Ultimately, it will require collaboration among various players to develop this new media frontier. With the right push, in-store video advertising can achieve its own form of hyper-growth. Given the unique potential of in-store marketing to reach customers in a way that no other form of media can achieve, that push would be an effort worth making for everyone in the marketing and media ecosystem.
Marketing by the Numbers
Historically, successful retailers were efficient at two things: logistics and procurement. Then Wal-Mart Stores Inc. came along and taught everybody that they didn’t really know anything about logistics after all, and they couldn’t dream of matching Wal-Mart’s muscle in buying. So what did retailers fall back on? Marketing, branding their stores, differentiating themselves, and investing in their consumers in ways that they never had before.
Retailers and marketers alike need to understand the return they’re getting on these activities. Spending on in-store programs, if consumer and trade promotions are taken into account, is now greater than spending on paid media advertising. There has always been some evidence that the spending was worthwhile: Retailers and manufacturers could see some short-term increase in sales volume as a result, and there was anecdotal evidence of such spending’s benefits for long-term brand building, as it reinforced a brand’s image and generated trial and repeat purchases. But ultimately, the people who decide where to spend marketing budgets need metrics to justify their choices. They also need to overcome a certain psychological block: Many people in the marketing world do not believe that in-store activities truly contribute to brand equity.
So we at the Nielsen Company jumped into the deep end and said that we would create a set of metrics that would quantify the value of in-store marketing. Pioneering Research for an In-Store Metric (PRISM) is an initiative that Nielsen launched with the In-Store Marketing Institute and a consortium of retailers, manufacturers, and media agencies. The goal of this project is to determine reach and frequency for marketing messages in stores, in the same way we can deliver that data for ads on TV or in a magazine. To do so, we audit a store in two ways. First, we install sensors at the entrances and place auditors in the stores to understand store traffic. Second, we divide the whole store into four-foot (1.2-meter) sections and record every marketing message in each section — every display, every digital sign, every flyer. And then we track that data against the store’s daily sales. With this information, we can now answer three key questions: How many people were in the store? What marketing messages did they see? How did those messages affect sales? We have a much better understanding of how various marketing vehicles work in the store, and how marketers can use a mix of methods to achieve certain results.
For example, consider “Brand X” Hair Care. Like all products, Brand X ultimately strives to get the highest possible number of gross impressions (the most distinct encounters in which a consumer views the brand’s marketing message) and the greatest possible rate of audience conversion (the percentage of consumers who walked through the store area containing a particular category and bought a product within that category).
Thanks to the data gathered by PRISM, Brand X knows that in-store marketing garners more gross impressions than any other form of media — more so even than TV ads on American Idol, currently the highest-rated U.S. broadcast television program in prime time. Within the store, though, Brand X could generate more impressions than it does; the hair-care section gets only about 10 percent of the store’s traffic. However, the hair-care category does have a high rate of audience conversion — 65 percent of people who visit its section make a purchase.
Logically, then, if Brand X can just get more people into the section, its sales will increase. PRISM data shows that some in-store marketing vehicles are better than others at attracting traffic — specifically, for Brand X, flyers placed over displays, which are most powerful in grocery stores; signage, which works best in mass outlets; and floor graphics. Given this knowledge, Brand X can better plan its in-store marketing mix across channels. And as in-store media becomes more technologically advanced and more sophisticated at attracting customers, PRISM and other such systems will continue their role as arbiters of information, helping marketers judge which new media will work best, in which parts of the store, with which customers.
George Wishart is global managing director of Nielsen In-Store, a division of the Nielsen Company.