveness of those segments.
However, it’s a more efficient TV buy when you consider that you’re only paying to reach viewers you know will buy your product. With a bulk buy, millions of viewers see an ad without any chance to buy. A simple example is just targeting pet food to the 4 viewers who have purchased pet food from Nectar. Why target a viewer who doesn’t have a pet?
What should advertisers take into account?
According to Cox, advertisers need to be careful not to get “stuck in a cycle of only measuring short-term sales growth and not long-term brand building from light shoppers.” Cox is wary of advertisers who only use data matching within a media plan, as it could lead to a strategy of only reaching a small group of people repeatedly. “You’re paying a huge premium to prove it works, but you also need to do massive advertising to persuade your light shoppers,” she adds.
Yonder previously made a targeted purchase of Sky Media/Nectar when planning a campaign for Coconut Collab plant-based yogurt. The data match led to around 500,000 Sky subscribers buying plant-based products at Sainsbury’s. Cox admits that if it had been done with ITV or Channel 4, it could have reached 2-3 million customers because those platforms are free registrations.
To cover all bases, Yonder targeted its ads to 500,000 Sainsbury’s plant customers alongside a VOD plan that picked stations that over-indexed the wealthy or sustainably-minded and did a massive buy of linear TV.
Channel 4 and the buyers we spoke to say this product works best for niche brands that only need to sell to a certain group of people.
Meanwhile, Jonathan Lewis-Jones, managing director of Publicis Commerce, warns the industry to “be careful” and not “distract from the broader digital transformation in retail and the broader opportunities for brands.” He says there’s a lot of buzz around ‘retail media’ right now, but the rapid advances in retail media are “really just one indicator of retailers becoming more digitally sophisticated.” He claims that the ITV and Channel 4 ads are a “clear illustration” of this.
How excited is the industry about this trend?
Jon Manning, who is a senior director of investment at Publicis Media agency Starcom, says that from an audiovisual perspective, this is an interesting development. It’s worth noting that Publicis Media already has a service similar to ITV and Channel 4 powered by Epsilon, which was created out of customer demand for this type of data.
“Historically, we’ve only been able to target fairly broad demographics. This is the ongoing evolution of addressing our client’s intended audience and minimizing waste to ensure each pound works as effectively as possible,” says Manning. “Not all brands may see the benefit of this data, but it will certainly be a useful and valuable layer of guidance for some.”
