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: This episode is brought to you by Epsilon, and their award-winning People Cloud Loyalty Solution.
Paula: Epsilon has actually just released a guide on the topic of Contactless Loyalty, which explores how marketeers can create human-like connections with their customers in an increasingly contactless world.
Paula: I would highly recommend you have a look, so to download the guide, visit emia.epsilon.com forward slash let’s talk loyalty, and you’ll find the guide in the resources section.
Paula: So welcome to episode 62 of Let’s Talk Loyalty.
Paula: And my guest today is a gentleman by the name of Jonathan Hopkins, who is the founder of a company called Sonder.
Paula: Now Sonder itself is something that I will let Jonathan explain.
Paula: But in terms of the context for why Jonathan is coming onto this show, I have to say he seems to be the only person and the only agency providing the kind of services that I needed in a very specific area of managing a loyalty program.
Paula: And that is understanding the value of the asset and the media and the audience that you own as a loyalty program owner.
Paula: So I hope I’ve explained what you do suitably well, Jonathan.
Paula: First and foremost, welcome to Let’s Talk Loyalty.
Jonathan: Thank you very much Paula.
Paula: Great, great.
Paula: So as you know, I have lots of questions, including explaining your company name, explaining what you do in terms of valuing media, particularly for loyalty program owners.
Paula: But before we get into all of that, tell us your favorite loyalty statistic.
Jonathan: Well, my favorite loyalty statistic is that a soulless email is the most valuable media asset of all owned media channels.
Jonathan: So more valuable than a digital screen at the front of a store, more valuable than a homepage banner, and more valuable than a social media post.
Jonathan: And when I say valuable, you asked for a statistic.
Jonathan: So I would say we valued emails at over $250,000.
Jonathan: That’s US dollars.
Jonathan: So for a large organization with a large audience, a soulless email where you give the entire email to a partner, a brand partner, exclusively, is the most valuable email, most valuable asset that we have valued for businesses.
Paula: That’s wonderful, Jonathan.
Paula: And I’m hoping that changes in the future.
Paula: Dare I say email has been around for a long time.
Paula: And as somebody who’s passionate about voice media, I’m hoping that we might be able to add to Trump that at some point.
Paula: Actually, dare I risk a cliché?
Paula: Trump is probably not a good word this week.
Jonathan: Well, it’s funny you say that because I read an article once that talked about email being the cockroach of all media channels.
Paula: Oh my goodness.
Jonathan: Which was actually meant in a positive way.
Jonathan: It is long lasting.
Jonathan: It is one of those few opted in channels.
Jonathan: It’s just really powerful and we love it.
Paula: Yeah, absolutely.
Paula: Well, I love the distinction, Jonathan, in terms of a soulless email, because as we talked about before we came on air, there are plenty of ways to support brand partners and I’m sure plenty of the loyalty program managers that are listening now would put plenty of their partners into an email.
Paula: But we all know the difference in performance between having a single minded focus on one offer or one partner or one merchant versus putting 20 links there and there and lots of competition for the reader’s attention.
Paula: So absolutely extraordinary to know that a soulless email for some of your clients can be worth hundreds of thousands of dollars.
Paula: So a brilliant statistic to open the show, Jonathan.
Paula: I think, you know, probably in terms of background, again, so the audience understand what you do, tell us how you got into this business of valuing owned media.
Paula: Just give us the story.
Paula: And again, I’ll give my own experience, again, struggling with the exact problem that you guys are solving.
Jonathan: Sure.
Jonathan: So my business partner and I both have a similar background and we used to run paid media agencies.
Jonathan: So when advertisers want to buy media in the open market, that’s what media agencies are for.
Jonathan: And we dealt a lot with CMOs and marketing departments.
Jonathan: And our observation was that a lot of the marketers out there in the world spend a lot more time and effort and care and attention and measurement around the media that they buy, whilst sometimes forgetting or squandering the attention, the value of that attention through their own channels.
Jonathan: And to be clear, when I talk about owned media, it’s basically a media channel which you as an organization own wholly or partly that attracts an audience.
Jonathan: And like I said, our observation was that it was like the forgotten child of the market world.
Jonathan: It’s like, oh yeah, I’m buying TV spots and I’m putting posters up and I’m putting banners on websites on this X, Y, and Z media owner.
Jonathan: And then I’ll run it through my own channels as well, almost as an afterthought.
Jonathan: And we thought that really devalued the channels that this organization had invested a lot of money, let’s face it.
