Aldi increases ad spend as Woolies and Coles scale back

By May 16, 2016News, Uncategorized

Our GM and Media Director Ben Willee commenting on the importance of ‘owned’ media for retailers.

German supermarket Aldi is ramping up its advertising, delivering much-needed cash to the television networks as the big two chains Woolworths and Coles slow spending. The $90 billion sector is in a price war as Woolworths cuts prices on everyday products after a bruising couple of years, and Aldi expands into South Australia and Western Australia.

But while the number one chain Woolworths and number two Coles are tightening their purse strings, Aldi has shrugged off its traditional caution about mass-media campaigns in Australia. Beyond catalogues and paying bloggers, it now accounts for more than 17 per cent of the sector’s ad spending.

Aldi spent $34.7 million across television, newspapers, magazines, radio, cinema, out of home, direct mail and digital for the 12 months to early April 2016. Advertisement The $34.7 million figure outstrips the $28.9 million the supermarket spent in the 2015 calendar year, which was a huge 93 per cent increase on the previous year. The Nielsen AQX figures show TV remains Aldi’s preferred medium, accounting for $30 million in advertising over the 12 months to April 2, 2016.

But digital also accounted for a proportionately large slice of Aldi’s advertising budget, at $1.37 million. This compares with $1.7 million spent on digital by Coles, and $3.7 million by Woolworths. Aldi does not file its accounts with the corporate regulator due to its controversial decision to structure itself as a limited partnership. But broker Morgan Stanley recently said Aldi’s sales jumped 60 per cent to $8 billion between 2013 and 2016, and would reach $15 billion by 2020.

While Woolworths remains one of Australia’s biggest advertisers, the Nielsen figures show it spent $74 million over the year to April 2 compared with $87.9 million in the 2015 calendar year. Similarly, Coles supermarkets spent $48 million on advertising in the year to early April. This compared with $53.6 million in the 2015 calendar year. Both Woolworths and Coles cut advertising spending in the 2015 calendar year.

The latest figures show overall advertising by supermarkets was $198.7 million in the year to early April, of which TV nabbed $116 million. Newspapers accounted for $45 million, magazines $4.1 million, radio $14.4 million, cinema $1.89 million, out-of-home $8.3 million, and direct mail under a million. Digital was $7.2 million, though this is expected to continue to rise.

Ben Willee, media director at Spinach Advertising, said:

“It’s a lot of [advertising] spend but spend doesn’t tell you the whole story.”

Supermarkets have some of Australia’s most comprehensive customer databases. This “owned” media is arguably as important as traditional media, Mr Willee said, and could lead to falls in traditional media spend as supermarkets get better at mining their databases.

These databases are used for everything from providing customised offers to striking better deals with suppliers, and spruiking financial products. A 35-year-old woman buying nappies, for example, might be targeted for insurance.

Aldi and Woolworths did not respond to requests for comment. Coles declined to comment.

View original article from The Age 16th May 2016 here.