Tesco is set to increase spend on direct, data and digital marketing – at the expense of mainstream advertising – as part of a business-wide review initiated by boss Philip Clarke following the retailer’s first profit warning in 20 years.
That is the verdict of a number of industry insiders – including City analysts – who had been questioning Tesco’s marketing strategy, and especially its reliance on the Big Price Drop promotion, even before its financial woes were revealed in January.
A major part of this process is the review of its advertising account, held by Red Brick Road since 2005. EHS 4D’s hold on the Clubcard business is not affected by the review.
The pitch is being led by former EHS 4D boss Matt Atkinson, who is now Tesco group marketing and digital officer, and, according to reports, is a prelude to a broader shake-up of Tesco’s marketing.
It is also an acknowledgment that Tesco is “slightly off the pace with customers”. As one insider told the Financial Times: “This is the marketing component of the rest of the UK plan.”
Atkinson said the ad review has been instigated because “the way brands and consumers engage has changed and it seems to be a good opportunity for us both to step back and take a fresh look”.
And with Shore Capital analysts predicting a greater emphasis on the Clubcard scheme, industry sources are predicting that a major tranche of Tesco’s £110m adspend will be diverted to direct marketing techniques.
One source said: “With Matt running the review, he will be demanding measurable results and a solid ROI. That’s why Tesco hired him in the first place; he’s no adman – he’s worked in direct, digital and data marketing for years. It stands to reason he will be pushing for return on investment at the expense of awareness building.”
Another source added: “Most people recognise Tesco has taken its eye off the ball. Clubcard held a crucial role in turning the retailer from ‘pile it high, sell it cheap’ to the force it is today. And it will have an even greater role in bringing Tesco back on track – it makes perfect sense to use it.”
Tesco chief executive Clarke will next week reveal his wider rescue strategy for the UK business. He is expected to announce a major store revamp programme to make outlets more appealing to customers, as well as “put the love back into our stores”.
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