How proving effectiveness is helping one retailer to defend media budgets
Think marketing is tough in the UK? Belgian retailer Delhaize, like all its compatriots, must legally factor in inflation-linked pay rises, putting extra strain on marketing budgets already under threat.
Belgium might not seem the obvious place to look for evidence that marketing effectiveness is more important than ever, but if you can succeed in this country of 11.5 million people, you can succeed almost anywhere.
The reason? Not only do local marketers have to navigate three official languages and two distinct geographic regions, but Belgium is also one of only two countries in the EU to practise wage indexation. In other words, the wages of workers are linked to inflation by law. One million Belgian employees are set to receive an automatic pay rise of 11.59% in January, according to one report.
This is an added headache for companies in Belgium, which are facing the same rising energy and supply-side costs as everywhere else in the world. Alongside the cost-of-living crisis that is limiting consumer spending power currently, this has created a perfect storm for marketing departments.
“The biggest challenge we’re facing is budgetary pressure,” says Annelore Van Hove, head of media and channel at Delhaize Belgium, the country’s second-largest food retailer. “Luckily, we have a very strong VP of marketing who makes sure our voice is heard with senior management.”
Marketing effectiveness is a key gauge the team relies on to make its case. “For me, marketing effectiveness is about proving we can deliver a high ROI,” says Van Hove. “If we can show that we are increasing the revenue the business earns on every euro spent on marketing, the last thing they will do is cut the media budget.”
Changing price perception
Having opened its first supermarkets in 1867, today Delhaize operates hundreds of stores at the premium end of what Van Hove says is a “very competitive” €31bn market. The current macroeconomic pressures have only increased competition between the players, as consumers change their behaviour.
After seeing customers spending less in-store earlier this year, for example, Delhaize decided to introduce more entry-priced products, expand its high-quality own-brand range, and focus on loyalty programs.
For the marketing team, this meant a significant change of tack. Previous campaigns had followed the 60/40 rule on long-term brand building and short-term performance marketing, but the situation on the ground means that ratio is shifting towards parity.
“It’s difficult because we’ve managed to successfully build our brand over the last five years,” says Van Hove. “Our core audience is people who want to eat premium quality food, but the reality is they were buying more basic products from our competitors than from us.”
As a result, one of this year’s key campaigns focused on changing price perception over the short term. The omnichannel ‘Little Lions’ campaign showcased the value of 500 of Delhaize’s most purchased own-brand products. This was not without risk, says Van Hove, because “people know that we are not focused on low price traditionally”.
But the marketing team was able to frame the campaign around one of the company’s strategic growth drivers – providing inspiring, healthy and affordable food options for all. It paid off, with a 15% increase in Little Lions product sales after just one month. The company has increased the number of products in the range to 600.
“We found the sweet spot between brand positioning and the economic situation,” says Van Hove. “Now, we are trying to build a more long-term story by adding content, such as recipes, and linking it all back to how we make healthy eating affordable.”
Linking media performance to sales
To improve the effectiveness of its campaigns, Delhaize leans on market mix modelling (MMM) and attribution tools. “I always say that marketing is not an exact science, but we’re trying to base it more on facts and figures and be more analytical,” says Van Hove.
One way Delhaize is making this a reality is by using Sensor, Gain Theory’s multichannel, privacy-compliant attribution solution, in three key areas. First, in concert with its media agency, Delhaize determines an optimal plan for how and when to spend campaign budgets at a granular level, such as which channels, partners and audiences to target.
Second, Delhaize uses it to optimise campaigns. The marketing team was struggling to understand what was working on its busy social channels, notably Facebook and Instagram, for example. Sensor was able to show which messages were having an impact on which audiences on which channel, enabling the company to make tactical, in-flight decisions.
Third, it measures how marketing is performing in a language that senior stakeholders understand. “Sensor is the only tool I know of in Belgium that links media to sales,” says Van Hove. “In combination with MMM we have improved effectiveness every year for the past four years – during this period, ROI has increased by 60%.”
As well as providing proof that marketing is working, it has led Van Hove to something of a Holy Grail – a higher media budget in 2022 compared to 2021. While she admits it is too early to say if this will happen again in 2023, it shows that success is possible, even in a surprisingly tough market like Belgium.
Contact Gain Theory senior partner Sam Fellows to learn more about Sensor and other marketing effectiveness solutions.