#231: Building Your Program's Profitability - Loyalty's Hidden Potential

PAULA: Welcome to Let’s Talk Loyalty, an industry podcast for Loyalty Marketing Professionals.

PAULA: I’m your host, Paula Thomas, and if you work in Loyalty Marketing, join me every week to learn the latest ideas from loyalty specialists around the world.

PAULA: Hello, and welcome to episode 231 of Let’s Talk Loyalty.

PAULA: Today, I’m talking about the power and potential profitability of leveraging the unique assets within your loyalty program as a media business.

PAULA: It’s a big idea, and it’s one I have seen work extremely well for brands who find the perfect balance between the needs of their loyalty members, their internal business requirements, and external advertising partners who are relevant for your audience.

PAULA: Sonder Media is an Australian-based expert consultancy firm that specializes in identifying, valuing, and optimizing the media value of loyalty programs around the world.

PAULA: In this episode, I’m joined by its co-founders, Jonathan Hopkins and Angus Frazer, who share their unique expertise and insights on this opportunity.

PAULA: As more and more of us come under pressure to increase the return on investment for our loyalty programs, I think now is the perfect time to think about this idea of leveraging your loyalty program as a media asset with the potential to dramatically improve your bottom line.

PAULA: So Angus Frazer and Jonathan Hopkins, welcome to Let’s Talk Loyalty.

JONATHAN: Thanks, Paula.

ANGUS: Thank you, Paula.

ANGUS: It’s lovely to be here.

PAULA: Great, great, great.

PAULA: Jonathan, you’ve been on the show before.

PAULA: Would you believe it was over 160 episodes ago?

JONATHAN: I know, I can’t believe it.

JONATHAN: Congratulations on the growth.

JONATHAN: It’s been phenomenal.

PAULA: Thanks a million, yes.

PAULA: A few gray hairs in the mix as well, Jonathan.

PAULA: So listen to me, we’ve a lot to go through today.

PAULA: For me, I suppose the reason I loved having you on the show before was, first of all, I think you have a very unique role that you guys play in the industry globally in terms of helping companies with their owned media, managing it, measuring it and monetizing it.

PAULA: But also I think particularly you solve two very specific problems that I had in my career before, which was kind of increasing the return on investment for loyalty programs and also the pressure to drive media value.

PAULA: So lots to talk about today on those two topics and how you manage them.

PAULA: But before we get into all of that, please do tell me what are your favorite loyalty programs?

ANGUS: I’ll jump in on that one first, Paula.

ANGUS: I think in a world where we are inundated with some incredible AI technology, personalization, targeting, the one loyalty program that still stands out to me is the Humble Coffee Card because A, I love coffee, B, I love being able to get free coffee.

PAULA: Totally.

PAULA: Okay, so a low tech solution from Angus.

PAULA: Well done, you.

JONATHAN: Yeah, and I will build on that because this week, I heard about this coffee shop in London, which has a loyalty card as well.

JONATHAN: But what they did, which was different, was invite their customers to get loyalty stamps from all their competitors.

JONATHAN: And then they gave a free coffee when they returned.

JONATHAN: So I think that’s really-

JONATHAN: Confident and bold in your own product.

JONATHAN: You’re basically saying you’re welcome to go and try others.

JONATHAN: We believe that we’re the best in town.

JONATHAN: If you prefer their coffee, that’s fine.

JONATHAN: If you prefer ours, come back and we’ll reward you.

JONATHAN: So I thought that was quite a unique take on the whole coffee card.

PAULA: It totally is, Jonathan.

PAULA: I think we saw a bit of that with what’s in a McDonald’s and Burger King a couple of years ago, where there was literally, I think, a geo-targeted opportunity where you were incentivized to go and try the other burger with obviously an incentive to come back.

ANGUS: Yes.

PAULA: For sure, yes.

PAULA: And Angus, what I’m sure you’re doing is making sure to optimize that and smile nicely at the till to make sure you get a few extra stamps along the way.

ANGUS: I think I need to be nicer to the barista for that.

PAULA: Yes, you do.

PAULA: Definitely.

PAULA: Brilliant.

