Consumers pay more attention to circulars than other advertising

Two reports highlight the growing importance of in-store marketing. The first (noted by Progressive Grocer) was released by Vertis Communications two weeks ago and noted that, "47 percent of Americans cited inserts and circulars as the most effective, a 9 percent increase since 2003. Also according to the report, inserts and circulars have surpassed TV advertising as the medium most able to draw consumer attention." Further, "Forty-three percent of those surveyed said TV advertising interested them the most, but that was a 10 percent decline from five years ago. Meanwhile, 38 percent of respondents thought newspaper advertising best grabbed their attention, down from 45 percent in 2003."

Helping to confirm those results are new findings from BIGresearch that also point to the increasing importance of marketing at retail. Across all demographic groups, 27.4% of those surveyed said in-store promotions influenced their decisions, up 0.5% from last year. That compares favorably to TV/Broadcast at 27.9%, though still ranks behind traditional forms of retail promotion like newspaper inserts (30.5%) and word of moutn (42.6%). Of course, the influence of newspaper inserts have also been falling steadily the last few years, and plunged -4.5% last year lone (the influence of word of mouth promotion remained steady).

Tags: retail marketing, in-store advertising

P&G redefines "ad spend" to include in-store media

While P&G has been shining a spotlight on their plans to increase their presence inside stores potentially at the expense of traditional media, the news from AdAge today is that they're taking the plan so seriously that they'll be restating 11 years of ad-spending data in an effort to align their past marketing expenditures with their new terms and plans. AdAge speculates that the new restatement has as much to do with the company's internal goals as it does with the firm's share price, which has stumbled due to lack of organic growth and a slipping ad-to-sales ratio, the primary measure by which its growth was measured throughout the 90s and early this decade. Here's the quick summary from the article:

In-store advertising accounted for "the bulk" but not all of the increases, she said. At the same time, P&G subtracted the pay of many of its own marketing executives from the reported number. That reduced ad spending by as much as $163 million in 1998, when P&G apparently had little in-store advertising to offset the salaries and benefits

In all, P&G's restatement added $349 million to 2006 ad spending, with much smaller adjustments in other years, though Sanford C. Bernstein analyst Ali Dibadj believes the differences between the old and new definitions could have boosted P&G's reported 2007 outlays by $350 million, too. P&G said it hadn't calculated or disclosed the 2007 impact.

Essentially, the company added in budgets for in-store advertising (which it does a ton of), and removed the salaries and benefits of its marketing and advertising employees, essentially highlighting external and media-related expenses instead of more nebulous internal ones. The new numbers indicate that P&G has been spending about the same percentage of its sales -- roughly 10.5% -- for at least the past decade, as opposed to the last round of figures that indicated the firm was reducing its overall ad spend. Unfortunately, though, AdAge notes that even with these changes the firm still doesn't include consumer promotion spending as part of advertising, so we still don't have a complete picture of what the world's largest advertiser is really doing.

So why is it so important to know anyway? Well, as the article notes, "P&G's figures in the past 11 years show a very high statistical correlation (0.78) between ad spending ratios and organic sales growth under the old advertising definition, and an even higher one (0.87) under the new definition. For the past five years, however, the new ad definition shows a much lower correlation to sales growth than the old one." Consequently, investors like to see a slightly increasing (or at least steady) ad spend ratio, since that should imply higher (or at least steady) sales in the near future.

We know that P&G wants to continue winning that all-important First Moment of Truth on the sales floor, and given media fragmentation and the difficulty of reaching so many different mini-demographics with ad messages these days, it looks like they'll be bringing their A-game to the sales floor, which makes a lot of sense to me. Whether or not it will improve their overall performance as they shift more attention to retail media remains to be seen, but if nothing else, this looks like a really solid hedge in the age where TiVo and the Internet are making traditional media buys more speculative and often less successful.

Tags: retail media, P&G, in-store advertising

RetailWire discusses the potential of in-store advertising

Once again, the folks at RetailWire are having another lively discussion about the future of in-store media. Retail media expert Laura Davis-Taylor leads this BrainTrust Query (free registration required) in an attempt to answer the question of whether digitally-based retail media networks need a unique team and/or skills to function and be utilized to their fullest extent. As usual, the discussion is quite good, and there are responses on both sides of the table. My favorite is from Mark Lilien, a consultant with Retail Technology Group, who argues in favor of a interdisciplinary team by noting that, "retailing technology success is often 1% strategy and 99% execution."

That's a hugely important (and accurate) thought that still isn't well understood by many struggling to implement their retail media programs. The work that goes into up-front strategy is quickly surpassed by the work needed to implement and subsequently maintain any form of retail digital media, whether it be audio, video or interactive. Just because a medium is digital doesn't mean that it can lose it's relevancy or timeliness. Likewise, marketers would be wise to listen to the opinions of their customers during a retail media pilot, and consider making adjustments accordingly.

By my totally unscientific estimate, I believe that most retail media networks (digital signage in particular) are probably only utilized at 75% or less of their maximum efficiency (however one might measure that), since almost every network that I've looked at could benefit from some sort of improvement or other. Still, there are many who believe that once a network is deployed, it's finished, and the rest is up to the content guys. While that mentality might allow some networks to stay successful over time, there's almost always something that could be done to make it a little better for the consumer, and better performing for the retailer.

Tags: retail media, digital signage, in-store media, in-store advertising

VNU To Develop In-Store Measurement Service

After creating quite the commotion about it's P.R.I.S.M store media measurement technique, VNU has decided to take the service live, doing what it calls the "lead-market phase" of the new service in early 2007, with full availability later in the year. From the press release:

The new service, which will be developed through a new unit of VNU known as Nielsen In-Store, will measure consumer exposure to a fast-growing and powerful array of in-store marketing vehicles, including television and radio, shelf talkers, digital signage, and other point-of-purchase displays. Collectively, these in-store marketing approaches stand as the sixth largest advertising vehicle in the U.S., at $18.6 billion in spending in 2005.

The new service will also help retailers improve results through better store layouts, category adjacencies and product selection. “The new information we provide for retailers and manufacturers will help them work more effectively to improve the shopping experience for consumers,” said George Wishart, who has been named global managing director of Nielsen In-Store. “We also will provide the advertising, media and retail industries with a new currency standard that can increase the efficiency of the media buying and selling process.”

The same big names featured in the pilot project are endorsing the full-scale system, suggesting that early results were good. Members of the consortium include 3M, Coca-Cola, Kellogg’s, Miller Brewing, Procter & Gamble and The Walt Disney Company, as well as major retailers like Albertsons, Kroger, Walgreens and Wal-Mart.

(Cross-posted at the digital signage news blog)

Tags: VNU, P.R.I.S.M, retail media, media measurement, in-store advertising