Tesco ad blitz fuels Clubcard doubts

Tesco is embracing a new anonymised mobile display ad service, despite having one of the most sophisticated loyalty programmes in the world in its Clubcard scheme.
The move sees the supermarket giant become the first to trial the Weve platform, set up through a joint venture between EE, Telefonica (O2) and Vodafone, but is likely to raise questions about why Tesco is chasing new customers rather than trying to boost spend from existing ones.
The Clubcard scheme holds highly detailed data on 15 million customers, yet according to some estimates only brings in 10% of sales.
Some in the City have started to call on the retailer to do what many in the direct marketing and data industry would deem “the unthinkable” and rein in spending on the programme.
Dave McCarthy, an analyst at HSBC, estimates that Clubcard costs Tesco £500m a year, although some of this is offset by selling data to suppliers, and suggests that this should be spent on across-the-board price cuts instead.
“We find it hard to see what benefits Clubcard data bring, and certainly how it is worth £500m investment by Tesco each year,” he said in a recent note. “At a 10% contribution margin from loyalty-driven sales, Clubcard would have to bring in £5bn to wash its face. We do not believe that Clubcard is responsible for driving more than 10% of Tesco UK sales.
“Abandoning Clubcard would give Tesco extra firepower and allow it to use its resources across a wider market, and not just targeting Clubcard holders.”
The Weve scheme delivers targeted ads to mobile users using anonymised information gathered from the telecoms firms’ opted-in customers and claims to represent more than 80% of UK mobile customers.
According to Weve, Tesco has already run a hugely succesful trial of the service, in which it tried to drive awareness of a £5 offer to a segment of females between the ages of 25 and 54 to increase basket value and footfall into the store.
Weve targeted consumers who lived in the Tesco catchment area with MMS/SMS. It found that 68% of consumers (who recalled receiving the message) were previously unaware of the promotion, and that 40% took up the offer.
Weve commercial and marketing director Nigel Clarkson said: “Currently mobile planning and buying for display is based on a range of data points that are built into assumptions and algorithms. Our data will be informed by proper, verified first-party data and is unique.”
The Tesco trial follows the success of a scheme run by Morrisons, which saw the retailer get a 150% increase in new and reactivated customers.

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2 Comments on "Tesco ad blitz fuels Clubcard doubts"

  1. Why is Tesco using mobile #data from Weve when it has so much Clubcard data? http://t.co/87eRVWRgt1 #directmarketing #digitalmarketing

  2. Tesco using opt-in mobile advertising to fill Clubcard ‘gap’ http://t.co/4VFKwLCuEd (via @DM_editor)

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