In-store Radio Is Music to Some Retailers' Ears

Kmart, Rite Aid Insert Ads Into Programming to Increase Point-of-Purchase Sales

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A correction has been made in this story. See below for details.

NEW YORK ( -- Attention shoppers: There's an ad playing in aisle seven. And by the storefront display case. Even in the bathrooms.
Westwood One CEO Peter Kosann
Westwood One CEO Peter Kosann

In-store radio is nothing new to consumers who frequent department stores and pharmacies -- indeed, the soporific Lite-FM mix of music is one that has been spoofed in ads and movies for decades. But its ability to drive point-of-purchase sales is now drawing more major retailers.

Quick-changing messages
Boston-based POP (Point of Purchase) Radio is leading the segment, thanks to a partnership with Westwood One Radio that allows agencies and advertisers to insert 30-second spots hyper-targeting 25- to 54-year-old women. Drawn by the medium's ability to quickly change messages, its lower comparative ad cost than regular radio and research showing that sales of POP-advertised products jumped an average of 17%, large national retailers such as Kmart and Rite Aid have signed on. Total in-store carriage is at 10,900 locations; retailers share in the ad revenue, though POP won't disclose financial arrangements.

One reason in-store radio appears to be growing while terrestrial and satellite are struggling to attract listeners: its captive audience. "What gets manufacturers interested is the immediacy of the message," said Jerry Cardinale, senior VP-category management for Rite Aid. "The consumer can't hide or change the channel."

Privately held POP won't disclose revenue, although it said it increased ad sales by double digits last year. Westwood One CEO Peter Kosann said the format is catching on because it allows for more adaptable creative.

"If a pharmaceutical company called me and said a product is not moving on shelves, I could literally get a message out on what they want to target within 24 hours," he said. "Rather than one coupon or one point-of-purchase display, I can run an audio campaign across all 11,000 stores or target by store location."

Is it radio or out of home?
The ads have been especially efficient in pushing pharmaceutical products and keeping shoppers informed on inventory, with a 17% sales spike seen for advertised products in that category. Google is taking a similar approach with the outdoor retail-video-advertising technology it's trying to patent, which is why buyers are still not certain whether to pitch the format as a radio or out-of-home buy for clients.

"I haven't been able to find a place for it," said Matthew Warnecke, VP-director network and local radio at MediaCom. "It really is more about demonstrating if the audience is there and if it matches any of the brand's objectives."
POP Radio President-CEO Gary Seem
POP Radio President-CEO Gary Seem

Rich Russo, director-broadcast, JL Media, added: "It's almost like a blue-light special, like selling soap at 59 cents for the next hour. If normally I sell five bars in one hour and suddenly sell 32, I would say, 'Hey, it worked.' Then I'd start using different creative around that product."

While most stores subscribe to Westwood One's adult-contemporary station for their in-house radio, the spots are open to all formats. Stores with a dominant Hispanic population have been serviced with Spanish-language ads, while one advertiser recently wanted to target country-music fans and created a vignette with a DJ announcing the week's top three songs to approximate real country radio.

"If advertisers want to roll out messages based on incidence of cold and flu across the country, they can trigger the message to play market by market or retailer to retailer," said Gary Seem, president-CEO of POP Radio. And if an advertiser is really interested, the copy can even get down to the ZIP code level. "It creates a nightmare to execute, but we can do it."

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CORRECTION: An earlier version of this story incorrectly referred to Westwood One as being a property of CBS. CBS has a stake in Westwood One but is not a majority owner.
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