Claire Beale on Advertising: How Asda hijacked Tesco in the great discount brand campaign

It's official: it's war. Formerly the domain of Mogadon mums and piped covers of boy-band anthems, Britain's supermarket aisles have become a battle zone.

Thanks to crunching credit and food-price inflation running at over 14 per cent, there's a fight on for your purse, and it's happening in a store near you.

Blood is flowing in frozen foods, livelihoods are being lost round the soft drinks, and prisoners are being snatched over the soap powders. It's not pretty. Millions of pounds are at stake. Brands may perish. And the big marketing guns are being wheeled out.

Britain's big four supermarkets already spend millions of pounds on advertising, and millions more on price promotions. Now, while other marketers are slashing their budgets, the grocery stores are powering ahead.

Last week, Tesco launched a major national press campaign to position itself as "Britain's biggest discounter". It booked every full-colour ad slot in the first 20 pages of all the popular and mid-market papers on Wednesday, a real advertising extravaganza and a great example of the power of print advertising.

Except that Tesco's media agency, Initiative, didn't stipulate exclusivity as part of the newspaper deals, and the campaign was hijacked by Tesco's arch-rival, Asda. Having got wind of the Tesco blitz, which media buyers estimated would have cost the supermarket chain around £450,000, Asda booked its own full-page colour ads to run in the same papers on the same day, claiming that Asda sells 3,457 products cheaper than Tesco. Ouch.

As well as the above-the-line advertising skirmish, this marketing war is also being waged in-store, with price promotions on the front line. Tesco claims to have shaved £620m off our shopping bills since March, and its latest initiative, unveiled in the ad campaign last week, promises to go further. The new Discount Brands at Tesco label includes 350 value lines that will have their own aisles in stores and, to listen to Tesco's claims, could save customers £24 off a typical weekly shop. Meanwhile, Asda is focusing on cutting the price of all the products in its Smart Price arsenal, and is discounting other frequently purchased brands.

As the supermarket giants start to tally up the cost of combat, the latest stats from the TNS Worldpanel market researchers, which track consumer behaviour and purchasing patterns, won't make for comforting reading.

Over the latest 12 weeks, the grocery market has enjoyed a 7.3 per cent increase in turnover, but almost all of that is driven by price inflation rather than genuine volume growth.

And in the battle for market share, the hardened discount retailers like Aldi and Lidl (who spend relatively little on advertising) are growing. While Tesco has slipped a little – from a 31.7 per cent market share to 31.5 per cent – and Sainsbury's is down from 16 per cent to 15.8 per cent, Aldi's nudged up from 2.6 per cent to 2.9 per cent and Lidl from 2.3 per cent to 2.4 per cent. Of the big players, Asda (17 per cent to 17.3 per cent) and Morrisons (up from 10.8 per cent to 11 per cent) are the ones growing.

The shifts may seem small, but in a multibillion-pound business they are significant enough to draw out the guns. Campaigns won and lost in this latest price war could cement new customer loyalties that will be hard to shift.

Of course, this enmity between the retailers is good for consumers. And if you're worried about the stigma of the bargain hunter, just shop online: in cyberspace, there is no need to worry about being caught by your neighbour pushing a trolley piled high with cheap labels.

The real casualties in the grocery war look set to be the brands already squeezed by the supermarkets themselves in the battle for shelf space. It's hard enough to get listings in the big stores now, and a recent study by the research company Billets found that when big brands do use price promotions and discount offers, the big retailers keep almost 90 per cent of the profits anyway.

Now the retailers are aggressively promoting their own cheaper lines against the big-name brands they also stock. So recent Tesco ads have flashed up brands like Warburtons bread, only to tell us that it's 40p more expensive than Tesco's own. It's the same when you shop online, with Tesco dangling it's own cheaper alternatives to your big-brand favourites.

If further proof were needed that big brands are facing tough times, look at the new report by the Brand Finance consultancy, which finds that the economic squeeze has just wiped £38bn off the value of the world's top 100 brands. No surprise that those big names perceived as offering value for money – Wal-Mart (which owns Asda), Exxon, McDonald's, etc – are holding up well, while Starbucks, L'Oréal and Nike are sliding in value as we count our pennies. In fact, Wal-Mart has just overtaken Coca-Cola to become the most valuable global brand, according to Brand Finance, up in value in the year to last December by 9 per cent, to $23.9bn.

All of which is bad news for ad agencies with a client portfolio that extends beyond bargain brands. Small comfort that adland redundancy cheques will stretch a little further in the discount brand aisles.

IN THESE straightened times, you can expect every big brand to sweat its marketing budget to the max. So it's interesting to hear about Oasis's tactics for promoting the band's forthcoming album, Dig Out Your Soul.

"Wonderwall" has done many years service keeping busking musicians in bread and beer, and the band clearly saw an opportunity for payback: last week it roped in an army of New York street musicians to spread the word about the new release.

Working with the ad agency Bartle Bogle Hegarty and its client NYC & Company, the band used the streets of Manhattan as the stage to play tracks from the album. Thirty buskers were taught how to perform the songs, and then sent out on to the streets to premiere them in front of commuters.

It's a neat PR spin, and a great way of seeding word about the album. Risky, of course – though you can bet the buskers were hand-picked to do full justice to the Oasis oeuvre. Make your own mind up at youtube.com/digoutyoursoulsongs, where films of the buskers strutting their Oasis stuff have been posted.

Unfortunately, none of the clips have been viewed as often as the YouTube footage of Noel Gallagher being attacked by a fan at a gig in Toronto earlier this month. But that's rock'n' roll for you.

Claire Beale is the editor of Campaign