Tuesday, September 25, 2007

Nielsen and POPAI work out in-store media effectiveness

BrandWeek reports that sometime this week Nielsen Co. will make a major announcement regarding its effort to track the effectiveness of in-store marketing. This comes at more or less the same time as POPAI, the global organization for marketing at retail, plans to unveil their own study of the market which involved, "a proof-of-concept study of 400 shoppers who journeyed through four retail outlets-- 7-Eleven, BP, Dominick's and Walgreens--that explores the issue of engagement within the retail environment.POPAI's Marketing at Retail Initiative outfitted those consumers with micro-cameras to track their interaction with retail display materials."

POPAI examined several metrics including an impact ratio, which "measures in percentage the number of shoppers who passed the display and saw it", and an effectiveness ratio that, "describes (also in percentages) the number who passed the display. For example, if 10 shoppers pass a display, it gets a 100% effectiveness ratio score. If 10 pass it and three see it, it gets a 30% impact ratio score."

While I understand the difficulty of tracking shoppers as they walk the store, I really hope that one of these two groups will eventually come up with something better than outfitting shoppers with cameras. Even if shoppers get used to the devices, it still seems like a shopper wearing the device will behave differently than one without. If you knew your actions were being caught on camera, even if your face wasn't showing, would you pick up that box of condoms? What about anti-fungal medication? What about dandruff shampoo? Causing a shopper to stop and think instead of simply follow his or her list makes for unnatural behavior and consequently less accurate measurements.

Despite all of the technological gadgetry being used, it still seems like retail outlets could get much better data for the effectiveness of in-store marketing by running split-tests and comparing sales results. For example, take a chain store like Wal-Mart. If they install more aggressive in-store marketing for a particular product in one store but not in another, they could then compare sales in order to determine the effectiveness.

As usual, we come back to trying to figure out what "effective" means. For example, just because people pass by a display and see it, it can't automatically be called effective or ineffective. What matters the most to retailers and advertisers is whether or not noticing the ad spurred shoppers to make a purchase. What the POPAI study seems to measure more accurately is how attractive or eye-catching an ad may be, rather than how effective it will be at producing more sales. In theory, if the POPAI study was adopted as the industry standard, advertisers could just fire off ads full of bright colors and catchy visuals and as long as shoppers looked at them they could conclude they were effective and therefore charge more money. But where does the value for content come into play? An ad with less striking content may not attract as many eyeballs, but those that do notice it may be more likely to make a purchase based on its offer.

Tags: Nielsen, POPAI, retail marketing, in-store marketing


Bill Gerba said...

What matters the most to retailers and advertisers is whether or not noticing the ad spurred shoppers to make a purchase.

I'd agree with that, and I think most retailers would too (that small fraction that thinks they're about to become media companies notwithstanding). However, I get the feeling that the POPAI and Nielsen/PRISM study are as much about convincing CPG companies of the increased value (and therefore budget preference) of in-store displays, and advertisers still work on the CPM (cost-per-thousand) model.

While I'm 100% convinced that it's the wrong way to handle marketing at retail, if advertisers are willing to pay more because there's a set of numbers that they can use to compare against TV or newspapers, then I can see the value of wanting to gather them.

John said...

If not a CPM-based sales model, how would you sell Retail Media? Eventually, we'd like to be able to have advertisers bid for market share, since ultimately, Retail Media drives brand sales.

Unfortunately, those measures don't yet exist. However, we do know how many shoppers visit stores and how long they spend and therefore can give advertisers the same audience measures they've used for decades.

We'll see in a few hours what kind of measures Nielsen will be providing, and hopefully it will be a standard we can all agree on.

Bill Gerba said...

Hi John,

I totally agree that many advertisers want CPM-based measurement for in-store media, and it's exactly for the reason you allude to: it's what they have for everything else, e.g. directly comparable.

The problem is that I don't think the media are similar enough to warrant a directly comparable metric, and in fact using such a metric might be bad for us in the long term. There are strategically and economically valuable differences that aren't quantified by a CPM metric, and if we suddenly all agree that CPM is the way to go because Nielsen says they can provide the numbers, then we'll never be able to take advantage of said benefits.