Jonathan: A lot of CapEx building up a website, a lot of CapEx building up a database of customers, and so on and so on, through to social media and stores as well.
Jonathan: And these media ecosystems exist.
Jonathan: So all you have to do is turn them on really.
Jonathan: So we set up Sonder to kind of readdress that balance between the paid and owned channels, and just really shine a light for these large organizations on the value of the audience that they’ve spent decades attracting and managing and nurturing.
Jonathan: And that has a value for their own marketing, specifically, and also for partner brands.
Jonathan: And we passionately believe that businesses shouldn’t be giving away this media because it is quite sacrosanct.
Jonathan: They have nurtured and grown it over many years.
Jonathan: So why give that away?
Jonathan: It has a value.
Jonathan: So don’t give that to partners.
Jonathan: So that’s kind of what we’re passionate about at Sonder and why we set up the business.
Paula: Well, well done, you, Jonathan.
Paula: And I think it’s about five years I saw on your website.
Paula: So Sonder has been around and headquartered in Australia, although your accent is not Australian.
Paula: You’re originally from the UK yourself, Jonathan, yeah?
Jonathan: That’s right.
Jonathan: Yes, I’m English.
Jonathan: Worked in global advertising agencies out of London, always in a kind of pan-European or a global sense, managing global clients.
Jonathan: And then moved to Sydney.
Jonathan: And we’ve set up camp here where we call ourselves Sydney based, but we are a global business and we do have clients all over the world.
Paula: OK, fantastic.
Paula: So the next obvious question is, of course, Sonder.
Paula: Please explain the name and listeners will know.
Paula: And I think I said to you as well, Jonathan, I love words.
Paula: So as somebody who, you know, uses words in my everyday work, I really love when I find a new way that language is evolving.
Paula: So tell the audience about the name, where it came from and the whole source.
Jonathan: Well, it’s actually a funny story.
Jonathan: And for anyone who’s ever set up their own business with a business partner or has had a professional debate over words, they’ll respond to this.
Jonathan: You know, my business partner and I don’t argue very much, but right at the start of setting up the business, of course, it’s pretty crucial to get the name right.
Jonathan: So after two weeks of toing and froing, no one’s really happy, not getting there.
Jonathan: My wife eventually intervened, because I think she was listening to the arguments.
Paula: Fantastic, yeah.
Jonathan: She found the word.
Jonathan: And there’s a website online called the Dictionary of Obscure Sorrows.
Jonathan: And it sounds quite morbid, but it’s actually got a great collection of words which have been developed recently and have quite obscure meanings.
Jonathan: And the meaning of sonder is quite nice in today’s world.
Jonathan: It’s the empathy and the recognition that everyone around you has lives as complex and as vivid as your own.
Jonathan: So it’s about being really empathetic with other people and understanding their needs and not just talking about yourself all the time.
Paula: For sure, yeah.
Paula: And that’s pretty profound, Jonathan.
Paula: I think that’s something that all brands aspire to do.
Paula: Perhaps aren’t always as successful or not as visibly successful as they would like to be, but it is a great word.
Paula: I’m glad it ended the one and only argument that you and your business partner had.
Paula: So well done to your wife.
Paula: You can say well done from Let’s Talk Loyalty.
Paula: And also I’ll make sure that we link to the Dictionary of Obscure Sorrows.
Paula: So again, anybody who loves words will be massively impressed as I was with the level of intellectual thought, actually, that’s behind the words that the writer is actually creating on that website.
Paula: So we’ll give that a bit of a plug as well.
Paula: But back to Sonder, Jonathan, I think what really amazed me when we met and again, just for the audience benefit, I’m a very new media owner with an audience which clearly I dearly love and nurturing and every day I come to record interviews like this, it’s with the intention of adding value to the audience.
Paula: And I suppose along with that means that this audience is also very valuable.
Paula: But for me to understand how the business side of podcasting worked, certainly you’ve been extremely helpful to me.
Paula: But what I really loved as well, Jonathan, is the fact that a lot of the projects you started began, I know for example, there in Australia, and I’m thinking of American Express I’ve seen on your website, but then expanded to other markets such as the US.
Paula: And I think my perception as a marketeer is always like, well, the US knows how these things work better than I do or maybe the UK.
Paula: But tell us your experience in terms of valuing media for global brands.
Jonathan: Yeah, so the Amex story is quite interesting one.
