Product Placement

Product Placement

Dunnhumby is gambling that retail media can make a greater impact than TV commercials or print ads.

Teeradet Dumrongbhalasitr taps up the other side of a shelf divider for an herbal toothpaste brand. With four people working at dunnhumby's newest division, even this small task requires help from the team leader.

Several forms of retail media. These are all deemed more effective than traditional advertising.

Mr Teeradet was appointed head of retail media for customer marketing consultancy in February.

Retail media or in-store advertisements help to raise brand awareness for those brands that are not the first choice of consumers. As these products are usually placed at the foot level of aisles, Mr Teeradet expects his work will bear instant fruit.

"A woman in her forties walked by and was surprised Tesco Lotus sells this brand of toothpaste. She just didn't notice it before," he said.

Through this project, which started in February, dunnhumby is trying to prove that TV commercials and print advertisements are not the most effective marketing channels any more.

"What we're trying to tell retailers is to shift investment to stores from TV," said Mr Teeradet.

Dunnhumby was set up in Thailand in 2008, with Mr Teeradet one of two founding members. In 2011, Tesco acquired 100% of dunnhumby.

Following the success of Tesco Lotus ClubCard, it is now ready to move on to retail media before progressing to in-store sampling, which is the third phase of its business development plan.

With exclusive access to Tesco's 8.3 million customers, dunnhumby decided to tap into the growing demand of Tesco Express stores. Information such as how much money the customer spends per week and the categories frequently shopped are shown on the club card.

Tesco targets 2,000 express stores by 2015, up from 1,250 branches now. About half of its customers visit the 300 square metre stores, with 60% visiting Tesco Express exclusively.

"More than half the shoppers turn on autopilot and never change their route. That means they won't know what types of categories there are at our express stores," he said.

In May the company grouped its stores based on whether they had media coverage. Groups were determined for brands, categories, overall spending, region and sub-format.

Ad types such as headboards, window posters, hanging mobiles, dividers, wobblers, shelfstrips and hanging trays were used to inform and interrupt consumers.

For instance, Oreos are placed on a front fridge tray, suggesting they can be purchased with milk.

"Even headboards need to be tested from 20 degrees all the way to 90 degrees. Thais aren't very tall, so ergonomic designs are adjusted accordingly," said Mr Teeradet.

Rules for each Tesco Express store include one aisle can't advertise for more than one product category, and one category can have only one brand advertisement. A store cannot advertise more than six categories, or it will look messy, he said.

Dunnhumby brought in the best practices from Britain, but consumer behaviour there is different, said Mr Teeradet.

"The market in Britain is not as fragmented. In Thailand there are mom-and-pop stores, modern trade outlets and flea markets, but in Britain there are only modern trade stores. So reading data is not as complex," he said.

For three weeks dunnhumby analysed data such as the number of impressions, which is how many times a consumer sees an ad, the cost per impression, the number of purchasers, incremental sales, brand and product uplift, and new customers.

It found a 26% sales increase for products that used retail media campaigns. This also led to a halo effect, meaning an advertisement for one product benefits the whole brand.

"There are always arguments about the most effective type of media, but we have found it to be retail media," said Mr Teeradet, adding retail media campaigns are 3.3 times more cost-effective than TV in reaching consumers and 10.3 times more than print.

The firm has 15 vendors participating in the project out of over 9,000 vendors at Tesco. It plans to increase to 40 vendors by next year.

Dunnhumby's revenue is divided evenly between analysing customer data and customer relationship management. The company hopes retail media can make up 20% of revenue next year.

For the first five months of this year, Thailand's ad spending totalled 28.3 billion baht, up by 1% from the same period last year, with 99% spent on TV ads. Spending totalled 114 billion baht last year.

Of the top 10 advertising spenders, eight are consumer goods such as Unilever Holdings, Procter & Gamble, Coca-Cola, Beiersdorf, Nestle, L'Oreal, Dutch Mill and Osotspa.

Dunnhumby's core capability is in retail business, but Mr Teeradet said there is a possibility of forming partnerships with companies in the oil, telecom, banking and entertainment sectors to help manage data, build loyalty campaigns and understand customer behaviour.

The next step would be 360-degree communications, where consumers are engaged the minute they park their car or leave their house, said Mr Teeradet.

"Those who like loyalty schemes will be very immersed, and they will try to keep every single point they can," he said.

Mr Teeradet (left) and his team. No task is too small for the team leader.

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