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Tesco-Sociomantic: The perfect marriage?

Speculations are rife around Sociomantic and Tesco, wherein the latter is looking to buy the Berlin-headquartered display advertising player. If industry grapevine is to be believed, the acquisition would be done through Tesco-owned customer science specialist – Dunnhumby. It may be recalled that Tesco had added Dunnhumby also through a majority stake acquisition in 2001, which was increased to 86 per cent in 2006.

In an email query from DMA, Rohit Kumar, MD, Sociomantic SE Asia, said, “We don’t comment on speculation”.

Though details on the conversations are not clear as yet, industry sources are of the opinion that the discussed price for the sale is pegged at USD 200 million.

The rationale behind the pricing is not difficult to fathom given that Sociomantic reported revenue for a period of August 2012-August 2013 at USD 100 million. In the year, the company had also established its presence in growth markets such as South East Asia and India, making room for further growth in its revenue figures.

The more important question however, is how the deal, if it were to go through, impact both companies. At the outset, Sociomantic and Dunnhumby do appear to be the perfect marriage.

Dunnhumby and the work that it has done for Tesco’s retail business through its loyalty programmes such as the Clubcard are an indication of the early expertise that the company has built in using analytics to customise messaging. This application of intelligence towards making personalised offers to customers is the very space that Sociomantic is working in. The coming together of the two companies would enable each to learn from the experience of the other, and augment their individual offer.

On taking a closer look at the client list of the two companies, it is evident that there is minimal overlap in the current state. Dunnhumby works more with FMCG players such as Procter & Gamble, Coca-Cola and US retailer Kroge amongst others. Sociomantic on the other hand, as is the case with most players in the retargeting space, is engaging ecommerce companies.

This development should help accelerate the adoption of programmatic for sectors such as FMCG which have otherwise been slow to react to technology based targeting solutions.

From a geography standpoint too, the acquisition of Sociomantic would give Dunnhumby access to new markets including growth markets.

Given that tech is at the heart of both the companies, it would be interesting to see if Sociomantic and Tesco are able to agree on terms for the acquisition to take place.

Noor Fathima Warsia

A veteran journalist in the Indian marketing, media and advertising fraternity, Noor Fathima Warsia took on the role of Group Editor -– APAC for Digital Market Asia in May 2013. Noor has focussed on tracking trends and developments in the Indian media industry.