Jonathan: And as we know, American Express offers has been for a number of years now, the leader globally in terms of how to do offer based marketing and customer understanding and how to be really smart about delivering offers that are relevant to your customer base and in their case card members.
Jonathan: They are in a fortunate position in that they have access to their spend data so that they can really tailor bespoke brand messages back to their card members.
Jonathan: For example, if you’re a female card member who’s recently bought athletic clothing, you’d get served a communication online and social and via email from the likes of Lululemon, the female athletic brand.
Jonathan: So for those listeners who aren’t familiar with the program, that’s effectively what it does.
Jonathan: We started working with them four years ago in Australia, did a complete valuation of their entire ecosystem, which covers all the classic digital channels like email, website, social, apps and so forth.
Jonathan: But also, we even got into call centers.
Jonathan: So when they’re doing outbound calls to their card members to talk about offers with a brand, that’s effectively like a live read or a podcast mention.
Jonathan: So that also has a value.
Jonathan: So that was quite a unique one.
Jonathan: But also through to their lounges, their entertainment lounges and their airline lounges and the screens and the brand collateral that they have there.
Jonathan: And so we worked with them originally in Australia.
Jonathan: And then the global headquarters, ceramics offers out of New York got wind of the work that we were doing and wanted to take it around the world.
Jonathan: So we ended up doing a similar evaluation across 13 countries.
Jonathan: And what we always think is quite funny is that they’re a financial institution and we unlocked for them over a billion dollars in media value that they weren’t recognized.
Jonathan: So they hadn’t recognized and they weren’t using that in their discussions with their merchants when it comes to the offers.
Jonathan: So what was happening was that they were just not giving away, but they were saying that we’ll support your offer through our own channels, but it just didn’t have a value attached to it.
Jonathan: So with the work that we did, they were able to say, on average is about $250,000 worth of media support to accompany their offer.
Jonathan: So that fundamentally changed how they went to market when they were talking with the merchants.
Jonathan: And it really drove a wider interest in the marketplace, increased the offer size, and had some significant business outcomes.
Jonathan: So yeah, it was one of our first global clients, and it continues to be a great client for us.
Paula: Yeah, it’s a super success story, Jonathan, and a billion dollars of owned media.
Paula: I mean, as you said, actually, it’s actually amazing that a brand of that scale really hadn’t realized.
Paula: But again, I suppose it comes back to the point that you opened with yourself, Jonathan.
Paula: There are so many agencies that help us buy media and very few that help us sell media.
Paula: And that’s really, again, I think what everyone listening to this show maybe hasn’t considered, maybe hasn’t factored into their P&L.
Paula: But my own story, which I told you as well before we came on, Jonathan, was very similar.
Paula: And also a huge success story.
Paula: And I have to say, despite my own expectations, because I was running partner offers for O2 Priority in Ireland.
Paula: So back in 2010, so again, even predating your own agency, we were negotiating phenomenal discounts for customers of O2 and really didn’t have a good valuation to tell them yes, this Solus email, to your point earlier, is going to be worth X amount of media value that they wouldn’t have spent or wouldn’t have had to pay, for example, for a TV campaign or radio campaign.
Paula: So I’ve certainly seen firsthand the complexity of owning a media asset and particularly transitioning into a commercial media asset.
Paula: So I guess that is that something that your clients struggle with, you know, when you maybe first make contact with a big brand that has an asset that’s not being used in this way commercially, maybe just used to drive their own kind of loyalty behavior.
Paula: What’s your experience talking to brands?
Jonathan: Yeah, it’s a great question.
Jonathan: And what we find is varying levels on a scale of, you know, highly commercial.
Jonathan: When you look at grocery category and supermarkets and aggregator retailers like department stores, what we find is they tend to be more advanced.
Jonathan: They tend to be quite sophisticated.
Jonathan: They tend to have customer personalization engines set up.
Jonathan: They tend to have been charging vendors who sell the goods in their stores, either through co-op funding or directly as a paid media owner would do for decades.
Jonathan: So they’re at the one end of the scale.
Jonathan: I think your telcos, like you described, and your financial institutions are probably at the other end of the scale.
Jonathan: They haven’t recognized it yet.
Jonathan: They’re a bit nervous about overly commercializing their assets, something that we guide them through.
Jonathan: But I think it’s important to note that in the five years that we’ve been doing this with massive global brands around the world, what we found is about 50% are charging money.
Jonathan: So that’s how they’re monetizing it.