PAULA: So listen, as I mentioned, there’s a couple of big challenges that I think everyone listening to this show really struggles with.

PAULA: And it’s good context for today.

PAULA: I’ve been talking a lot about it recently, in fact.

PAULA: And I suppose it comes at the end of a huge period of investment in loyalty programs, which I think will continue.

PAULA: But I think what I’m certainly hearing from people now is that there are more and more demands on how is that loyalty program performing?

PAULA: How can we measure and obviously increase the return on investment of loyalty programs?

PAULA: So I know owned media is a brilliant solution and answer to this kind of challenge that we’re all facing.

PAULA: So I’d love you maybe just to talk through exactly how does owned media fit into this particular problem slash opportunity.

ANGUS: Okay, well, I mean, I could jump in on that one in terms of, I guess, understanding the value of owned media when it comes to loyalty programs.

ANGUS: And I suppose it’s poor form to start at answer with a caveat, but I will caveat it to say that every business is distinct, is unique, and has different audiences, different media channels.

ANGUS: So it is difficult to pin a number on what any loyalty program out there is worth.

ANGUS: But in our experience, and working with the kinds of businesses that we’ve worked with, what we found is that typically a loyalty program is worth over $70 million per year.

ANGUS: So it’s significant in terms of the value and the potential commercial opportunity there for organizations.

ANGUS: Because when you think about all the media that is being leveraged and used to support different offers, rewards and use across all the media channels like email and social website apps, there is so much there.

ANGUS: And when you add all of that value up, it is significant.

ANGUS: And so we think that loyalty programs, when they, I guess, flip the lens a little bit and just look at the media that they have and the value of it, the audiences that they can contribute and provide to other brands, it’s a huge opportunity for them.

PAULA: And just to clarify, Angus, that’s $70 million.

PAULA: Obviously, it’s an extraordinary number.

PAULA: But what you’re talking about is that’s completely different to the business case for loyalty, which exists to drive profitable behavior for the business.

PAULA: So that’s one element of the whole P&L for the return on investment.

PAULA: What you’re saying is that they’re entirely different opportunity and it’s a $70 million opportunity in your experience.

ANGUS: Exactly.

ANGUS: And the beauty of it is that it’s very, very quantifiable.

ANGUS: And the kind of work that we’re doing with organizations around the world is to actually calculate what the specific media value is for every single channel and format that they are providing and that they are using to communicate with their huge audiences.

ANGUS: And that, because we can get down to that level, you can then ladder that back up to demonstrate the full value that a loyalty program offers.

PAULA: Absolutely.

PAULA: And I think I said to you last time we spoke, Angus, that this was exactly the situation I had.

PAULA: I had a wonderful role as head of e-commerce for e-bookers in Europe.

PAULA: And as everybody knows, the travel business has tiny margins.

PAULA: And every time there was an earnings call with our biggest competitor, lastminute.com, the single biggest takeaway that the investors had was, oh my God, the media value these guys are earning on the back of their audience.

PAULA: I mean, I don’t know the numbers, but even 20 years ago, Angus, it was an extraordinary thing.

PAULA: And again, meant I was under pressure to sell media to my audience.

ANGUS: Yeah.

JONATHAN: And when you look at websites as an example, because a lot of that data is in the public domain, and you look at the top 50 websites in your country by monthly page views, what we generally find is that there are more normal businesses than publishers in that top 50 ranking.

JONATHAN: It’s usually about 60% of them are actually businesses.

JONATHAN: So they’re attracting huge audiences.

JONATHAN: And only now, in the last few years, are we starting to see loyalty programs catch up with that and say, across our email base, across our social following, our app.

JONATHAN: They’re drawing millions and millions of customers.

JONATHAN: And those customers, yes, they’re there to engage with the business and transacting on some occasions, but also they’re there looking for offers.

JONATHAN: And the offers business we’ve seen just grow exponentially as a way to offer rewards to customers and the ability to target those customers and give them tailored offers is really, really powerful.

JONATHAN: And then those offers are supported via media channels to make them aware of them.

JONATHAN: And that’s where the value resides.

