The Digital Signage Insider

Experts Respond: In-Store Ads Hardly a 'Waste of Money'

Published on: 2006-04-07

In about 517 words, Jack Neff stated his opinion that in-store advertising may just be a big "waste of money."  Normally, a short opinion piece that turned up in a web search wouldn't be worth mentioning.  However, Jack Neff works for Advertising Age, and his thoughts appeared on the front page of last week.  Needless to say, I wasn't very happy when I read the article, and as it turns out, neither were most people who came across it.  The results of an online poll for the article were published in AdAge's weekly print edition, and an overwhelming 69% of readers agreed that in-store marketing does work, but just hasn't been given that much (mainstream) attention for one reason or another.  What does this mean for companies involved in marketing at retail?  Well, if nothing else, it certainly suggests that some above-the-line advertisers (and notable above-the-line advertising publications) aren't fully committed to in-store media efforts just yet.

Neff's original argument basically boiled down to one sentence: "Retail is mass, but it's not really media."  Companies like Procter & Gamble and Wal-Mart have been equating store traffic with viewing audience, he suggests, and this simply isn't so.  He continues: "[Shopping] may be entertainment, but it's usually not where people go to watch, read or play, akin to TV, magazines, radio, Web sites or game consoles.  People are there to buy their stuff and get the hell out, as one veteran retail marketer has put it, more than once.  That's why you hardly ever see anyone standing around watching Wal-Mart TV. The people most exposed are Wal-Mart employees, bludgeoned for hours daily by constantly replayed ads."  Well, that would obviously explain Thomson's acquisition of PRN (who at the time probably derived over 90% of their revenues from Wal-Mart TV), or Wal-Mart's recent expansion of their in-store TV network, or Target's installation of its own in-store network, or any of the research coming out of organizations like POPAI and ISMI, or the rise and success of "destination" retail models (think Barnes & Noble, where you can sit and read all day long, as long as you're OK with plunking down $7.99 for coffee and a scone).  In the US and abroad, shopping is entertainment (for better or for worse), and millions of people participate for fun every day.  It's not a passive activity like watching TV or listening to the radio, but there's no doubt that people everywhere set out for malls, shopping centers and department stores for the opportunity to "tune out" from everyday stress and browse, enjoy, and perhaps add a few more line items to next month's credit card bill.

For all of his (misplaced?) ideological musings, Neff does make a couple of salient points about factors hampering the adoption and use of in-store media, both digital and static.  For example, "the biggest media marketer in stores, News Corp.'s News America, has a lock on shelf advertising in 35,000 stores and a roughly 90% market share."  That certainly could hinder the deployment of certain types of in-store marketing tools, although there are many others that major marketers have found to be just as effective.  Neff continues: "[T]hink network TV is expensive? Compare it to the $19 million Unilever is spending via News America this year for category exclusives on little shelf placards and machine-fed coupons and such. That's more than the entire measured-media budgets for most of its brands."  Again, a reasonable point.  While in-store marketing has been shown to have a very competitive CPM, some marketers still seem to have unrealistic expectations about below-the-line marketing campaign costs.  Yes, many in-store marketing techniques can be done quite inexpensively.  But full coverage of multiple brands and products in thousands or even tens of thousands of retail outlets is going to cost money.  Neff touts the $19M figure, but he never gives a CPM number (granted he probably doesn't have that information), nor does he indicate what a TV campaign with similar reach would cost.  I don't know whether Unilever's experiment has been a success or not, but its very existence tells me that Unilever is looking for a greater return on its full marketing campaign (including in-store) than it can achieve with regular TV or print ads alone.

The other thing that irks me about this article is the ongoing distinction between measured and unmeasured media budgets.  This of course isn't Neff's fault, but it does indicate the general opinions furthered by the advertising industry as a whole.  Conceptually, marketing experiments are separated into "measurable" and "unmeasurable" categories, and different rules about whether the techniques/campaigns are successful or not get applied to each.  I understand that this is how it's been for a long time, but aren't we entering the age of results-driven advertising?  Marketing heavyweight P&G, in their landmark first moment of truth article in the Wall Street Journal, certainly made their future direction clear: "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." But it certainly seems like those in the advertising industry are trying to distance their efforts from this sort of accountability, as well as the vehicles (including many types of in-store media) that provide it.

Fortunately, as I mentioned in the beginning of this rant, I wasn't alone in thinking that perhaps Neff went a bit too far in suggesting that in-store media might be a waste of money.  Leaders from Gladson Interactive, AdComm Outdoors, Nestle Purina PetCare and Saatchi & Saatchi all wrote in, noting that like every other kind of marketing tactic, in-store won't always be effective, but the medium can't be discounted altogether.  I think Saatchi's Jared Meisel summed it up best:

"There is no denying the fact that the current state of on-screen in-store ads are not as effective as they could be. But this does not mean that the medium is broken.  Rather, it is ripe for updating and innovation."

One final note: While retail POP has been around for over a century (and is fairly well understood), retail media networks have only been available for a few short years.  Given the strong growth in this space over the past 18 months, it's pretty clear that our industry will have ample opportunity to demonstrate the value that our products -- when combined with compelling content -- can bring to the retail environment.

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