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Using in-store advertising to win the First Moment of Truth (FMOT)

Author: Bill Gerba on 2005-10-10 07:45:33

"Procter & Gamble Co. believes shoppers make up their mind about a product in about the time it takes to read this [sentence]."  So begins an article on the front page of the September 21st Wall Street Journal.  P&G's most recent concept for (further) conquering the world of consumer packaged goods (CPG) is the First Moment of Truth (FMOT, pronounced EFF-mot), the 3-7 seconds after a shopper first encounters a product on a store shelf.  It is in these precious few seconds, P&G contends, that marketers have the best chance of converting a browser into a buyer by appealing to their senses, values and emotions.

Immediately after the paper came out that morning, blogs and websites from around the world were filled with comments about this "new" form of marketing that existed entirely on store premises.  Direct marketing site DMNews immediately zeroed in on P&G's commitment to using as few words as possible in its messages (how many words can you read in 3-7 seconds?), and started a thread discussing FMOT implications for traditionally wordy direct marketing approaches like mailers, bag stuffers and flyers.  Reveries editor Tim Manners notes, "This is serious stuff: P&G has a 15-person FMOT department in its headquarters, 'as well as 50 FMOT leaders stationed around the world,' led by a Director of First Moment of Truth...."

While in-store marketing certainly isn't new to anybody involved with digital merchandising initiatives like touchscreen kiosks and digital retail signs, the advertising world at large traditionally hasn't paid a lot of attention to it, instead choosing to focus on mass-media like TV, print and radio.  But if P&G's current spending is any kind of indicator of where the rest of the industry is headed, all that may be about to change.  As the WSJ article notes, "it has cut its commitments to advertise on cable channels for the current season by 25% and its broadcast-TV allotment is down about 5%. At the same time, overall ad spending rose slightly."  So where is the rest of that money going?  Well, at least some of it must be in the hands of the aforementioned 50 FMOT leaders around the world, but the lion's share is going into POP displays, in-store TV advertising (such as on the Wal-Mart TV network), and experimental in-store promotional tactics.

News of P&G's predictions about ad spending and performance was also no surprise to readers of Dairy Foods Magazine (what? you don't read it?), as Donna Berry wrote an extremely similar article about FMOT for that publication way back in March 2005.  Her takeaway after hearing a keynote speech by P&G's FMOT director Dina Howell: there are actually two moments of truth.  The first is when a browser first encounters a product in the store (they win if the customer decides to purchase).  The second moment of truth happens each time a customer uses the product.  So for P&G, each time somebody washes a load of laundry with Tide, feeds their dog Iams, or brushes their teeth with Crest is another marketing opportunity.  Or, as they say in their 2002 Chairman's Address, "The second moment of truth occurs two billion times a day when consumers use P&G brands. Every usage experience is our chance to delight consumers."

According to investment bank Veronis Suhler Stevenson Partners LLC, U.S. companies will spend around $18.6 billion on in-store marketing advertising this year, up from $17.6 billion last year (a healthy 5.7% growth rate). Overall, companies are slated to spend almost $200 billion on standard types of advertising this year, including TV, print and the Internet, up from $188 billion in 2004 (an even healthier 6.4% growth rate).  As additional funds become available for use in-store, more self-service, interactive and narrowcasting projects will get the green light from advertisers and retailers looking for the greatest sales lift per ad dollar.

While digital merchandising programs can have a significant upfront cost, they make up for it with longer usable lifecycles, fewer installation and operational challenges over time (by some estimates, store managers fail to deploy static POP displays up to 50% of the time), and of course, the ability to change the promotional material without having to make physical visits or ship additional equipment.  But the real ace up our sleeves will likely be reliable accountability for advertising playback.  Since I started with a WSJ quote, I'll end with one as well:

"For years, agencies were paid a percentage of the overall ad budget. P&G changed that model several years ago because it worried agencies would naturally gravitate toward costly TV ads. It now ties agency compensation to product-sales increases. Ad-agency executives say another factor will soon be thrown into the mix: the cost of new services they're being asked to provide, such as installing and monitoring in-store displays."

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