Tesco Buys Into Ad Tech As Big Data Division Dunnhumby Nabs …

Tesco Buys Into Ad Tech As Big Data Division Dunnhumby Nabs …

UK-based Tesco, the world’s second-largest retailer after Walmart, has made a killing in its sector by jumping early into the use of big data, collected via loyalty cards as well as through stores and online, to figure out what its customers wanted to buy. Today, Dunnhumby, the data science group that helped Tesco with that effort, which Tesco eventually acquired, is making an acquisition of its own. It has bought Sociomantic Labs, an ad tech firm that specialises on programmatic and retargeting advertising with an emphasis on e-commerce.

The companies are not disclosing the terms of the deal but a source close to the negotiations tells us that it is in the low hundreds of millions of dollars — Business Insider, which noted a rumor of the deal in March, put the possible price at up to $200 million.

The is the first advertising acquisition made by Dunnhumby, but not its first purchase to expand its marketing musle: among them, in 2011, it bought BzzAgent – a firm that organises people to compete to be first in line to try free or discounted products and then chat about those products online.

Run by ex-Googler (via its acquisition of Admeld) Jason Kelly, who joined the firm in 2012, Sociomantic stands apart from a lot of other ad tech startups in that it had never raised venture funding and was bootstrapped.

It has been profitable since it first opened for business in Berlin in 2009 and in 2013 generated revenues of a “couple of hundred million dollars,” according to Dunnhumby’s CEO Simon Hay. From what we understand, Sociomantic had not been shopping itself around although it has been approached for an acquisition in the past.

Hay would not get into specifics of how Dunnhumby and Sociomantic will integrate their services but there are a couple of areas that seem pretty obvious.

The first of these will be in selling advertising and ad services to the clients that Dunnhumby already works with in the retail sector. What’s interesting is that while this will have a direct impact for Tesco, expanding that business could also help it indirectly. In addition to Tesco, Dunnhumby works with brands like Coca-Cola and other retailers like Macy’s and Kroger and others across 70 countries on loyalty programs, as well as helping to collect and parse other shopping data in stores and online.

“We can take our data assets and combine them with Sociomantic’s platform to create value for the customers who shop with our brands,” he says. In other words, if you are a Macy’s shopper and your interests have already been identified by Dunnhumby, those interests may end up getting linked up with ads that you may see served by Sociomantic.

Conversely, Sociomantic can begin to upsell the data crunching capabilities to the clients that it already works with. Hay tells me that in the case of Sociomantic’s existing business, it will be business as usual — that is, nothing will be closing down as part of the acquisition.

Part of this is about Dunnhumby looking for ways to engage with consumers (which Hay likes to call “customers” but not in reference to its direct clients) in more immediate ways, to be able to track how and when they respond to marketing.

“As of now we start the plan,” Hay says. “What we see with them is the ability to use data to activate customers in real time, and we are in the space of activating customers in near time and other channels. I think that together we can be a powerful media marketing organisation that creates wonderful experience for customers.”

Today, Dunnhumby works with brands and retailers reaching some 700 million consumers, while Sociomantic’s ad network covers 400 million people.

Image: Flickr

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Tesco Buys Into Ad Tech As Big Data Division Dunnhumby Nabs …

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