Jonathan: Whereas the other half, like the Amec example and the telcos we work with are just representing that value back to those vendors.
Jonathan: So it’s actually not about saying, we’re expecting you to pay 250,000 for this email or whatever it might be.
Jonathan: It’s more that we are recognizing that that has a value and that if we’re like in the telco example, what they tend to do with the Apple, the Samsungs and the Googles of the world is provide an allocation within a wider deal with that business.
Jonathan: So they will say, as part of this wider business deal, we will give you three, five million dollars, whatever it might be per annum in marketing support through our own channels, in store and online.
Jonathan: And prior to us coming along, there wasn’t a lot of compliance back to that partner in terms of, well, we’re halfway through that deal at a certain point in time.
Paula: Totally.
Jonathan: There wasn’t a lot of measurement or understanding of or proof of reporting that that activity was going out and then to what value.
Jonathan: So that’s where we’ve seen big strides in terms of recognizing that.
Jonathan: But like I said, often they’re more comfortable not actually charging money for cash money, but it’s certainly being recognized in the deals.
Paula: And that’s a conversation changer anyway, Jonathan.
Paula: And that’s what I’m hearing is what happened with Amex.
Paula: So whether or not you decide to charge, and that can be a decision that changes obviously over time.
Paula: But the first thing is the education piece, recognizing the value of your audience, the attention you’re bringing to your partner, and using that to leverage benefits, even if it is more benefits for your loyalty program members in return, like a better discount or whatever.
Paula: So it really does put you as a media owner in a much more powerful place.
Jonathan: Exactly, and one of the things that we’ve discovered is most powerful at communicating that point internally, is when you get someone externally or when you do it yourself, to conduct an audit of your audience at every channel, and you measure it as the media owner, as the media industry does in terms of impacts, that’s impressions or fall impacts, eyeballs in the in the out of home environment.
Jonathan: When you aggregate all those up, and you put them in a chart next to paid media owner, vendors, traditional media owners, what we find is that organizations are typically on a par or often bigger than TV stations, website owners, newspapers and so on.
Jonathan: And again, it’s really quite startling internally when you show boards and C-level executives those figures.
Jonathan: And it really changes and reframes the mindset of the owned ecosystem that you’ve built up when you say you’ve actually got more than the New York Times, or you’ve actually got more than the Sun in terms of monthly impacts across your ecosystem.
Jonathan: And that really does have an impact.
Paula: Yeah.
Paula: And one of the figures I saw on your website, in fact, Jonathan, I know you work with Virgin Australia, and they mentioned that they actually own 35 different media assets, which clearly they weren’t to where they owned until you went in and did that audit for them.
Jonathan: Yeah, exactly.
Jonathan: And that’s a common thing as well is that we have this wheel on our website, which demonstrates all the possible different owned channels.
Jonathan: But every time we work with a business, we discover new and interesting ones.
Jonathan: Like for the Virgin Airlines example, it was an air freshener in the toilet on the plane that actually had a brand on the back of the air freshener.
Paula: Wow, my goodness.
Paula: Yeah.
Paula: But genuinely, and it’s clearly not commercial, but I think the same every time I go into maybe a nice hotel and I look at the brand of soap that’s on the sink, and all of a sudden that brand just goes up a notch in my perception, you know, just because it’s associated maybe with it with a high quality hotel.
Paula: So I think it’s everywhere.
Paula: It’s around us all.
Paula: And as commercial marketeers, I think it’s just a case of paying more attention to it.
Jonathan: And yeah, we’ve done trucks for a supermarket.
Jonathan: We’ve done cups and t-shirts for department stores, KFC.
Jonathan: Yeah.
Jonathan: So there’s always these quirky ones, which are quite interesting.
Jonathan: Often the businesses don’t want to commercialize those ones.
Jonathan: They want to either give them to charities or keep them for their own marketing.
Jonathan: But I think it’s really important that they understand the value of them as well, because once you put a dollar value on something, it does change people’s perception of it.
Jonathan: And more often than not, they’re really surprised about the value of those assets.
Paula: Absolutely.
Paula: And I think that’s also a very good point that you can commercialize some of your assets, but not necessarily all of them.
Paula: And I was thinking that, as you specifically were talking about the outbound calls example, because again, I think different markets would have to make different decisions on it.
Paula: Some customers may be less comfortable, you know, getting maybe a third party message from an outbound call, and some may find it very welcome.
