Dunnhumby believes the launch of its marketing effectiveness evaluation tool, Marketing Mix Optimisation (MMO), will prove invaluable to sales and marketing directors, finance directors and chief executives.
Based on the actual shopping behaviour of about 13m households (roughly half the population), MMO offers what the firm claims is 'unrivalled statistical robustness'.
Because it uses individual transaction data taken straight from the till, the system produces granular information, down to the level of hourly sales.
The shopper data comes from Tesco, which is such a significant magazine and newspaper retailer that the MMO tool can cross-reference shopper behaviour with their press consumption. But Dunnhumby can also quantify the effect of TV and outdoor advertising, for example, by analysing the behaviour of customers who have been exposed to such campaigns. The tool also tracks relations between pricing and sales.
Martin Hayward, director of strategy and futures at Dunnhumby, says: 'This is the beginning of a new wave of analysis that is possible as a result of getting better data. It should spell the end of marketers having to allocate budgets based on the analysis of tiny groups.'
It also ushers in a new era of accountability and transparency for marketers and their agencies, who are under pressure to measure return on investment in marketing activities in the short term.
'Long-term brand building is very important, of course, but in the past they have hidden behind it because they couldn't make the link between advertising, awareness, favourability and sales,' says Hayward.
But while short-term frequent reporting data straight from the supermarket till will enable marketers to alter their media planning on the fly, some fear that its availability could also foster a potentially damaging short-term sales focus, rather than longer-term investment in the brand.
'Evidence from the US shows that when brands started to measure daily sales, they ran end-of-quarter promotions, marketing budgets moved below the line, price elasticity went up and it became a vicious cycle with people buying only on promotions,' says Paul Freeman, an IPA Effectiveness Award judge and former head of modelling at Kraft International. 'That's OK for retailers, but it does little for long-term brand equity. The job of marketers is to reduce price elasticity, not just shift boxes.'
Freeman also takes issue with Dunnhumby's claim that the Tesco database is representative of the population as a whole. 'Tesco shoppers are more price sensitive than those who shop at Waitrose, for example. This tool seems designed to drive marketing activity to where it is more measurable, but just because something is difficult to measure doesn't mean it is any less profitable.'
Les Binet, European director at DDB Matrix, also warns of the dangers of 'forced correlations'. 'At a simple level, Heat readers may be likely to buy more cosmetics, but not because they read Heat or are influenced by the advertising, but because they are female,' he explains. 'Equally, they may have bought the magazine somewhere else. Greater accuracy is a good thing, provided you are measuring the right things.'
Such concerns were front of mind for Chris McDonough, UK marketing director and general manager for Ireland at Muller, when he started working with Dunnhumby a year ago.
'The fact that the database comprised Tesco shoppers was a concern, but Dunnhumby was able to demonstrate that while some were loyal Tesco customers, others shopped across the repertoire of different retailers,' he says.
He does admit that the MMO tool 'could drive very short-termist thinking' among brands. 'But the Muller brand strategy looks forward three to five years, and within that context this tool allows me to optimise some of our media thinking in the short term,' he adds. 'It brings a new rigour and robustness to marketing activity that underpins our longer-term marketing strategy.'
McDonough also acknowledges that the tool takes no account of the effectiveness of the creative in advertising or direct mail campaigns. 'But we correlate the information we get from Millward Brown on the effectiveness of creative, with the information we get from
Dunnhumby on media spend to ensure we draw the right conclusions,' he says.
Of fears that the MMO tool will merely serve to drive more sales to the already dominant Tesco, McDonough says: 'Brands can and do work through Dunnhumby to build programmes that drive sales to Tesco shoppers. We do that, because it helps drive sales and builds our relationship with Tesco. But the MMO tool just happens to be based on the Tesco shopper database. Dunnhumby's relationship with Tesco in this context is entirely independent.'
Muller has already saved between 20% and 30% of its marketing budget through greater efficiencies and improvements in targeting since starting to use the MMO tool, and McDonough expects to improve that 'significantly' next month when the brand launches a monthly marketing score card based on a full four-weekly set of results.
Rather than encouraging a short-term approach, Hayward maintains that the MMO tool represents 'the best chance we have had to disentangle the reaction between long and short term', given its ability to test the impact of promotions with or without advertising - and vice versa - on an on-going basis. 'We are getting much closer to cause and effect, which is very exciting,' he says.
Not everyone agrees. 'It is difficult to prove causality without exhaustive analysis discounting every probability until you are left with the most likely explanation,' says Paul Ryan, head of insight at Thomson Intermedia. 'This tool is an advance, based on an enviable data set, but it's not the Holy Grail.'