Schering-Plough's $10M Experiment With Digital Out-of-Home

Despite Price Cuts, Vendors Expect Ad Buy to Be Repeated

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LOS ANGELES (AdAge.com) -- When Schering-Plough, the pharmaceutical/package-goods giant behind brands like Claritin, Dr. Scholl's and Coppertone, sought to move $8 million to $10 million of its $372 million TV ad budget into digital out of home earlier this year, vendors were eager to accommodate them.

Ads for Dr. Scholl's ran on RMG Networks' Danoo during the Schering-Plough campaign.
Ads for Dr. Scholl's ran on RMG Networks' Danoo during the Schering-Plough campaign.
In what is believed to be the fledgling medium's biggest dedicated ad buy, Schering-Plough and its media agency, Havas' MPG, and its out-of-home division, Chrysalis, met with more than 30 member companies of the Out of Home Video Advertising Bureau in the spring to discuss which networks would be the best demographic and creative fit for seven of its portfolio brands. Participating brands in the digital out-of-home buy were Claritin Liqui-Gels, Claritin For Kids, Dr. Scholl's for Her, Dr. Scholl's Massaging Gels, Tinactin Chill, Lotrimin Ultra and Dr. Scholl's Pain Relief.

Digital out-of-home -- an industry that includes everything from taxi TVs and in-store retail networks to digital panels at malls -- has long been touted for its promise as an ad medium but has shown little signs of earning a full-blown commitment from marketers. Aside from cinema, which has positioned itself as the most seamless way for marketers to shift their TV budgets into alternative venues with comparable scale, many networks are too fragmented to accommodate a TV-equivalent buy on their own.

Although $8 million to $10 million may seem like a drop in the bucket for a brand like Claritin, which spent nearly $150 million on TV in 2008, according to TNS Media Intelligence, it's an investment necessary for digital out-of-home to meet the growth patterns projected by PQ Media in a new report issued this week on spending in the medium from 2009 to 2014.

For Ray Rotolo, Chrysalis' senior VP-managing director, proving digital out of home's efficacy against other media for big TV spenders such as Claritin and Dr. Scholl's was a top priority. So the first step was to determine how often consumers interact with out-of-home ads. A study conducted with Arbitron compiling 1,035 interviews across 25 locations and four participating networks found that 47% of consumers were exposed to digital out-of-home media on a weekly basis, on average twice a week with and with an average dwell time of 40 minutes. That placed it second only to TV (with 87% of consumers) in terms of overall media exposure in a given week. "This was a pretty powerful profile for us," Mr. Rotolo said.

Pricing cuts
After whittling down OVAB's candidates to 17 participating companies, Schering-Plough began rolling out its campaigns with a variety of vendors throughout the spring and summer. Because each network was ultimately a cog in a very large wheel of TV ad dollars, some adjustments had to be made to accommodate such a big buy, including pricing cuts. According to three participating vendors who spoke with Ad Age, normal cost-per-thousand viewer rates were slashed by as little as 10% and as much as 40% to secure inventory for Schering-Plough, often with networks helping to create customized creative for the participating brands.

But much in the same way that Reckitt-Benckiser's $20 million online video buy earlier this year was seen as a way to prove that medium's worth, most participating networks were happy to make short-term adjustments for what they consider a worthwhile experiment for the long-term.

"Our normal, everyday pricing is much higher, but we certainly wanted in on the buy and to make it attractive for the client," said Bob Martin, chief marketing officer for RMG Networks, which includes recently merged networks Danoo and Ideacast, both of which ran ads during the Schering-Plough campaign. "I really don't think [the price cuts] mattered. We wanted it as a blue-sky plan in order to truly learn this new medium."

Bill Ketcham, exec VP-chief marketing officer, Adspace, a mall-based network that ran repurposed TV ads for Claritin Liqui-Gels for two months across its full footprint of 105 malls, said engagement with Claritin's ads stood out in a recent custom study the company did with Nielsen. Awareness of the ads was registered by 37% of the malls' viewers, a figure that was significantly higher than most campaigns, he said.

"A lot of commercial awareness depends on the target, so when you have a movie targeted at teens like a Jonas Brothers movie, of course it's going to be higher," he said. "But this was way above our average."

Schering was pleased enough with the early results that the company is already in discussions with Adspace to renew its buy in spring 2010, Mr. Ketcham added.

Promising numbers
Overall engagement metrics with Claritin's ads were first shared at the OVAB Summit in New York two weeks ago. Purchase intent for the two brands went up 26% among those surveyed, with 73% of allergy sufferers reporting more likelihood to buy the product. Ad recall also showed promise, with unaided recall reported among 9% of respondents and aided recall at 36%.

However, some challenges still remain, said Mr. Rotolo. "What it didn't change was top-of-mind brand awareness. But we looked at this from a pretty broad perspective, so we didn't expect it to change dramatically," he said. "The other thing that really struck us from a business standpoint was that 68% of consumers surveyed saw the screen, [but] only 38% of them interacted with the screen. So only a third of the people actually watched the ad. We can now use this in how we negotiate, because we have to understand where it fits. We can also use this as a challenge for the industry to say, 'Your ads can work here and here's how.'"

Patrick Quinn, president of PQ Media, said spending on non-ambient digital out of home is expected to rise 3.2% in 2009 to $1.91 billion, down from an 11.2% gain in 2008. But most of the bigger players -- cinema vendors like Screenvision and National CineMedia, retail networks at Walmart and Target, and others -- are doing the heavy lifting, as only 2% of the 661 companies tracked by the study reported revenues between $25 million and $100 million, and a mere four are producing revenues upwards of $100 million.

Still, he said of the digital out-of-home vendors, "They're faring well for their first recession. This is low single-digit growth, but compared to newspapers, radio and local TV, they're doing quite well," he said. "But history has shown that media with strong audience metrics will perform well during and after a recession."

Suzanne La Forgia, OVAB's president, said the Schering-Plough ad buy has already helped establish a precedent for marketers to look at the industry as a planning and buying alternative to other media. "It allows brands to do some research around it to look at it from a broad perspective without losing the benefits of the individual pieces," she said. "We got some great learnings from both sides, and it will continue to be a point of education for us from an OVAB perspective to improve the buying and creative process."

Coincidentally, four of the participating networks have already gone through major changes in the three-month period since the ad buy ended. ProLink, a network comprising screens on golf carts, recently ended its OVAB membership to pursue a new advertising strategy; OnSpot, a mall-based network, was acquired by Access 360; and lifestyle networks Danoo and Ideacast merged to form RMG Networks.

"There were some networks that were more flexible than others in working with us to create the program we wanted to do, but part of that has to do with [the health] of each individual network," Mr. Rotolo said. "But we really do see a place for digital out of home in the media mix. It may not be at the top-end of the purchase model, but we have a bunch of clients that are interested and are looking at it from a very different perspective than they would have before."

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