ANGUS: And that’s, you know, to Jonathan’s, sorry, to Jonathan’s point there about the volume of audience that loyalty programs can actually contribute and provide.

ANGUS: Layer onto that, the sophisticated targeting that they are able to bring to the party as well.

ANGUS: So that it becomes an really compelling opportunity for other brands to be able to leverage that.

ANGUS: So that it’s not just a volume play, it’s a value play as well.

ANGUS: And that they can really target those audiences.

ANGUS: In many cases, better than what can be bought out in the paid media market.

PAULA: Yeah, and actually that’s a good point, Angus.

PAULA: You guys both came from this industry of buying media.

PAULA: So I suppose you have a brilliant perspective in terms of what it’s worth and exactly how to monetize it.

ANGUS: Yeah, between Jonathan and I, we’ve presided over the investment of billions of dollars around the world.

ANGUS: And so we’ve seen a lot in terms of the way that brands can access paid media targeting.

ANGUS: And obviously it’s evolving constantly, and there are some really good solutions out there.

ANGUS: But ultimately, when you look back at what a business can provide and the sorts of first-party data that they have, the sort of reporting that they can provide, downstream financial reporting, that kind of thing, that’s leaving the paid media market for dead.

PAULA: And I guess my key thing, when I think back to that particular instance where I was facing this challenge, as I mentioned in ebookers, I guess as an e-commerce manager, the actual KPIs that I was targeted with were about converting.

PAULA: And Jonathan, you already referred to this idea that the customer’s there to transact with that brand.

PAULA: So I think I was always super protective of the inventory because what I was afraid of was actually, there would be way too much of other people’s product and content competing from my customer’s attention.

PAULA: So how do you, I suppose, identify the best way to monetize owned media without compromising, I suppose, the core business and objectives that the visitor’s there for?

JONATHAN: Yeah, exactly.

JONATHAN: So we talk about getting an even triangle between the three core constituents.

JONATHAN: And they are your business, your customers and the partner, or supplier, if you’re a retailer.

JONATHAN: So if you can get an even triangle between those three parties, you’re doing a good job.

JONATHAN: Where we see problems is where, for example, it’s skewing too much towards the partner’s needs.

JONATHAN: So it’s working really well for a partner, as you said in your example, but it’s not working well for the customer, and therefore it’s not working well for your business.

JONATHAN: So if you can get it working on an even basis for those three parties, so it’s a triple win, you’re in a good spot.

JONATHAN: We’re certainly not in the business of over commercializing your audience.

JONATHAN: That’s a dangerous space to be in, and absolutely not mercenary in that regard.

JONATHAN: It’s very much about ensuring a better outcome for your customer.

JONATHAN: And that’s where our partner offers have really come into the fore because you’re adding value to your customer base by going out into the market and finding relevant offers for them and delivering them through your platforms.

JONATHAN: So you’re definitely winning for your business, you’re definitely winning for the partner, and you’re definitely winning for the customers.

JONATHAN: So that’s why we’ve seen such growth in that offers area.

PAULA: Yeah, and I think you had a funny phrase that you used to, I suppose, explain those three different stakeholders.

PAULA: Do you want to share that with the audience?

JONATHAN: Yeah, I mean, we talk about don’t tattoo the baby.

JONATHAN: So don’t over commercialize your audience.

JONATHAN: It’s about being sensitive to your customer’s needs and adding value at every turn.

PAULA: Lovely.

JONATHAN: And some marketers get very protective, like you were describing, you know, the purists about their media assets.

JONATHAN: And we understand that, you know, we’ve been marketers as well.

JONATHAN: But ultimately, if showing them a partner offer adds value to the customer, then we think it’s worth doing.

PAULA: For sure.

PAULA: So what categories now?

PAULA: I suppose bearing in mind, guys, that we’ve got people all over the world listening to the show, of course.

PAULA: And we also have all sectors.

PAULA: We have a lot of people in the travel industry, a lot of people like me coming from telcos.

PAULA: But what are the particular loyalty programs or sectors and categories that you think particularly are working for this opportunity with owned media?

ANGUS: Well, I think certainly the categories that you’ve mentioned there are absolutely prime for being able to leverage owned media.

