UK grocery retailers could claw in an extra £1.7bn worth of revenue by using the customer data and insights they already have under their noses to monetise their owned media, in the same way publishers have been doing for decades.
So says a new study conducted by DunnHumby Media, which claims that even its own parent company Tesco could rake in an additional £170m by embracing the publishing model.
Calculated using the firm’s Revenue Calculator – a tool that enables retailers to estimate their media revenue potential – the study claims that retailers have the opportunity to generate an extra 1% of their retail sales with media, which is equivalent to £11bn across the EMEA region.
The data science specialist believes retailers are in a powerful position at the point of purchase for a customer when they are choosing between brands, so it is a great place to influence their choices.
The firm argues that retailers know their customers better than anyone due to the fact they have vast and valuable customer data-sets, largely related to habits and historical purchases, as well as further data they might hold through loyalty programmes.
They might be able to accurately predict what they will buy and therefore uncover new opportunities for brands to make their messages resonate more meaningfully. As a media platform, a retailer can offer multi-channel campaigns that target shoppers more relevantly across their journey.
DunnHumby insists that retailers can benefit from a virtuous circle consisting of rich data assets telling them where, when, what and how customers shop; the ability to close the loop between media channels and in-store sales; and a more tailored approach to communication with new and repeat customers.
The firm does admit that the exact monetisation potential depends upon a number of factors, such as a retailer’s data and technology maturity, the span of their media coverage across different domains and their multichannel presence. It also depends on the percentage of sales they accrue from own label and their willingness to give brands creative freedom in the advertising space. However, this opportunity to make new revenue from their data and media assets exists for all retailers, DunnHumby insists.
The calculator uses an algorithm that allows retailers to adjust for these areas to give a closer estimation of the revenue that could be realised.
The Revenue Calculator claims that Tesco could bring in a further £170m, Sainsbury’s £105m, Asda £95m, Morrisons £70m and the Co-op £30m.
DunnHumby Media global managing director Jérôme Cochet said: “As it stands, only a handful of retailers are taking on the role of publisher. And for them, it’s a smart move, as the media opportunity is a big one.
“Just think of the data and insights generated by browsing and shopping behaviour when compared to the actual products bought, across all the media touchpoints retailers own, in-store and online.
“Over time, more retailers will look to adopt this approach to remain competitive. Continued pressure on profits means retailers are feeling greater urgency about identifying new revenue streams, such as monetising their media assets. That said, retailers must take the right approach to doing this, otherwise they risk losing customers. Done correctly, it’s an opportunity to connect with consumers where and when it matters most – which ultimately is what every brand wants to do.”
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