Paula: In my own experience again, coming from Telcos, we tried a little bit of it, and I’ll be keen to hear your experience, if you have any from the American Express example.
Paula: But for us, if we were telling them something that was genuinely in their own interests and had a bit of a wow factor, then they were delighted to be told.
Paula: If it was, you know, a scripted, you know, oh, can I tell you about our other offers?
Paula: Then it didn’t work.
Paula: So I guess it’s down to the quality of the message, I suppose, as well as the channel.
Jonathan: Yeah, exactly right.
Jonathan: You’ve hit the nail on the head there.
Jonathan: It’s very much about the customer data that that organization has.
Jonathan: And Amex are in a fortunate position where they have, you know, world class data that informs their decisions.
Paula: Yeah.
Jonathan: And if in an outbound call center environment, we certainly wouldn’t recommend promoting a third party brand unless you had data that supported that individual card member was interested in that category or demonstrated clear signals or spending patterns in that category.
Jonathan: But it’s a really important point.
Jonathan: And, you know, one of the challenges we often face when dealing with brands who are looking to commercialize in some way their media assets is getting the balance right between the three constituents.
Jonathan: And we talk about the importance of having a nice even triangle between those three constituents.
Jonathan: And that would be your business, the partner brand in question, and most importantly, your customer.
Jonathan: Because if that triangle is misshapen towards the partner brand, like in your example, you’re going to lose customers.
Jonathan: And if you’re losing customers, A, that’s bad for business, but then you haven’t got a media audience in the future to commercialize anyway.
Jonathan: So that doesn’t work.
Jonathan: So first and foremost, that triangle must be delivering on the customer.
Jonathan: It must also work for the partner brand.
Jonathan: Otherwise, they’re not going to get happy.
Jonathan: They’re not going to come back.
Jonathan: And also for your overall business objectives.
Jonathan: So as an organization, you have to think before you commercialize any media format or asset, that it’s delivering on those three effectively.
Paula: Yeah, that’s a great point.
Jonathan: That’s the most important thing, I think.
Jonathan: And certainly we’re not mercenary at all.
Jonathan: I’m an ex-marketer myself, and I understand the purest in the marketer, wanting to keep their websites and their email programs sacrosanct.
Jonathan: But equally, we live in a commercial world.
Jonathan: CEOs are tapping loyalty directors on the shoulder and saying, okay, you’ve had a few years of this, you’ve built up a sizeable database.
Jonathan: Now, what’s the return on investment?
Jonathan: How are we going to generate revenue out of this if it’s not generating revenue back to the business?
Jonathan: So there’s alternate revenue streams, one of which we represent.
Jonathan: And also the customer, I think there’s plenty of opportunity for like-minded brands to add value to the customers.
Jonathan: You know, that Lululemon example, you know, that I gave for our ex.
Jonathan: If they’re spending in that category and they’ve demonstrated a passion and an interest for that category and you as a business have the opportunity to improve that experience for the customer, then why wouldn’t you take it?
Paula: Absolutely.
Paula: And you’ve reminded me of a time when I was a purist, and I don’t know where I am on that scale at the moment, Jonathan, but I was the marketing manager for e-bookers across Europe, again, out of Dublin, but back at the very, very beginning.
Paula: So I’m going to say in the year 2001, 2002, when banners were the only, I guess, media channel that really existed in the digital world.
Paula: And I remember our C-suite essentially coming under a lot of pressure because lastminute.com was making millions selling banner advertising and I was under pressure as e-bookers Europe to take banner advertising and our websites, whereas I was laser focused on the conversions and the metrics for people making travel bookings and I felt it would distract.
Paula: So again, you know, with your expertise, you can see both sides and advise clients on those kind of things.
Paula: Whereas this time I didn’t even have that clarity of thinking, but I knew it didn’t feel right at the time.
Paula: Now, I guess, as you said, times have moved on.
Paula: It’s nearly 20 years later, but that’s the kind of thing that I think brands really need a lot of guidance on.
Jonathan: Yeah, and you’re right again.
Jonathan: It’s those baby steps when you’re initially considering it.
Jonathan: I think the first step is to get a valuation and actually understand what the size of the prize is, either for your own marketing or partner brands.
Jonathan: But the baby step that we recommend is to start with one or two partner brands that are like-minded.
Jonathan: Often, we’re dealing with telcos or aggregator retailers who rely on those partner brands and they will have anywhere between 10,000 to 10,000 vendors or brand partners that they rely on within their category.
