The big retail chains have been holding the line on their ad spending during the recession, but they've been shifting dollars from newspapers to TV as they try to build brand loyalty among very price-conscious consumers.
In the last four years, for example, the top 10 retailers in the U.S. by ad spending collectively boosted the TV portion (network, spot, syndicated and cable network) of their ad budgets five percentage points while lopping off nine percentage points from newspapers.
And in most cases, cable has also provided them with an efficient way to tap the broadcast audience. In the rising TV budget at Sears, Roebuck & Co., the cable portion has grown from 17.8% of TV in 2000 to 27.5% in 2003; in the same period, cable at Home Depot has grown from 13.6% of its TV spending to 28.1%.
NEEDS LINK TO POP CULTURE
"For a brand to be viewed as credible and really be top-of-mind, broadcasting is a more dynamic medium," says consultant Catherine Sadler, former chief marketing officer of Ann Taylor Stores. To establish a brand, it needs to be aligned with pop culture and the zeitgeist, something TV is better at than print, she says.
"TV is an image-and brand-builder, a storytelling mechanism," says Randy Curtis, marketing strategist at BuenoCurtis Relational Marketing.
Cable TV has been a large driver of that change, thanks to targeted audiences, and because the medium has learned to put together value-added packages, such as Home Depot's sponsorships of TLC's home improvement shows, say the experts.
"Cable is listening, and it's starting to get it," says Mr. Curtis, a former VP-creative at Wal-Mart Stores. "It ain't rocket science-it's the magazine model."
The change out of newspapers is also "cohort-driven," says Jim Lucas, director of strategic planning and research at Interpublic Group of Cos.' Draft, Chicago. Newspapers are losing ground, not just because TV is winning the zero-sum ad-budget game, but also because newspapers themselves are losing circulation and the all-important young audience, he says.
Retailers are still heavy users of free-standing inserts to drive special offers to existing customers, but they are under pressure to bring in a new customer base and TV helps, says Gwen Morrison, president- North America of Chicago-based The Store, an agency specializing in retail owned by WPP Group.
"No one is walking away from the circulars," says Ms. Morrison. "That's different than trying to drive new interest from a new user base."
After several years of depressed sales, retailers want to wean consumers out of the clearance mentality to improve their bottom lines. Some, such as Federated Department Store's Macy's chain, have been prompted to start brand-image campaigns.
Ms. Morrison singled out J.C. Penney's "It's all inside" and Target Stores' "Sign of the Times" campaigns as recent successful efforts to build image. "There was a sameness to all the [retail] advertising. That's why Target broke out of the pack," she says.