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10 May 2018

Lidl Scales Back Digital Media Investment After Seeing Poor ROI

Lidl has scaled back its investment in digital media to a more “appropriate level” after finding that its return on investment was not as effective in digital as in other media channels, according to a Marketing Week report.

The discounter has rapidly increased its marketing spend over the past five years, from £28m in 2013 to £75m in 2017, because it could see the impact it was having on the brand and, more importantly, sales. It also shifted where it invested from print and flyers to TV and digital, with the latter a “very important part” of its mix.

However, when Lidl’s head of media Sam Gaunt started interrogating that spend he found the effectiveness was very different across channels. While in broadcast it had an “incredibly successful response”, the same was not true in digital. At a headline level, he explains, broadcast had low CPMs and high impact, while digital had high CPMs against a broad audience and low impact.

“We scaled up and then we scaled back investment in digital and interrogated the way that spend was being deployed and how to improve that return,” says Gaunt. “It clearly would have been irresponsible to maintain our investment at that level so we scaled it back while we interrogated the media.”

“We measure long term and short term and whether what people are seeing and hearing in our ads translates into people going into stores, and then what category they buy as well,” he explains. “Our marketing investment has really ramped up, aligning our physical availability (Lidl now has more than 700 UK stores) with the mental availability of the brand to significantly drive sales.”

Speaking at the Adobe Summit in London, Gaunt admits interrogating digital media has proved to be “incredibly complex” because of the huge range of formats, KPIs and ways of measuring. Yet he believes it is “incumbent on advertisers” to ensure their spend is being invested in the right way, rather than leaving it to partners.

The challenge in digital, suggests Gaunt, is that too many advertisers are not doing this work and therefore “skewing the digital media marketplace”. Problems such as fees based on percentage spend, as well as rebates and arbitrage are making it an “unfair market”, he claims.

“It is incumbent on all [marketers] to see where our spend is going and how it is delivering benefits back to the brand. We have to demand transparency and get visibility on these areas. Find out what is valuable to your brand, be clear on that, and properly interrogate it to ensure that is what you are being delivered.”

He also believes there is an issue with the ‘London bubble’, meaning many marketers are out of step with what consumers are doing. For example, media planners working in the capital might base their investment on their own media consumption, which is often very different to people in the rest of the country.

“All of this skews how digital should be optimised,” adds Gaunt. “There is so much cash going into the wrong sort of media. “To get to a fairer marketplace, every impression needs to be properly interrogated on its value to the buyer.

“We all need to think about the digital inventory we are buying. There is an endless supply so we have to identify what is important for us, separate the wheat from the chaff, and make the media marketplace fairer and of benefit to us all.”