ANGUS: And you mentioned telcos, Paula, and that’s an area that we’ve done a lot of work in.

ANGUS: And many of them now are really bonafide media businesses that bring scale to content deals and really driving usage and customer value through their media offerings.

ANGUS: We work with Singtel Optus, and they are no exception.

ANGUS: They have a business that spans across, obviously, fixed telephony, mobile, internet, but they also have subscription TV service, and they have major sporting and content deals with the likes of English Premier League.

ANGUS: So they have this enormous wealth of owned media value, which they’re using in a really multifaceted way.

ANGUS: So obviously, they have very large, sophisticated handset deals with the likes of Samsung and Apple and that kind of thing.

ANGUS: And so the owned media that they are using to promote these new handset launches and that kind of thing is incredibly valuable.

ANGUS: And so it’s really being able to demonstrate the owned media value that they are bringing to support those handset deals.

ANGUS: And then the third area is where your audience really comes into it, which is around the loyalty programs and offers and rewards programs and programs that are being run by telcos.

ANGUS: And as we’ve talked about, the ability to really drive the owned media value within those programs.

PAULA: For sure, yeah.

PAULA: And as you were talking about that, Angus, I was just thinking about this much rumored death of the cookie and the opportunity to really advertise online is really being, well, likely to be compromised, let’s say.

PAULA: We don’t know exactly when, but it sounds like, you know, with that mindset that anybody who is looking to build awareness and do some marketing activity really does need access to first-party databases where all the privacy is taken care of, and as you said, the level of clarity and accuracy around marketing to certain people is just at a whole other level.

JONATHAN: Yeah, exactly.

JONATHAN: The first-party data phenomenon that’s coming very soon, if not already in a lot of categories, is an extremely powerful owned media tool and attractive to other companies.

JONATHAN: That ability to target, to demonstrate conversion via an opt-in database is just not available in paid media.

JONATHAN: So as the cookie crumbles, first party data is very much at the forefront of owned media leverage.

JONATHAN: And what we’re seeing is movement towards owned media, retail media in many, many categories to leverage that customer data in a sensitive way.

PAULA: For sure.

PAULA: And you mentioned Singtel, Angus.

PAULA: I’d love to get a sense of other, I suppose, brands that you guys have maybe worked with in perhaps travel or financial services.

PAULA: I think you guys mentioned is one where there is huge scale, bigger appetite, and I guess you’re doing kind of global media evaluations for these guys to help them monetize it.

JONATHAN: That’s right, Paula.

JONATHAN: We work with travel and financial services brands around the world.

JONATHAN: We’re seeing a lot of growth in airlines who have been quite established in this space, but now through their loyalty programs as well, they’re generating a lot of interest from external parties and have online stores, e-commerce programs within their loyalty programs, and supporting those brands through their own media channels.

JONATHAN: And then from a FinFET services perspective, we work with banks.

JONATHAN: Big banks are all getting into the office space, as well as global credit card brands across multiple markets.

JONATHAN: So the equation is really quite powerful.

JONATHAN: So on average, across these office programs, we’re seeing about five times the cost of the offer to the business, to the partner business, in terms of media support.

JONATHAN: So if it costs an offer brand 50,000 in hard cost of redemptions to the offer, we’re seeing $250,000 worth of media support going behind that offer.

JONATHAN: So it’s quite a compelling sell to those brands.

JONATHAN: And what we’ve seen, certainly in the financial sector, is sales teams now leading with the value of media as a way to attract new vendors and partners.

PAULA: Absolutely.

PAULA: And actually, as I was asking about the sectors as well, guys, I was thinking that, in fact, since we last spoke, I’ve actually moved into this direction myself, because I guess in B2B, there’s also brands that I can support as a media business myself.

PAULA: And whereas I don’t have an advertising budget, I can promote loyalty conferences and loyalty events, and they can promote Let’s Talk Loyalty directly out to their audiences, which are usually an email format, for example, or we’re showing up on all of these random websites.

PAULA: But what I love about that model for me as a small business is it’s done on a full, I suppose, contra basis rather than a cash basis.

