Archive for the ‘Research’ category

New research halves standard number on buying behavior

July 30, 2008

Marketers have for ages been talking about how 70 per cent of purchasing decisions are made in the store.

But new research from OgilvyAction suggest the real number is more like half that – 34.9 per cent.

According to the study, reports Retail Wire, 39.4 percent number is the real number of consumers who wait until they’re in a store before deciding what brand to buy. About 10 percent change their minds while in the store and 20 percent leave a product on the shelf that they intended to buy. Nearly 30 percent of consumers wind up making a purchase from a category that they didn’t intend to buy from before walking into a store.

The 70 per cent number came out of work done for the Point of Purchase Advertising Institute (POPAI) more than a decade ago. POPAI says it is sticking to its numbers, suggesting: “There have been various studies that have arrived at different in-store decision rates over the years, based on unique methodologies, trade channels, and the context and location of consumer interviews. POPAI welcomes any research that helps brands, retailers and agencies understand the strategic importance of marketing at retail.”

The OgilvyAction research probed 14,000 total shoppers globally and looked at shopping behavior in 13 categories, including beverages, confectionary, hair care and household cleaning products.

While the new research failed to answer just how much advertising outside the store environment influences purchases, it did determine important factors that drive impulse purchases. Sampling and product displays ranked one and two.

“The good news for marketers is that a product display and sampling can build brand equity,” Jeff Froud, senior strategic planner for OgilvyAction, told “No matter what rulebook you studied when you were studying marketing, price promotions don’t build any brand equity and in some cases can be equity destroyers.”

“More and more of our communication is moving to store,” A.G. Lafley, chairman and chief executive at Procter & Gamble, said last month at the International Advertising Festival in Cannes. “And the reason it’s moving to store is that more and more consumers are… making their purchase decisions in store. And in a period where you have a fair amount of food price inflation, we think more of that shopping list, whether it’s just in [a shopper’s] head or actually written down, is being decided in the store.”


Industry experts weigh in on Wal-Mart TV 2.0

July 30, 2008

The online discussion forum Retail Wire attracts a very knowledgeable crowd — what it calls a Brain Trust — to comment on various issues of the day, including recent news that Wal-Mart is taking its in-store video network in a new direction.

This is a site requiring registration, but it’s free, and worth the few seconds it takes to capture your data.

What some industry experts have to say:

Obviously, Walmart has a lot to gain with their in-store media effectiveness, so it is no wonder they will roll out next generation, more creative in-store programs. Suppliers want to move as close to the consumer purchase decision as they possibly can, so moving general advertising dollars to in-store media with Walmart helps them and also ingratiates them with their largest retailer.

Buyers at Walmart have goals to attain, and the amount of in-store media support their suppliers purchase could well be one of their success measurements, so buyers will encourage and endorse this in-store activity.

Finally, suppliers can use these Walmart spends to help validate the specific level of investment support they provide to Walmart, so suppliers who are challenged to validate their support dollars to Walmart will have this support as an advantage when discussing P&Ls, which have always been a hot topic of discussion in planning meetings with Walmart.
Dan Nelson, CEO, Leadership Resources

It’s a smart move for Walmart to find ways to make in-store media more accountable and interactive. As marketers are moving away from TV spend (albeit slowly) there’s a great opportunity for retailers to pick up some of those above the line media dollars–if they can prove effectiveness.

The first couple of iterations of Walmart TV didn’t do a lot to distinguish in store advertising from general advertising but the promise of more interactivity and accountability make in-store media much more compelling. If there’s revenue to be captured, I think we can expect more retailers to move this way.
Lisa Bradner, senior analyst, Forrester Research

Of course, any retailer-operated advertising medium “fully financed by suppliers” is laughable on its face and questionable in its delivery. We’re all familiar with how it works. Suppliers don’t support efforts of this type willingly, but are strong-armed into paying the freight. This is followed by pricing adjustments that are eventually passed along to consumers, and a dearth of success reports for the medium in question.

