Lidl scales back online investment, claiming digital video is overpriced

Linear TV advertising is underpriced, while digital video is too expensive, Lidl’s head of media has claimed.

Speaking at the Future TV Advertising Forum this week, Sam Gaunt said he wanted to use the conference to “sound a note of caution” that digital video has been over-valued, and therefore over-priced.

The challenger supermarket said it had been quick to ramp up its digital investments but was now “retrenching” following a sophisticated econometric analysis.

“We were surprised by how much return we were getting from [our online] investment – how much lower that it was than traditional channels – so we have held back,” he said.
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Gaunt, who has 15 years’ media and digital agency experience working with brands including McDonald’s, Kellogg’s and Heinz before joining Lidl 2015, said the company evaluates everything it does with “rigorous” cost benefit analysis. His conclusion was that “digital can struggle against traditional forms of advertising, including radio and print.”

Gaunt stressed that Lidl was not going to stay away from online advertising, but the business would be more “cautious” about how it is used.

“We have scaled back our investment and been more careful about evaluating the value,” he said.

Gaunt added that Lidl is now working with Adobe to understand which digital metrics correlate with turnover. With better knowledge of what drives the metrics, Gaunt said he would then look to scale-up and re-grow online investments.

Additional reporting by John Moulding