Lidl is in the midst of reviewing its contracts for "tier one" media partners as part of the next phase of its in-housing journey.
The German budget supermarket chain – which spent £62m on advertising last year – began its move to in-house programmatic media two years ago.
Since 2017, it has worked to a “hybrid model," having built out its own internal team of specialists and consolidated its digital media buying with Adobe’s demand-side platform (DSP). This process has given Lidl ownership of the contract to buy, serve and track ads. But, it continues to work with media agencies including OMD and Starcom which handle planning and buying respectively.
Speaking at The Drum’s Programmatic Punch event on Monday (2 December) in London, Lidl’s head of media Sam Gaunt said the brand is now extending its internal team’s remit as it looks to forge direct relationships with "media partners" in a bid to secure better inventory for 2020.
“One of the major things we've learnt [from in-housing] is that the amount of inventory out there is finite,” he said. “We’re often led to believe that the digital media landscape is endless and there's endless money you can put into digital channels – but it’s clearly not the case.
“So, what we’ve done is figure out the inventory that does have value for us and we’re trying to secure that for the future.”
For example, Lidl knows Christmas is a peak period in the advertising calendar and wants the best formats available with these so-called “tier one media partners”. As such, it will develop those relationships directly, rather than relying on its agencies, to secure inventory for the next few years.
This is not a new development in the industry.
For years, advertisers have sought more control and better value by cutting out the middle-men between themselves and media owners. And since the EU's General Data Protection Regulation (GDPR) was introduced in 2018, an increasing number of advertisers have been having more conversations directly with publishers about programmatic media in the hunt a cleaner supply chain, more transparency with those in it, and better control over their own data.
For Lidl, the transparency point has been key. Gaunt said that since it began its in-housing journey it has managed to exercise more control over its media buys but a surprising by-product of this has been more trust in its agencies.
“We got transparency on the decisions being made around programmatic and that often they’re being made for the right reasons. I’m over my cynicism from three years ago, the industry has moved on now and agencies are adapting to the trust issue,” he said. “But nevertheless, decisions will be made by agencies for the right reasons but clients want to be aware of the reasoning behind them.”
Despite the progress and plans for 2020, Gaunt stressed that “fully in-housing” and ridding itself of any media agency in relation to programmatic was not an option.
“We’ve got a balance – the transparency we want, contracts with the DSP and the rest of the tech stack, and we’ve got the agency around the table being held to account,” he added.
“For us, a hybrid model has helped us strengthen relationships with agencies. As long as you've got that degree is mistrust – when you don't have that visibility, you don't know the decisions being made, then the commercial relationships - it doesn't matter the reassurances you get from an agency.
"Where that mistrust exists there's a problem in the relationship. But by taking this level of control, we’re taken the responsibility, but we're still heavily dependent [on media agencies].
“The number one benefit has been strengthening of that trust."