Lidl has experienced a rapid ascent over the last five years, with it recently overtaking Waitrose to become the UK’s seventh biggest supermarket.
At the same time, its marketing spend has soared. In 2013, the German discounter invested just £28m in advertising. Yet, even though there are still three months of the year to go, Lidl has already spent £75m in 2017. This growing investment has allowed it to grow its brand perception around quality making the middle classes reconsider shopping with a discounter.
But despite its advertising investment consistently growing year on year, Lidl’s head of media Sam Gaunt is still pessimistic about investing too much of this budget into programmatic. Speaking at the Festival of Marketing today (4 October), Gaunt said too many brands are overspending on programmatic without a clear strategy.
“The marketing industry has been guilty of overselling programmatic,” he explained. “There’s a large amount of over-investment by marketers in the programmatic sphere who sit within brands that have no real strategy. They don’t know how much they are spending on programmatic or where this advertising is going.”
Why it isn’t yet profitable enough for Lidl
While he wouldn’t divulge specific numbers, Gaunt produced a chart that showed how Lidl’s digital advertising – which programmatic sits within – is still dwarfed by radio, TV and print when it comes to ROI.
He added: “All marketing is about building your brand but also driving sales and programmatic isn’t doing the latter for Lidl just yet.
“For all the debate around fraud and viewability, the reality is programmatic is very expensive. It’s a premium media. When you stack up the cost of it with traditional media and then weigh up the impacts, it can be hard to justify.”
There’s still a long way to go until we reach that nirvana of really understanding how programmatic can work effectively.
Sam Gaunt, Lidl
Gaunt said because people typically consume programmatic advertising with the sound off, they are more likely to get distracted. TV, as a comparison, is “more impactful” because the sound is on, which makes it more powerful at holding someone’s attention, he added.
When asked whether bringing programmatic technology or media expertise in-house to improve programmatic efficiency – something brands such as Pernod Ricard have done – could help lower these costs, Gaunt immediately shot the idea down: “There is a head count attached to taking it in-house. That then has to fit into our costing.
“Not having it in-house gives Lidl flexibility to dial up and dial down spend on programmatic when necessary. The moment you bring in expensive programmatic talent, there’s the risk you don’t make enough use of them.”
The ‘programmatic nirvana’
One of programmatic advertising’s biggest benefits is the fact it removes a “premium for spending money on regional targeting,” according to Gaunt. However, ultimately, he feels programmatic still has a long way to go in justifying itself.
He concluded: “There’s no doubt the future of media spend revolves around programmatic advertising and buying. But, at the moment, the problem with programmatic is it is new, shiny and overvalued.
“I’m not trying to sound pessimistic but trying to make the point that there’s still a long way to go until we reach that nirvana of really understanding how programmatic can work effectively and generate an impressive ROI.”