How Loblaw will grow its media business with Eyereturn deal

Canada’s largest retailer took a big step towards expanding its media business Thursday, acquiring the digital advertising technology Eyereturn from media company Torstar.

According to Loblaw, the move enhances its ability to buy and sell digital advertising, both for itself and other marketers, using the expansive data set derived from its massive PC Optimum loyalty program, which it says has 18 million members. Acquired by Torstar in 2008, Eyereturn offers a suite of services used by marketers buying digital inventory, including analytics, ad serving, a demand side platform, data management, targeting and brand safety.

Loblaw only introduced its media business in April of 2019. “We have, for the last 18 months or so, built the capability to create measurable, targeted advertising, based on in-store and online buying from our PC Optimum members through the Loblaw media technology stack,” said Uwe Stueckmann, Loblaw’s chief customer officer.

The deal with Torstar gives Loblaw Media more control and reduces the need to work with third-party providers, while enabling it to do more with more clients. “What Eyereturn brings to us is the end-to-end media stack: DMP, DSP, full custody of the data along the way,” said Stueckmann. “It is improving what we’re doing… It’s going to add opportunity to work with non endemic advertisers—so people who do not sell their wares in our stores—and open up a bunch of new avenues for us for sure.

“What I’m most excited about, actually, is the team that comes with that acquisition…. It’s a hot skill,” he said. “They’re pioneers in ad tech in Canada, and are a highly respected, world-class, digital marketers.” (Read more from Stueckmann below.)

Loblaw’s move to grow its advertising business mirrors that of other retail giants with access to large amounts of first-party consumer data. Most notably, Amazon’s ad business has been growing fast, while Walmart, Target and Kroger have all taken steps to grow their advertising business.

In terms of total revenue, ad sales represent a relatively small percentage. But with online shopping behaviours dramatically accelerated by the pandemic—meaning more readily accessible buying data and more traffic on owned and operated sites—the opportunity for retailers to take more of the ad business away from existing media vendors and agencies has increased.

The Wall Street Journal recently described that opportunity as being “asset light and high margin,” making it “a welcome addition to traditionally low margin, volume-driven retail.”

However, some of Canada’s traditional media players have expressed concerns about Loblaw’s moves into ad sales, suggesting that as the biggest, and in many ways most important, retailer in the country for many marketers, they can exert additional leverage when trying to sell advertising to those marketers.

“Loblaw owns the marketplace but is also participating in the marketplace,” said Canadian Media Directors’ Council president Shannon Lewis “Brand marketers will have to consider whether the advertising opportunities they garner directly from Loblaw Media Group technology platform can match the neutrality and trusted strategic advice from media agencies that are only concerned with the best outcome for their clients’ business performance.”

But according to Stueckmann, Loblaw Media provides marketers “absolute transparency regarding the effectiveness of marketing investments through precise sales attribution—something every marketer and media planner should be excited about. It finally brings accountability to media investments.”

The Message spoke with Stueckmann about the acquisition, online shopping in the pandemic, and its Christmas advertising.

On Loblaw Media as Loblaw’s in-house digital ad buying operation: “We believe that this is a more efficient and effective way to advertise. And if we don’t take our own medicine, it’s going to be difficult for us to convince others to take that medicine… We’ve fully bought into the idea that bringing measurability and accountability to marketing is something that as an industry we have to do. We’ve got the capability and the data to do that.”

Where is Loblaw selling advertising, outside its own channels: “We are basically using the Google ad network to sell display and video, and then Facebook and Instagram with direct integration. What Eyereturn will enable us to do, is broaden our scope.”

On the value of PC Optimum data: “The best predictor of future behaviour is past behaviour. The best predictor of what you’re going to buy in a supermarket, is what you usually buy in a supermarket… The second piece that is unique is that we can bring sales attribution, which is not only can we accurately target on past behaviour, we can also report on the impact of the stimulus that we put into the market.”

Online shopping growth in the pandemic: “Our online shopping is up very significantly, well over double of what we were running at in years prior… Last year we just exceeded $1 billion in online sales, and we will do significantly more than double that this year.”

Loblaw Media in a post-cookies ad world: “I think we are positioned quite well, in that our platform is not a cookie-based platform. It’s a platform  that is first party data, derived from actual registrations of actual people logging into an actual system… I think in the medium to long term, the post-cookie world is going to make our datasets and our capabilities with Eyereturn even more valuable.”

Where is your Christmas advertising? “We don’t have a big Christmas campaign coming, but we have one of the biggest integrated campaigns running for the President’s Choice Insiders Report, which has hundreds of pieces of digital content, supported by TV. Our strategy is increasingly… to leverage our own media and distribute content in our own media forums, as we have—through our loyalty program—access to millions of Canadians in our app, through email and on our website.”

David Brown