Annual In-Store Marketing Report

GROWING CLASH BETWEEN RETAIL ADS AND TRADE PROMOTIONS

Both Jockey to Dominate Shopper's Real-Time Experience

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CINCINNATI (AdAge.com) -- In-store advertising has seen a growth of investment in retail outlets and more experimentation in recent years, but advertisers and
Floor mat ads, like this one for Quilted Northern, make audio announcements when shoppers step on them.
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BATTLING FOR SHOPPERS IN THE AISLES
Marketers Deploy Arsenal of New Promotional Devices


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> Survey Results: Consumer Reponse to In-Store Displays


> Survey: In-Store and Out-of-Store Ad Association

agencies remain skeptical about the big question: Does it work?

Hitting consumers with media advertising in the store, where Point-of-Purchase Advertising International says 74% of all buying decisions are made, is disarmingly sensible, say even the most hardened in-store skeptics.

But marketers say it doesn't help the credibility of new in-store media when they're often sold in an age-old way -- through arm twisting by retail buyers whose chains sometimes view these media more as a profit center than a way to move merchandise.

Testing and experimentation
"There's a lot of testing and experimentation going on right now [with in-store advertising]," says Qaisar Shareef, director of global shopper marketing for Procter & Gamble Co. "One thing we're all recognizing is that there are a lot of consumers in stores. There are enough large retailers that there's a lot of scale. Therefore, this has to be an opportunity we have to understand better."

Retailing has consolidated as fast as media options have fragmented in recent years, leaving such mega-retailers as Wal-Mart Stores and Carrefour as one of the ways to reach a substantial audience with in-store advertising.

Premier Retail Networks, which operates the Wal-Mart TV Network as well as similar networks for Sears, Roebuck & Co. and Best Buy Co., reaches 118 million unduplicated viewers with Wal-Mart TV alone in a four-week period, says Mark Mitchell, executive vice president of sales.

Mr. Mitchell cites research commissioned by his company from Nielsen Media Research showing unaided brand recall for five test ads on Wal-Mart TV in 2002 was 66.4%, vs. an industry average of 24% for in-home TV ads, per data from Ipsos-ASI.

Other retailers inspired
PRN and Wal-Mart have inspired plenty of other retailers to get in the game. X3D Technologies recently signed a deal to put its 3-D holographic projection screens in 400 European stores of Wal-Mart's biggest global competitor, Carrefour, and is testing such a screen at a Toys "R" Us store in Times Square. RMS Networks produces advertising for 40,000 TV monitors in U.S. convenience store, Advance Auto Parts and Sports Authority outlets, reaching an estimated 20 million shoppers weekly.

Meanwhile, the floors of food, drug and mass-merchandise stores have become so attractive that two companies are fighting over them. Floorgraphics, originator of the floor ad concept in 1995 on a national scale, faces News Corp.'s NewsAmerica, which has muscled into Floorgraphics' turf over the past three years.

Promotion vs. advertising
Still, in-store advertising suffers from a prejudice that any marketing taking place inside a store must be promotion, not advertising, says Richard Rebh, CEO of Floorgraphics, which sells and operates a $60 million-plus floor advertising business in 10,000 stores globally, with retailers getting a slice of the revenue.

Mr. Rebh says he's worked to sell floor ads to media agency buyers and brand marketing executives rather than the sales and trade marketing executives who normally handle promotion. Still, only about a quarter of sales comes from marketing budgets rather than promotion or trade marketing budgets, he says.

There's good reason why in-store ad funds come from promotion budgets, says one package-goods executive who oversees both marketing and sales. Because many retailers treat in-store advertising like trade promotion -- pressing hard to sell in-store ads to vendors -- the executive wants sales reps considering it the same way they do other promotion options rather than tapping ad budgets, as retailers would prefer.

Sales impact
But Mr. Rebh contends in-store ads, at least floor ads, can stand on their own merits. He's produced exhaustive data not only on the reach and recall of floor ads, but also on what sales reps want: sales impact. Floor ads reach 40% of the U.S. population in two days at a cost per thousand of 54¢, compared with $17.74 for TV and $2.05 for outdoor ads, and increase purchases or purchase intent by more than 20%, Floorgraphics says.

Ultimately, in-store ads get held to a higher standard than ordinary media because they're evaluated like promotion, based on actual sales lift rather than just recall and purchase intent, says David Diamond, a marketing consultant who is a veteran of Catalina Marketing Corp., ACTMedia and P&G.

"Consumers who walk into a supermarket mainly want to do one thing -- walk back out of the supermarket," he says. "Floor ads are great. You kinda can't miss them. ... You don't perceive they've slowed down your trip."

But he doubts consumers spend much time watching in-store TV. And for years, in-store radio has been dogged by store managers turning down the volume in response to shopper complaints, Mr. Diamond says.

Unilever Home & Personal Care uses in-store advertising extensively, buying Wal-Mart TV, Walgreens and Kroger radio, and floor ads, says Jim Geikie, director of customer marketing for antiperspirants and deodorants.

Entertainment factor
Key to making in-store ads work, he says, are tailoring them to the medium, linking them to other merchandising and making them entertaining enough to capture shoppers' attention.

When Unilever launched Axe body spray in 2002, it had PRN adapt its "Axe Effect" advertising from Publicis Groupe-based Bartle Bogle Hegarty, New York, to Wal-Mart TV by showing "scenes of in-store seduction," such as a cashier reaching across the conveyor belt to grope an Axe-scented man. That Unilever had Axe displays in the electronics section, where people are more likely to linger and watch ads, helped make the connection work better.

Unilever doesn't cite results from the campaign, but it was satisfied enough to sign up for a second flight of in-store seduction ads breaking this month.

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