Comments from our GM and Media Director about Aldi’s increase in ad spend.
As competition in the $90-billion grocery market heats up, the big supermarkets are spending less on traditional advertising.
But German discount supermarket Aldi is defying the industry-wide slowdown to record a 16 per cent rise to $39.3 million, according to Nielsen figures.
The figures for September 2015 to September 2016 show supermarkets spent $200 million on advertising across metro and regional TV, metro and regional press, magazines, metropolitan radio, cinema, out-of-home, direct mail and digital.
This is down 13.4 per cent from the $231 million spent in the year to September 2015.
According to the Nielsen figures, the big two chains Woolworths and Coles recorded double-digit declines in traditional advertising. This left Woolworths spending $77 million and Coles $45 million.
While the Nielsen figures showed Metcash recorded double-digit declines to $16.7 million, the wholesaler said it had increased its spending overall, particularly from October “to support the summer shopper spend.”
“The Nielsen data does not capture the redistribution of spend to reflect the full mix including catalogue, digital and sponsorships,” Metcash said.
Ben Willee, general manager and media director at Spinach Advertising, said the industry-wide decline most likely reflected supermarkets putting their money into activity that is not tracked by Nielsen, such as their own email activity and parts of video advertising.
“It’s safe to assume that if they’re [Aldi] growing their traditional media in double digits their digital activity is probably growing at the same rate,” he said.
Launching in Australia in 2001, Aldi initially shunned television and the major media. But in recent years it has ramped up advertising to the extent that it occasionally outspends Coles.
Paul Foley, the former Aldi executive who helped it set up in Australia, said the local ad blitz was typical.
“The typical discounter strategy is to get the product lines it needs and to be fairly sure it would win any taste test … and then to really ramp up the heat as far as advertising is concerned,” Mr Foley said.
“This is a very typical discounter strategy, it’s done in every country.
“It’s a super story that they’re telling, it’s a very powerful one… ‘This is the known iconic product of the market, this is the Aldi version, and there is a huge price gap without there being any reduction in quality’.”
Aldi is expanding into South Australia and Western Australia and is estimated to have 10 per cent market share.
Mr Willee said:
“It’s generally accepted in marketing that if you want to grow your brand, your share of voice has to be higher than your share of market. In this case Aldi’s share of voice is significantly higher than their share of market, a clear sign of their aggressive approach to growth.”
And while the figures present serious challenges for traditional media because retail and government are usually the two biggest advertisers, Mr Willee said the “other interesting conclusion from this data is the value of traditional media. There’s no doubt that digital is important, but the tried and true methods of generating sales still work very effectively”.
Coles and Aldi declined to comment. Woolworths was contacted for comment.
View original article from The Age 9th October 2016 here.