How Agencies Are Structuring for Shopper Marketing

Funding Overflows in Bid to Catch Consumers Racing Along the Path to Purchase

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NEW YORK ( -- When Lowe & Partners decided to devote more resources to retail activation, it didn't form an outgrowth of its existing practice but instead developed a separate agency called Open, which it launched last September with offices in London and four countries across Europe, Asia and South America. The move was among recent examples of how agencies are structuring to understand and communicate with shoppers anywhere on the circuitous and constantly shifting path to purchase.

Shopper marketing is gaining share of advertising and promotions

Shopper marketing is gaining share of advertising and promotions
"I don't think there's any client losing sleep at night waiting for another shopper-marketing agency," said Lowe Chief Strategy Officer Michele O' Neill. "So our starting point was, if we're going to do this, let's do this differently."

The way the industry is restructuring for shopper marketing, the key challenges, emerging best practices and unmet needs are the subjects of this Ad Age Insights Shopper Marketing report, the first in a quarterly series about the newest strategic and tactical developments in the rapidly growing art and science of shopper marketing.

Manufacturer investment in shopper marketing has roughly doubled over the past five years to $35 billion, according to Booz & Co., and it is expected to continue to expand at an annual rate of roughly 15%, with some funding reallocated from traditional media and trade promotion. (See chart, right.) The Open offices in developing markets suggest that shopper marketing -- a burgeoning phenomenon in the concentrated retail environments of North America and Western Europe -- is taking hold even in the BRIC countries and beyond.

A recent report by Booz & Co. and the Grocery Manufacturers Association notes that 83% of consumer-packaged goods companies surveyed expect to increase their shopper-marketing investment over the next three years. For 55% of those companies, the shopper-marketing investment will exceed all other marketing spending, including internet and social media.

"Shopper marketing is at the same stage that digital was at in the '90s," said Carl Hartman, WPP global team leader. "Everyone got all hot and bothered about digital, and then it turned out to be banner ads." Today, he said, "Everybody knows that reaching consumers at the point of purchase is an important place to reach them. So you have a video screen on a shopping cart. Is that really the big bang?"

He added: "Shopper marketing really hasn't hit that 2.0 feeling yet -- but it's about to."

Shopper Marketing
This excerpt is from the first in a series of quarterly trend reports published by Ad Age Insights on Shopper Marketing for 2011. Triad Digital Media is the sponsor of this series, and allowed the first 150 readers free access to this first report. By registering for the free access, you agree to allow Triad to contact you with additional marketing information. The free access limit has now been reached. Ad Age Insights customers can purchase these reports individually for $249, or if you are already an Ad Age subscriber, for $199. Future reports will be published in April, July and October.
Ken Schept is a freelance writer specializing in articles and reports about retailing and marketing. His clients include Millward Brown and Kantar Retail.
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