PAULA: So I feel like even for brands who are listening that might not want to go the whole hog in terms of building a media business, there’s still opportunities to identify partners or maybe a complementary loyalty program that has a similar audience and start to refer people to each other.

PAULA: So is that something you think is also relevant for understanding the value of owned media?

ANGUS: Yeah, absolutely, Paula.

ANGUS: And it’s great to hear what you’re doing there in terms of, I guess, leveraging the media assets that you can bring to the table and the audiences that you can bring to other brands.

ANGUS: And Contra or value in kind, these kinds of things are really, really common, and we’re seeing a lot of businesses do this.

ANGUS: I guess what we advocate is that you need to talk about the dollar value and the audience that is being assigned to those media formats.

ANGUS: So if you’re talking about providing an email or access to a website banner or leaderboard, that kind of thing is fine, but it’s very, very hard to understand the real value of it unless there is a dollar attached to it.

ANGUS: So rather than just saying, we’ll give you an email, and then someone at the other party is saying, well, we’ll give you an email.

ANGUS: Those two emails could be radically different in terms of the real value.

ANGUS: So we always advocate, know your worth, know the value of the media that you have, the audiences that they command, and that you can then actually go out and operationalize.

PAULA: For sure.

PAULA: And it’s a good point, Angus, because I’ve often had that situation where I would say, look, I’ll do an email out about your particular event, for example, and somebody then says, great, we’ll put you as one of six in our email.

PAULA: And I’m going, actually, that is not a fair trade.

PAULA: Yeah, exactly.

PAULA: So yeah, I do remember we talked about Solace emails last time, Jonathan, actually, you had a big number around a Solace email campaign that you’ve done for a client.

JONATHAN: Yes, we consistently find year on year that email is one of the most valuable channels, and that’s across physical media in store, as well as all digital media channels.

JONATHAN: You know, it’s opt-in, so it gets around privacy issues.

JONATHAN: They’ve asked to receive it.

JONATHAN: You’ve got open rate metrics, which can add to the value, and it goes directly into their inbox.

JONATHAN: So there’s a myriad of reasons why email is such a powerful tool, even in the world where all these new media channels and social media platforms come up.

JONATHAN: In terms of value, email tends to be the winner.

PAULA: Yeah, not surprised to hear that.

PAULA: And I think as consumers, we all feel that as well.

PAULA: It has cut through.

PAULA: And what I’ve always liked about email is I do feel actually in control as a consumer.

PAULA: So if it does get excessive, to your point earlier, about getting the balance right, I do feel I can unsubscribe.

PAULA: So I’m happy to keep receiving it because I feel that level of control that I’ll never be bombarded.

PAULA: So yeah, I think it’s a very good point.

JONATHAN: And one of the innovations we’re seeing around the world is just this growth in customer personalization engines.

JONATHAN: So the ability of these large organizations, especially in grocery and retail, to be able to tailor individual communications to an individual customer with offers based on their shopping behavior is huge value to partners because they work that much harder and they can’t do that anywhere else.

JONATHAN: So it’s quite a unique thing to own media.

PAULA: For sure.

PAULA: And I always love, I suppose, innovative and emerging ideas as well in terms of formats.

PAULA: What else, I suppose, is coming through, you know, beyond those traditional channels that you’ve been, as we said, measuring and valuing for the last few years?

PAULA: What other kinds of ways, I suppose, should we be thinking about where there’s value and attention that could be, you know, opportunized, if that’s the word?

JONATHAN: Well, yeah, the personalization engine is a big one.

JONATHAN: The other type of formats that we’re seeing emerge is in, there’s a lot of growth in search.

JONATHAN: So what Google have been doing for years in the paid media space, we’re seeing translated into owned media.

JONATHAN: So searching for products on an e-commerce site, and then getting served with, you know, recommended banners or placements that match that search.

JONATHAN: And those have, obviously, are much higher value based on where they sit on the page.

JONATHAN: And there’s a huge growth in app usage and being able to serve relevant communication via geotargeting.

JONATHAN: For example, you know, you’re walking past a McDonald’s and you’re being served by one of your favorite platforms, a geotargeted offer as you check your balance.