Jonathan: Telco, for example, they’re relying on Apple, Samsung, Google, and so on to supply them with the phones and the devices.
Jonathan: So it’s part of their business model that they have to give those partners some real estate.
Jonathan: So to start with those and start having the conversation with those businesses where you already have a relationship, often through the merchandise department or the category sales team within these types of organizations, that’s where the relationships lie.
Jonathan: And you have that initial conversation whereby we’ve had it independently audited.
Jonathan: Yes, we’ve been giving it away for years.
Jonathan: We’ve now realized the value of what we’re sitting on, the value of our audience.
Jonathan: And we’re going to have that value recognized.
Jonathan: Like I say, we wouldn’t recommend charging straight off the bat.
Jonathan: We’d recommend taking that initial step of just saying it’s being recognized in the deal.
Jonathan: And then down the track, you can start charging your suppliers, vendors and partners.
Jonathan: And then only when you’re comfortable in doing that, and I’m talking three, five years hence, would you start looking at, if you’re a telco, a car brand, so non-related categories where you share either a brand promise or brand positioning or brand ethos, or you share a customer base and an audience that is similar.
Jonathan: So we’ve worked with department stores who’ve partnered with car brands because they’ve got an alignment and they wanted to put a car in their foyers of their department stores.
Jonathan: I think it was Tesla.
Jonathan: There’s a brand and they wanted to borrow some brand equity off that brand.
Jonathan: But let’s have the media, let’s have what we’re doing, let’s have our audience and our store traffic recognized in that conversation.
Jonathan: That’s all we’re saying.
Paula: Wonderful.
Paula: And you made a point as well earlier, Jonathan, about particularly again, back to American Express, they do have access to spend data.
Paula: But that’s clearly not the case, certainly in my example of being in a telco.
Paula: So is it your view that regardless of having access to the spend data or not, that it’s equally valuable to go through this valuation process?
Jonathan: Yeah, absolutely.
Jonathan: I think one thing marketers nowadays pride themselves on is understanding their customers.
Jonathan: So it might not be spend data, but every decent marketer out there does understand their customers’ likes, dislikes, profile, behaviors.
Jonathan: And it’s sufficiently enough to enable them to formulate a program that’s going to be relevant and a selection of partner brands.
Jonathan: It can even work in a sponsorship sense.
Jonathan: So if you’re as a brand going out there and have some sponsorship partners that you’ve invested in, obviously, there’s been a rigorous process to identify who those sponsorship partners should be or what events they should be.
Jonathan: And more often than not, you’re supporting them through your own channels.
Jonathan: So again, that’s a use case that we often see is sponsorships and those kind of partnerships.
Jonathan: And that’s, again, another good initial step.
Paula: So I suppose that the last few things I wanted to go through, Jonathan, was the particular categories that you think should be thinking about this.
Paula: And also any examples from the loyalty sector, obviously, given the niche audience that we’re talking to here.
Paula: So we’ve already mentioned Virgin Australia.
Paula: So any good case studies or sectors that you wanted to flag and highlight?
Jonathan: Yes.
Jonathan: So the airline category is an interesting one.
Jonathan: Obviously, going through turmoil at the moment.
Jonathan: But historically, they’ve certainly led the way in, I think, what the US airline industry calls ancillary revenue and looking at alternate revenue streams.
Jonathan: We all know the margins in the airline industry are tiny, from like 3%, whereas margins in media, because you’ve already invested the CapEx in building the ecosystem, it’s already there, is over 90% profit in terms of media income.
Jonathan: So the travel industry is quite established.
Jonathan: The other one is retailers and supermarkets, specifically.
Jonathan: For a couple of decades now, they’ve been working with their vendors on shared marketing programs.
Jonathan: Now, often they will be cost neutral for the supermarket or the retailer.
Jonathan: So they’re the home, if you like, of the program.
Jonathan: They might do a partnership with Disney and run a collect and get through their stores.
Jonathan: But it’s supported by up to four or five brands.
Jonathan: And those brands are contributing to the funding of that marketing program through the stores on the website and throughout paid media as well.
Jonathan: So they’re probably, like I said, the most advanced and sophisticated.
Jonathan: And some of the supermarket businesses that we work with, I would even go so far as to say that they’re more advanced in terms of their data capability, in terms of their targeting capabilities than a lot of the traditional TV networks, the traditional media businesses that we used to deal with in our old lives.
Jonathan: And the reason for that is that they have the customer data.
