09/06/2011

By Lloyd Gofton, Director of Liberate Media

In May,Tesco broke into the Social space with the acquisition of BzzAgentfor $60 million, or at least Dunnhumby, owned by Tesco, did the deal.

If you’re not familiar with Dunnhumby, it was acquired by Tesco not so long ago (see: Dunnhumby set to be wholly owned by Tesco), and this isn’t the first acquisition by Dunnhumby. It purchased KSS Retail, a US price-modelling company in early 2010 which offers a clue to exactly what they are doing (read more: Tesco Clubcard company Dunnhumby buys KSS Retail).

So, far from being a new diversification into a different market, which Tesco is well known for, this acquisition in fact strengthens Tesco’s loyalty and consumer communications/research and product marketing.

After all, Dunnhumby was the power behind the Tesco loyalty card which revolutionised retail in the 90s, and has continued to keep Tesco's grip on UK retail strong and forward-facing. The trend in purchasing US-organisations is likely to be a planned strategy as Tesco has had its sights trained firmly on the U.S market for some time, and current stores on the other side of the Atlantic are doing okay in a tough climate.

BzzAgent, which is based in Boston and was set up in 2001, describes itself as a word of mouth agent that uses 800,000 BzzAgents (advocates), basically people who compete to be first in line to try free or discounted products to build awareness, talk about brands, recommend products and ultimately drive sales. The agency works with clients such as Unilever, Wrigley and L’Oreal, and claims that BzzAgent participants have spread word of mouth to over 100 million family and friends since its launch.

By combining the data wealth of Dunnhumby, with the social intelligence and reach of BzzAgent, Tesco is clearly making a move for the social consumer and it seems to be well ahead of its competitors in this endeavour. Combining data, knowledge and experience is a powerful advantage for Tesco, and this could be money well spent if it can make significant returns from social conversation and ultimately product marketing and sales.

Please visit: www.liberatemedia.com


Watch the video below featuring Jemima Gibbons of AAB Engage discussing ow social media can positively impact your business.

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