JONATHAN: It is one example that’s been possible for some time, but it’s now starting to come into that office space as well.

PAULA: And I was going to ask you that actually, Jonathan, given that it has been since, what did we say, November 2020 when we last talked.

PAULA: And I think what we’re all seeing is actually just huge growth in this space.

PAULA: So, you know, you’re certainly preaching to the converted clearly as far as I’m concerned.

PAULA: But for people listening, you know, in terms of, you know, why now?

PAULA: If people would be considering doing something like this, like, what do you think is the opportunity for brands, really, to think about doing something in 2022 when they might have, like me in the past, you know, kind of resisted doing it?

ANGUS: Well, I think when it comes to looking at your loyalty programs from a pure media perspective, there’s a couple of steps that we advocate.

ANGUS: First of all, the valuation.

ANGUS: So before you do anything in this space and make any strategic decisions around how to mobilize your media assets, you really need to understand the size of the prize.

ANGUS: So auditing and valuing the media assets that you have access to is the critical first step.

ANGUS: And then secondly, you want to look at really defining the model in which you want to apply to this kind of program.

ANGUS: And that includes identifying the sorts of brands that you would want to partner with and decide whether or not you actually want to be charging cash money for your media or if it’s going to be about representing the value as part of a wider deal.

ANGUS: And this comes down to direct versus indirect revenue.

ANGUS: So, direct revenue is where you can charge cash money for access to your audiences via media channels, whereas the indirect revenue is where you can represent that media value as part of broader deals.

ANGUS: And then I guess the third thing would be really resisting, I guess, the temptation to simply go out and offer channels and formats.

ANGUS: In the media world, you sometimes hear people talking about buying spots and dots, which is really just referencing the going out and just buying bits and pieces of media here and there without having any kind of strategic clarity as to what you’re doing.

ANGUS: So, we definitely advocate creating solutions for partners.

ANGUS: So, solutions led media opportunities is really critical.

ANGUS: So, you can essentially package up specific media channels that will address your customers or your partners’ marketing objectives.

ANGUS: So, understanding what your partners are trying to achieve through communications and then really tailoring those solutions through your own media ecosystem and providing those.

ANGUS: So, that creates a huge step forward for businesses to be able to offer those kind of well thought out solutions rather than just saying, would you like to buy an email?

ANGUS: That kind of thing.

ANGUS: And then finally, Paula, it’s about making sure that you’ve got the measurement and reporting in place.

ANGUS: We’ve spoken about the data and the targeting and the ability to look at downstream financials when it comes to loyalty programs.

ANGUS: That sort of thing is just so valuable to other brands to be able to access that sort of thing.

ANGUS: So, for anyone in that space who’s looking to do more of this, that is an area that you definitely want to be able to actually execute and leverage.

JONATHAN: Just to pick up on the second part of your question, which is why now, I think there’s internal and external forces.

JONATHAN: The internal ones would be post-pandemic, everyone’s looking for alternative or ancillary revenue streams.

JONATHAN: And this is highly lucrative.

JONATHAN: We’re talking about 80 to 90% profit margins, because the capex has already been laid down, these media channels and ecosystem has already established.

JONATHAN: So it’s effectively just turning it on for partners.

JONATHAN: So that’s the internal reason.

JONATHAN: Externally, we’ve kind of alluded to a lot of this, but businesses are seeing diminishing returns in paid media, and they’re not getting that targeting level anymore.

JONATHAN: They’re not getting that ROI.

JONATHAN: So there’s an appetite within the marketplace to move into owned media.

JONATHAN: And so that’s the external force that we’re seeing as well.

PAULA: Yeah, and I’d love to hear, I suppose, just even anecdotally, in terms of your existing clients, it feels like with that, I suppose, strategic clarity, Angus, that you mentioned, it does feel like that there is probably a need also for some internal expertise.

PAULA: So, you know, potentially, of course, working with you guys in terms of the valuation.

PAULA: But then when you do decide to start, you know, perhaps selling this particular new product in the business, it does feel like, you know, again, there’s busy loyalty professionals out there.