Jonathan: So the beauty of businesses as media owners, that concept is that you’ve got the close relationship with your customers.
Jonathan: You’ve nurtured them over these decades and years and really understand them, whereas a TV network or a website is just selling eyeballs.
Jonathan: So that’s the difference.
Jonathan: And also, what we see in the supermarket space is the ability to track and measure.
Jonathan: And that is invaluable when it comes to investing.
Jonathan: So what we’re seeing now and one of the trends is a move from them only receiving what is traditionally called trade marketing money or co-op funding.
Jonathan: Ad sub is another one into the brand budget.
Jonathan: So what we’re seeing is media agencies who traditionally have only bought paid media through traditional media channels are now investing a client’s brand money into retail media.
Jonathan: So supermarkets, wobblers, banners, socials, digital screens in supermarkets, what we call retail media is now starting to get a share of brand money as well.
Jonathan: And the reason for that is case studies and proof that it’s working.
Jonathan: And not only do these supermarkets have the ability to measure campaign.
Jonathan: So you did a four week campaign Unilever in the supermarket, and we delivered 20% uplift.
Jonathan: Not just that, they can actually track over time continuously week in, week out.
Jonathan: So they can say over the course of the year, they can do partnership programs with these brands and measure the sales uplift throughout every day rather than just campaigns.
Jonathan: So when you’ve got that proof of concept through having the customer data and having that ability to measure everything, we’re seeing brands that are looking for efficacy, moving all their trade dollars and their brand money and some of their brand money into owned media channels because it’s working so well for them.
Jonathan: And with the other trend in owned media is digital screen networks, which have been installed either at entry and exit points above escalators or windows.
Jonathan: You now have the ability to attract people into the store, so you’re not just preaching to existing customers, you’re also acquiring new customers through owned channels.
Jonathan: So with those two macro trends happening, we’re seeing a bit of a shift into owned media.
Paula: And it’s actually extraordinary, Jonathan, to even think that supermarkets as a category are, in your view, in many ways more powerful than TV channels as media owners.
Paula: I mean, that’s just extraordinary, but I totally agree with you.
Paula: It’s exactly the power and the proof of concept that you talked about.
Paula: And there’s lots of people, I think, listening that if they’re not already doing this, particularly the supermarket sector, I’m sure they’ll be getting in touch with you.
Paula: And I was thinking about actually as well, even the context that we’re all so familiar with, which is ad blocking and just having banner blindness and all of these other things.
Paula: So I think it’s almost the newness of the channels that you’re identifying as well.
Paula: There’s an element of novelty which will support commercialization of media assets because there is that point of impact, where, as you said, a whopper, for example, might get attention, that a banner ad on a Facebook, for example, might not be cutting through on anymore.
Jonathan: Yeah.
Jonathan: And you touched on another really important point there, which is the proximity to purchase that these organizations have.
Jonathan: So that’s why we’re seeing such fabulous efficacy in terms of driving sales.
Jonathan: And the other point there is this is a clean, premium environment.
Jonathan: A brand’s own website doesn’t have many brands on there.
Jonathan: And often it’s a logged in environment.
Jonathan: In the financial sector, you have to log in as a card member.
Jonathan: And therefore, it’s quite a privileged position for a partner brand to be in your logged in environment.
Jonathan: So it’s like an exclusive club.
Jonathan: And that’s why the value of owned media is so much greater than paid media, where you’re just getting bombarded with high rotations, multiple placements.
Jonathan: So yeah, that’s an important distinction between the paid media world, which is highly cluttered and having less and less efficacy.
Jonathan: And the owned media world, which is cleaner, premium, brand safe, that’s another one, and well nurtured by its owners.
Paula: Yeah, and I was exactly going to make that point next, Jonathan.
Paula: For brand partners, I would have negotiated with it.
Paula: They loved the logged in environment because it allowed them to perhaps give a richer discount within a more private environment.
Paula: So they didn’t feel like they were doing mass market discounting above the line.
Paula: And they really liked that it was only available to that exclusive demographic or those exclusive members.
Paula: So it definitely made the conversation much more powerful and the offer so much richer.
Jonathan: Yeah, and the partner brands understand it.
Jonathan: I mean, they often cases they’ve been present in those stores or those websites or those emails for years.
Jonathan: What’s ironic is the partner brands often give greater credence to the host brand’s own channels than the actual host who don’t know what they’re sitting on.
Jonathan: It’s a goldmine and it’s a really precious ecosystem that they should look after.
