A Couple of Things from Last Week’s Independent on Sunday…

Really struggling to do anything creative or thought requiring this week, but as I declutter my pockets I find a couple of things I tore out from last weekend’s Independent on Sunday that I wanted to put a marker on.

Firstly, in an article about a fully fledged in-store Tesco Bank (Cheerio then, Sir Terry – you’re a hard act to follow) I spotted this:

Tesco Personal Finance, now wholly owned and renamed Tesco Bank, is being primed to become a major competitor to the high-street banks. Already, six million customers buy Tesco financial products and have deposited £4.4bn with the company, but later this year the group intends to launch a savings account and a range of mortgages; then in the second half of 2011 it will launch a current account.

[W]hereas firms such as Virgin or Metro are seeking branches to build banking empires, Tesco will use its existing stores. The bank will also exploit the data from customers’ Clubcards. [my emphasis]

Oh good… if anyone knows how that might work in practice, I’d love to know… The nightmare scenario (and one I’m sure won’t happen) would be Clubcard operator and data cruncher Dunnhumby trawling through your current account data and working out what you are spending, but not at Tesco, so they can send ever more targeted promotions to you. (So for example, I think they already count the calories you buy from Tesco so they can have a guess at how many you don’t buy… Knowing how much you’re spending at other supermarkets would be a nice trick to have up your sleeve, I should think.)

Spending information might also help with price setting, something it seems as if Dunhumby are looking to develop further if their acquisition of KSS Retail is anything to go by… (e.g. Tesco Clubcard company Dunnhumby buys KSS Retail).

Supermarkets are wary of price wars, of course (reduces margins and cuts into profits), so finding optimal pricing models (just ponder what “optimal” might mean there…;-), and using those models to also influence shopping behaviour, can generate useful returns.

The other clip I have from the IoS is also price related, a comment by Robert Chalmers in a profile of one time editor of The Sunday Times, Harold Evans (Harold Evans: ‘All I tried to do was shed a little light’):

“So how do you feel about the Murdoch empire now?”

Evans pauses. “I’m not that familiar with the British… OK. Let’s take an alternative scenario. Murdoch never arrives. I manage to take control of The Sunday Times with the management buyout. Then I get defeated by the unions. The Independent wouldn’t be here. Rival papers survived because they got the technology. Thanks to Murdoch.”

Thanks to a man who, by starting the price war, created a situation where profit is driven not by a newspaper’s retail price but by its advertising, to the point that advertisers risk dictating editorial content. Haute- couture houses don’t fancy the idea of photographs of dead Congolese babies next to their latest tanning oil, do they? [My emphasis]”

“Thanks to a man who, by starting the price war, created a situation where profit is driven not by a newspaper’s retail price but by its advertising” – brilliant…

My reading of that is that maybe at one time the papers had a pay wall of sorts that kept in balance their reliance on advertising income. Price wars increased the percentage returns from the advertising, and then the internet arrived. The first generation online ad container – banner ads – were as ineffective as any other sort of advertising, (I guess – maybe more so?) and I’m guessing didn’t pose a huge threat to ad spend in the newspapers (note to self: look at financial state of news sales and ad industry returns over last 20 years…); but the AdWords container did, because you could start to track what happened to any interest raised by the ad. With ever more sophisticated forms of personalised behavioural advertising (which isn’t just online – it’s what ClubCard does, right?) the route that newspaper advertising provides is threatened from the other side. (That is, AdWords provide trackability, which newspaper ads don’t; behavioural marketing provides more sophisticated segmentation than the crude ABC demographic reach that newspapers provide.)

I’ve no idea how the Times paywall is doing at the moment, but as News Corp makes moves on BSkyB, I wonder if we’re going to a see folk taking up (exclusive?) membership subscriptions to cross platform content providers, who maybe also run content access points (iDevices, Sky boxes, etc.) and optionally content generation/commissioning. And who would be in the running? Apple and NewsCorp/Sky at the very least. (Not Tesco, yet… Err… maybe: Tesco sets up film studio to adapt hit novels;-). I’m certainly watching out for signs of someone making moves on buying up online game distributor Steam, though…

Author: Tony Hirst

I'm a Senior Lecturer at The Open University, with an interest in #opendata policy and practice, as well as general web tinkering...

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