|ShelfAds are tiny digital video players that detect movement and start playing an ad when consumers pass by.
POP Broadcasting’s ShelfAds device aims to tackle two of the biggest criticisms lobbed against existing in-store media networks -- that shoppers must look up to view ads on giant, expensive plasma screens and that the ads never stop. “We wanted to take everything that was wrong with in-store marketing and not go to market until we got it right,” said Earl Littman, 79, founder and chairman of POP Broadcasting, based in Dallas and backed by $1.3 million in venture capital funds. “We weren’t going to do it until you didn’t need a plug.”
The small devices cost just $300 to manufacture, are battery operated, attachable to store shelves and operated by a remote server the size of a cigar box, according to John McGinnis, senior VP at AVIDWireless, which developed the technology behind the patent-pending system.
Smell of success
Mr. McGinnis said the system has also been built to integrate RFID technologies and could one day dispense aromas as well. “If you are in the bread aisle, you could release the aroma of fresh-baked bread,” he said.
Although brands participating in the pilot test are getting the ads for free, Mr. Littman said rates will be just $4 per day, no matter how many times a shopper steps into the infrared zone that kicks off a signal for an ad to play. That means an entire year would cost $1,460, compared to thousands for an ad on PRN’s Wal-Mart TV, which runs ads simultaneously throughout the entire store, instead of on an aisle-by-aisle basis.
While the test is currently only in one store, Mr. Littman said he plans to roll out a larger pilot test in partnership with Fiesta Mart, a retailer with 50 stores in Texas, later this year and expects marketers to begin paying to run their ads during that study. Mr. Littman is eager to get a return on a $500,000 personal investment in the system and also to finally find a measurable ad medium.
“I know I spent years spending clients’ money on TV advertising and not knowing whether half of it worked,” said Mr. Littman, who was the chairman of independent Dallas-based advertising agency GDL&W until it was sold to Saatchi & Saatchi in 1993. “This is the Holy Grail, the last eight seconds of the buying decision, this is where advertising could really work.”
Though in-store marketing spending is estimated at more than $17 billion a year, measurement of the medium has been elusive and criticism of its effectiveness fierce. “Brands and marketers are desperate to reach shoppers at the shelf,” said Gwen Morrison, president, The Store in Chicago, a part of WPP’s Global Retail Practice. “Many of these systems have gravitated to these large screens and it’s always been hard for shoppers to look up. It’s been an ergonomic issue almost.”
Ms. Morrison said store employees often turn off volume on in-store networks and shoppers have “zoned out” tuning out the noise from ads. ShelfAds ”might catch your attention and create more of a speed bump in the aisle since the sound is not going on constantly,” she said.
The POP Broadcasting system, despite being cheaper, might have a tough time gaining distribution in retail stores. After all, the two largest grocery store chains in the U.S., Wal-Mart Stores and Kroger Co., have already committed to in-store media network companies. Wal-Mart partners with Premier Retail Networks and Kroger Co., the nation’s No. 2 grocer, is rolling out a similar system in partnership with IBN, In-Store Broadcasting Network, in its 2,500 stores.
But Ms. Morrison said she does not expect Kroger and Wal-Mart to limit themselves. “I don’t think any one format is locked out,” she said. “They are still on a learning curve.”
Indeed, in the race to create an in-store marketing model, marketers are eager to find a system that links transactional data to marketing expenditures. Toward that aim, the Association of National Advertisers in partnership with the Point-of-Purchase Advertising International is launching an extensive, half-million dollar pilot study.