Marketers' promotion funds buy new media frontier: Supermarkets

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Package-goods marketing dollars flowing into retail stores aren't just buying temporary price reductions or special displays anymore. Increasingly, they're buying stores as an ad medium.

In recent months, Procter & Gamble Co. has backed rollouts of its new Physique haircare brand and expansion of its Iams premium pet food brand into supermarkets and mass merchandise outlets with extensive in-store and front-of-store ads at national retailers and supermarkets such as Wal-Mart Stores, Kroger Co. and Meijer.

"The [retail ad] support P&G is getting for Iams is unprecedented in the history of the pet category," said Burt Flickinger, managing director of Reach Marketing. He expects other package-goods marketers to try similar approaches.

In an interview last year, A.G. Lafley, P&G President-North America and Global Beauty Care, compared Wal-Mart's 90 million-strong weekly customer count favorably with any of the other mass media options available today.


Such manufacturer interest in the store as an ad medium is driving increased use of "retail mini-labs" for testing new in-store marketing concepts, said Valerie Scala, VP-market testing services for Information Resources Inc. And retailers offer geographic and demographic targeting that other media are hard-pressed to match, said Ken Harris, partner at Cannondale Associates.

With the U.S. Federal Trade Commission taking a harder look at slotting fees, retail advertising could provide a new way for retailers and manufacturers to justify payments, he added. "[Manufacturers] can say we're looking at retailers as media vehicles . . . and some retailers are a better media [vehicle] than others," he said.

Regardless of the rationale, in-store marketing and co-marketing with manufacturers is likely to become a growing source of revenue for retailers, said Jon Kramer, president of J.Brown/LMC Group. Today, most co-marketing programs are developed by manufacturers. But Mr. Kramer expects retailers to become the driving force in the future and increasingly is being approached about developing such programs "from the retailer out."

"The thing that scares me," Mr. Kramer said, "is that someday retailers are going to wake up and say: `We can hire the agencies.' Suddenly this whole agency paradigm is gone. There's no need for brand managers and salespeople. And if the retailer is smart, he can take 100% of the [marketing] dollars."

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