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 / Winter 2008 /Issue 53(originally published by Booz & Company)


Major Media in the Shopping Aisle

Covering New Ground
Some factors inhibiting the potential of in-store advertising are already being addressed, for example, through the PRISM initiative. But this is not enough to engender an in-store revolution. The entire marketing and media ecosystem needs to tackle three key priorities.

First, marketers and their partners must create a programming model tailored to the retail environment. They cannot just reduce video spots to 10 seconds or improve the technology with which in-store advertising is delivered. Marketers need to improve the way they frame their message. To date, they have mostly relied on programming that has already proven popular on television. For example, Nickelodeon adapted its Kids’ Choice product awards for Wal-Mart’s in-store network.

But a better solution lies in creating programming that is developed specifically for retail stores. It should combine the entertainment value of television with the benefits of in-store sampling and counseling — offering education as well as entertainment. This represents a particularly attractive opportunity for cable networks and magazine media brands to “own” those specific in-store interest areas such as food, gardening, home improvement, sports, or health and beauty. Media companies that develop attractive solutions will be able to capture a greater share of campaign spending than they otherwise could.

Second, marketers and their partners need to better use in-store marketing efforts to upgrade promotions and analytics. Promotional spending in the U.S. by companies in consumer packaged goods, entertainment, sporting goods, consumer electronics, and home improvement totals roughly $300 billion annually. But the in-store media of choice are still circulars, coupon dispensers, customized displays, and product packaging. There is enormous opportunity to further enhance the effectiveness of these vehicles through in-store advertising formats. Given the magnitude of this investment, getting a return on it will be a top priority for chief marketing officers for years to come.

Third, integrating in-store media with the broader marketing mix will require some organizational change. Marketing organizations need to break down the traditional walls between divisions and work more directly with a diverse set of agency and media partners. Just as marketers spent decades building stronger capabilities to achieve a better return on their investment in consumer and trade promotions, they now need to build new capabilities in both advertising and shopper marketing. This will include developing better metrics to make it easier to gauge the impact of in-store ads as part of any campaign.

It also needs to be easier for marketers to buy ad inventory by region, rather than by store or by chain. The example to follow is the cable TV industry; cable companies, which once sold ads independently, learned to team up so that an advertiser could buy ads across every cable system in a given market, such as the New York metropolitan area. In-store video networks will need to undergo a similar evolution.

Players across the ecosystem will also need to find a common way to track and demonstrate results. At present, the back-office processes for in-store advertising — trafficking, campaign reporting, and invoicing — are complicated by the use of different systems in different stores. More standardized platforms will make for easier analysis and execution. So will the emergence of ad networks that integrate inventory across many players of various sizes.

As companies address these challenges, in-store advertising will become a more valued and widespread component of marketing campaigns. Indeed, the global market for in-store video advertising is poised to take off. Leaders who take the initiative and invest in the right combination of assets and capabilities stand to reap significant rewards.

There are ample opportunities for all parts of the media and marketing ecosystem: media companies, brand marketers, advertising agencies, retailers, mobile phone carriers, and technology development firms. And there will also be a growing emphasis on large-scale providers. CBS’s recent acquisition of SignStorey and NBC Universal’s partnership with PRN and a host of other video ad networks have signaled a major shift in the market. There is a greater emphasis on “place-based media,” which reach out to consumers in different locations with relevant ad messages, such as spots for healthy food on advertising networks in fitness centers. CBS Outernet, for example, is more than an extension of an existing outdoor advertising business into a broad set of place-based media; it represents an effort to extend the core video content business into new venues, reaching consumers on the go in less-cluttered media environments. NBC Universal’s push into a broad set of al­ternative media channels, dubbed NBC Everywhere, is following a similar direction, though with a strategy that is focused on partnerships rather than ownership of alternative out-of-home media assets.

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  1. Tom Ehrenfeld, “Starbucks and the Power of Story,” s+b, Summer 2008: Overview of books about the preeminent creator of retail experience — without (much) in-store media (yet).
  2. Rich Kauffeld, Johan Sauer, and Sara Bergson, “Partners at the Point of Sale,” s+b, Autumn 2007: Explains why shelf-centered collaboration between manufacturers and retailers can provide the behind-the-scenes infrastructure needed for in-store media to truly connect.
  3. A.G. Lafley and Ram Charan, The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation (Crown Business, 2008): Contains the P&G CEO’s description of two “moments of truth” for reaching consumers: at the shelf and during each use of the product.
  4. Leslie Moeller and Edward Landry, with Theodore Kinni, The Four Pillars of Profit-Driven Marketing: A Proven System for Maximizing Creativity, Profitability and ROI (forthcoming; McGraw-Hill, 2009): Detailed guide to practices and organizational processes needed to implement any form of marketing metrics, including those required for in-store marketing.
  5. Tom Ryan, “Walmart Introduces Smart Network,” RetailWire, Sept. 4, 2008: News article about the introduction of this IPTV network to 2,700 stores.
  6. Christopher Vollmer, with Geoffrey Precourt, Always On: Advertising, Marketing, and Media in an Era of Consumer Control (McGraw-Hill, 2008): The digital age has reshaped all marketing imperatives and the industry as well; compelling context that shows why the moment is right for in-store media.
  7. In-Store Marketing Institute Web site: Electronic home of the PRISM project for measuring the effectiveness of in-store media.
  8. For more articles on marketing and sales, sign up for s+b’s RSS feed.
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