PAULA: It would be ideal, I suppose, to resource this as well, to basically have those products created and go to market and actually sell them almost as a new business unit.

ANGUS: Yeah, absolutely right, Paula.

ANGUS: And I think what you’re touching on there is one of the areas of innovation that we’re seeing is the inclusion of media specialists within marketing and loyalty teams.

ANGUS: And it’s so important because owned media really does work across a whole organization.

ANGUS: And it can be challenging to actually be able to corral and manage all these quite disparate teams.

ANGUS: So having a media specialist who understands communications, understands marketing, and gets the media and the audiences that the business has to be able to actually really pull those together into a meaningful way.

ANGUS: And they can be the champion for it.

ANGUS: They can go out, they can work with loyalty teams, with marketing teams to really position the owned media in the way that it should be.

ANGUS: And they can manage campaigns, they can do the planning and reporting.

ANGUS: So yes, there is an OPEX cost to running media programs, but in our experience, the cost is just so insignificant versus the actual opportunity in the ROI.

PAULA: For sure.

PAULA: And I think what that does for somebody like me, for example, as a loyalty manager is, I have much more comfort then that the boundaries are clear, when it is an internal solution, that the goals are fully aligned, that we know exactly how far we can go, to the point earlier about not going too far for any one stakeholder.

PAULA: I do think that that’s perhaps what was missing when I was being asked to deliver it again on top of my busy workload.

PAULA: So great to hear that that media speciality is increasingly coming into loyalty programs.

JONATHAN: Yeah, and just to build on that, Paula, the reality of what we’re seeing is that because of the sophistication of running their own marketing programs, a lot of the tech and the data stacks are already in place.

JONATHAN: So if you think about content management systems, CMSs, a lot of these tech platforms are already in place and they’re already running quite sophisticated data stacks to get those business financials on their own marketing and their own campaigns.

JONATHAN: So conversion metrics, engagement metrics, and just understanding through their customer data engines what’s going on in their own business that can easily be used and redeployed into partner campaigns as well as their own.

PAULA: For sure.

PAULA: And I mean, I haven’t asked the question, but certainly when I think about all of my partners on the show in terms of technology companies, I’m pretty sure that their solution is being designed with exactly this requirement in mind.

PAULA: And I’m thinking client-wise, for example, I did write an article about Walgreens, and I think it was about two years ago.

PAULA: But exactly this idea, you know, they have an audience of 100 million people, permission to market to them.

PAULA: So then, of course, they set up the Walgreens advertising group, and the opportunity to commercialize a database of 100 million people was obviously something Walgreens spotted a mile off and to put the infrastructure in place in order to capture that value.

PAULA: So I’d love to be able to be on the inside and see the P&L a couple of years on.

JONATHAN: Yes, well, we’re seeing Walgreens, we’re seeing CVS in the last few years in the US.

JONATHAN: Walmart have a business called Connect.

JONATHAN: In the UK, you’ve got Harrods Media, you’ve got Boots recently launched, Tesco.

JONATHAN: And so, yeah, the Amazon’s leading the way in terms of the revenue that they’re able to garner from this area.

JONATHAN: It’s around 32 billion globally, which is huge.

JONATHAN: And that’s where they’re making a lot of their revenues now.

JONATHAN: So, yes, it’s happening a lot in the retail space.

JONATHAN: Airlines have been doing this for decades as well.

JONATHAN: They call it ancillary revenue.

JONATHAN: And the telcos and the financial institutions are all doing it now as well.

JONATHAN: So it’s definitely becoming more normalized.

PAULA: For sure.

PAULA: Well, as I said, you guys are perfectly placed in terms of your expertise, first of all, on the buying side, to now advise on the opportunity side.

PAULA: So from my perspective, you’re creating and delivering an enormous service to the whole loyalty industry.

PAULA: OK, Angus Frazer, Jonathan Hopkins, co-founders of Sonder Media.

PAULA: Thank you so much from Let’s Talk Loyalty.

PAULA: This show is sponsored by The Wise Marketeer, the world’s most popular source of loyalty marketing news, insights and research.

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PAULA: For more information, check out thewisemarketeer.com and loyaltyacademy.org.

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