Jonathan: But it’s really attractive to partner brands.
Jonathan: They understand the importance of the connection that the host has with their audience and the understanding of that audience and their ability to direct them in one way or another.
Paula: Absolutely.
Paula: And I suppose as well what it also does for the partner brand is they’re safe in the knowledge that the host has already taken care of all the GDPR compliance and whatever else is necessary to have that nurturing relationship of trust that you talked about.
Paula: So, you know, it’s almost like I don’t think there’s anything else that needs to be thought about.
Paula: Or maybe there is.
Paula: Do you look at the privacy policies when you’re evaluating the media as well, just to ensure that the third party permissions are already covered off?
Jonathan: Yeah, I mean, invariably, the organization, the host organization has been through those protocols themselves.
Jonathan: Obviously, we would encourage them to do that.
Jonathan: They do vary by country.
Jonathan: But that’s one of the beauties of email is that it’s opt in, which is one of the reasons why it’s so valuable, because they’re passionate about the category and they’ve asked to see it, which reminds me of a funny story that came up with one of our clients, where there was a new marketing team that had just taken over, and they all had their different views about how many emails should be going out, which is a hot topic for loyalty.
Jonathan: And I think they were sending around nine emails a week as a department store.
Jonathan: And the general consensus around not just the marketing team, but the whole of the business was that they were bombarding their customers, that it had to stop, that this was outrageous, that they didn’t want it.
Jonathan: And we conducted some research as part of our overall program, whereby we looked at the impact and the interaction and how their customer base was feeling about the own media channels in totality.
Jonathan: And we asked this question to kind of resolve it.
Jonathan: And the two target audiences, the two constituents who are most passionate about the business and the category, 73% of them said it’s the right amount of emails that we’re getting.
Jonathan: And around 15% said, I’ll be happy to have more.
Paula: Wow.
Jonathan: And it just shows you that marketing teams are not the customers.
Jonathan: You should always ask your customers what they think.
Jonathan: And it really kind of changed everyone’s view of how many emails to send.
Jonathan: Obviously, you only send nine to the people who want nine.
Jonathan: And use your data to determine what those is.
Jonathan: But if you’ve got a passionate database who are into the category, it’s fashion, it’s clothes, I want to know when there’s a discount, I want to know when there’s a new release in what I’m interested in, then they were happy with getting nine a week.
Jonathan: So there’s those kind of things that shine a light on your own channels and really add more value, basically, because you’ve opted in to see this.
Jonathan: It’s a really passionate category and channel, and you should treat it as such.
Paula: Wonderful, wonderful.
Paula: Well, on that note, I’ll mention one final thing I saw on your website as well, Jonathan, which I think just supports our overall, I think, mutual conclusion of the direction that this business is going.
Paula: And that was just I saw an article you wrote that perhaps even Netflix would be looking at advertising and taking advertising on its own platform in order to drive its own commercial revenues, because as much as we all know that we’re addicted to the content and the cost of that content, I think means that business needs more channels of income.
Paula: And so, yeah, incredible.
Paula: And I saw the summary figure that you mentioned as well of over seven billion dollars of media value that Sondra have unlocked to date.
Paula: So that’s an extraordinary figure.
Paula: And is there anything else that you wanted to mention, Jonathan, before we wrap up?
Jonathan: No, I think that’s it.
Jonathan: I mean, I would just encourage your listeners to treat their own media ecosystems with the respect that it deserves.
Jonathan: And just have a look at it and just have a think about what channels do you own and how valuable they might be.
Jonathan: Because our view is that they’re extremely valuable.
Jonathan: And yeah, the media of the future is owned media.
Paula: Wonderful.
Paula: Well, that’s the perfect way to close, Jonathan.
Paula: Well said.
Paula: I’ll clearly make sure that we have a link to your own website, wearesonder.com and also to your own profile, Jonathan Hopkins.
Paula: So I just want to say thank you so much from Let’s Talk Loyalty to Jonathan Hopkins and wearesonder.com.
Paula: This show is sponsored by The Wise Marketeer, the world’s most popular source of loyalty marketing news, insights and research.
Paula: The Wise Marketeer also offers loyalty marketing training through its Loyalty Academy, which has already certified over 170 executives in 20 countries as certified loyalty marketing professionals.
Paula: For more information, check out thewisemarketeer.com and loyaltyacademy.org.
Paula: Thanks so much for listening to this episode of Let’s Talk Loyalty.
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