Update: Dunnhumby CEO Simon Hay tells AdExchanger the acquisition of retail retargeter Sociomantic Labs and its demand-side platform (DSP) technology came from a realization that "we were a media player without really knowing it at all."
"I think we saw the opportunity with everything becoming more programmatic and more of an opportunity to use data to deliver messages to customers that it felt like a natural extension of our offer and our world," he added.
Dunnhumby is a wholly owned data and consumer insights unit of British retailer Tesco. Terms of the deal were not disclosed, but have been previously reported in the $175 million-$200 million range.
Hay says in the deal release (see it):
"We have decided to buy the company because the combination of Sociomantic’s technological capability and dunnhumby’s insight from 430m shoppers worldwide will create a new opportunity to make the online experience a lot better, because for the first time we will be able to make online content personalised for people, based on what they actually like, want and need. "
In addition, this may be another sign of a marketer bringing media buying capabilities in-house. Sociomantic CEO Jason Kelly told AdExchanger in a recent interview that “ecommerce is typically dependent upon the agency to execute media and we’re coming in and saying, ‘We can do all that for you.’”
According to Hay, Dunnhumby had been in the market for a DSP and had shopped around before settling on Sociomantic, which he described as "head and shoulders above anyone we saw or worked with." Dunnhumby hadn't been silent on the acquisitions front, either, having bought Standard Analytics last June.
Cultural (and geographical) compatibility appear to be a driver here. Although former AdMeld CRO Jason Kelly was tasked with leading North American expansion for Sociomantic Labs, the startup is still to some extent very rooted in Berlin's tech economy. Its acquirer, Tesco, would keep the European operations in lockstep.
Another driver for the deal was that it ultimately dawned on Dunnhumby that its brick-and-mortar know-how could benefit from the digital acumen of Sociomantic (and vice versa).
"If we hadn’t joined forces with Sociomantic, we probably would have ended up competing against them because they were moving more toward our space and we were heading to theirs, and it was not so much a defensive [move as it was], 'Bloody hell, they're thinking the same way we are,'" Hay said.
This speaks to the trend of the "nontraditional publisher" getting into the digital media racket. These players range from online travel gurus such as Expedia to brick-and-mortar retail powerhouses like Walmart turning their attention to audience data monetization. The core product offered by both of these examples (travel booking and retail commerce) can inform media targeting as a picture of consumer intent is aggregated over time. As a result, new competitors will emerge as more first-party data opens up.
This trend represents an opportunity for the standard brick-and-mortar retailer or grocer to grab more of the digital marketing wallet share. While Dunnhumby, according to Hay, had been traditionally focused on couponing and direct mail, "we saw Sociomantic as a way to deliver end-to-end loyalty and relevant communications wherever consumers engage," which is increasingly mobile and social channels.
This calls into question another data opportunity for Dunnhumby, and that is the extent of its relationship with Facebook and third-party data partners moving forward. When asked if Sociomantic will bring to Dunnhumby more of a direct "link" to Facebook targets, Hay said it's "very much in the early stages at this moment … [but we'll] have to see. Facebook matters because it matters to customers, so it's an area we'll explore."
Sociomantic's operations will be business as usual, according to Hay. The company employs 200 in 16 offices globally, and totalled more than $100 million in revenue last year. Whether its founding team and CEO Kelly would join Dunnhumby, "we certainly hope so," Hay said.
He added, "Really we're not trying to shake the tree from day one because we’ve got a business to run. They’ve got a business to run. We saw the world through a similar lens and are both excited by bringing our different capabilities together."
John Ebbert contributed.