Tesco's big data arm Dunnhumby buys ad tech firm Sociomantic Labs

Summary:The supermarket giant acquired Dunnhumby after the data science firm catapulted the retailer to the top of the big data game, and now Dunnhumby looks to expand its offerings by eating up the programmatic ad power held by Sociomantic.

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For retailers looking for an example of how to win in the big data game, the U.K. supermarket giant Tesco — which clocks in as the second-largest retailer in the world under U.S. behemoth Walmart — is a solid place to start.

Tesco was an early adopter of big data techniques in the form of its Clubcard loyalty program, and over the years has managed to strike the often difficult to achieve balance of being predictive of customer needs without being intrusive.

Behind much of Tesco's success is the consumer data science company Dunnhumby, which Tesco eventually (and wisely) acquired in 2006. Now as a Tesco subsidiary, Dunnhumby has made some significant acquisitions of its own. 

In a deal announced Thursday, Dunnhumby bought the Berlin-based digital programmatic advertising company Sociomantic Labs — which was bootstrapped and grown to profitability by ex-Googler Jason Kelly — resulting in an "unprecedented" database of more than a billion shopper profiles.  

Although Sociomantic is the first advertising acquisition for Dunnhumby, the firm has been testing the purchasing waters for the last several years. In 2010 Dunnhumby acquired the pricing intelligence and optimization company KSS Retail, followed by a 2011 acquisition of BzzAgent, a company that organizes and incentivizes consumers to compete for free products.

But according to Dunnhumby CEO Simon Hay, the Sociomantic deal is by far the biggest yet for the company, in terms of both scope and ambition.

"We have been learning our way into the acquisition space," Hay said in an interview, "and it's not something we do with a high degree of frequency."

What made Sociomantic so attractive to Dunnhumby was its massive customer reach (it holds the keys to more than 700 million online shopper profiles) and the potential to combine services in a way that offers their clients more solutions in more places.

The core of those services revolve around the ability to reach customers wherever they shop — in store or online — and offer them personalized communications to build engagement and brand loyalty. In a prepared statement, Thomas Brandhoff, managing director and co-founder of Sociomantic, noted:

Together, we can help brands improve the relevance of their messages to create more personal interactions with their customers online and across mobile devices.

Claims of consumer benefits aside, the real meat of the partnership is the ad cohesion that customers could begin to see — a facet of the deal that not only benefits Tesco, but also the bevy of big-name brands and retailers already on Dunnhumby's client list, including Coca-Cola, Kroger and Macy's.

For instance, any interests that were identified by Dunnhumby via loyalty programs, such as a penchant for pink scarves or a late-night hankering for salt-n-vinegar potato chips, could show up in ads served by Sociomantic. On the other side of the equation, Sociomantic also wins with its ability to leverage the data capabilities within Dunnhumby's portfolio.

Yet even with those shakeups, Hay asserted that it will remain business as usual for Sociomantic, as he intends to take the same hands-off approach used with previous acquisitions. Financial details of the deal have not been disclosed.

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Topics: Big Data

About

Natalie Gagliordi is a staff writer for CBS Interactive based in Louisville, Kentucky, covering business technology for ZDNet. She previously worked as the editor of Kiosk Marketplace, an online B2B trade publication that focused on interactive self-service technology, while also contributing to additional websites that covered retail tec... Full Bio

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