On the other side of the equation, retailers have been numbingly unable for decades to convince product manufacturers that their stores are, in many ways, advertising tools superior to broadcast and print media. Retailers are chronically clumsy and ham-handed in their attempts to make this very credible case, including trying to tap into the more than $7 billion spent annually on distributing printed coupons. And brand broadcast expenditures are much, much larger. What is the best place to distribute coupons, the Sunday newspaper or a supermarket? No-brainer, right? If 70% of purchase decisions are made at the shelf, stores are the best places to communicate brand messages, right? And yet retailers haven’t made these cases because they always return to their tactic of choice: brute force.
M. Jericho Banks, Ph.D., Partner-Owner, Select Marketing LLC

It is hopeful that Wal-Mart’s in-store network would be really helpful to the customer. Let’s look at some facts about shopping at Walmart. The store is big! Some departments are easy to spot, others are obscured. How about using digital signage and interactive video to help the customer find their way to desired products…and first of all, finding out where they are in the store to start. That brings up another idea; how about a lost parents or Dad finder, similar to what theme parks do. Somewhere to sign-in if you get separated from your shopping companions.

Secondly, customers shop Walmart to save money. How about the system facilitating comparison shopping? This would be not only the cost compared to Walmart competitors, but how about bringing in Consumer Reports to tell the customers about products that are really a great value, or the cost trending of items that are becoming more expensive or reducing in price.

Not everyone shopping the aisles in Walmart, or any store for that matter, has current information on fashion trends or any idea on what goes with what. In an effort to help all of America to become fashion savvy and look good, how about information coordination, and detailing in the apparel aisles. Maybe even introduce “My Fashion Coordinator” software to allow the consumer the chance to input ergonomic particulars about their bodies, and get helpful input on a desirable fashion direction.

And this goes with my final fact; it is difficult to get help anywhere in a Walmart. So introduce a virtual store concierge who greats you when you arrive, and with motion or heat sensors, guides your through the store. I know that this may be a bit like “Minority Report,” but if that system was developed to be customer-friendly and not creepy, it would be really cool.

Understand that none of these suggestions is better than a front door greeter, a personal shopping assistant, or KNOWLEDGEABLE help available when you need it. But if not, these would be the next best things.
Jerry Gelsomino, Principal, FutureBest

A few thoughts:

1. For in-store digital media to succeed in Walmart or elsewhere, there has to be the realization that, no matter what anybody calls it, this isn’t a television network. While content is king and the reason for someone to go beyond simply noticing and actually watching what is on a digital screen, the medium is not about stopping people for extended periods of time. The environment is retail and people in that environment are on the move. They can get pretty ticked off if someone else is taking up space and interfering with the traffic flow. Messages need to be communicated quickly and be targeted to a given store’s consumers.

2. Digital images on a screen are ultimately unsatisfying even with amazing production values. Retailers need to be looking for ways to use the medium to connect consumers with the solutions available through the store or merchant’s website. Interactivity with video kiosks, especially those that tie to the back-end to recognize a consumer through a loyalty card, RFID key fob, smart phone, password, etc, will provide a level of personalization that will transition digital media from big screens blaring in a store to a tool that helps consumers get the most from their shopping experience.

3. Professionals in this space understand that digital media goes beyond a bank of screens in a consumer electronics department or a monitor offering food preparation tips in front of a fresh meat case. Stores need to start thinking in terms of other locations including store exteriors as a banner and brand-building medium, as well. Look at what Walgreens is doing in New York’s Times Square as an extreme example of another means for retailers to generate revenue and promote products and services.

4. There’s no doubt that marketers are looking more than ever to communicate with consumers in stores. Ultimately, however, the dollars that are starting to move in-store for digital signage and other merchandising tools will go right back out if some, at least vaguely, reliable source of measurement is not in place. There are a lot of companies (brands, retailers and digital tech vendors) working in the digital media space today that are focused on that very issue. It will be interesting to see what they come up with.

The new Walmart network may have sleeker flat screens and a more elaborate audience measurement mechanism than PRISM, but it has yet to deliver the kind of behavior-based metrics that (in my opinion) would put shopper media over the top.

Despite the glowing, rectangular screens, this is not TV. Shoppers are busy people focused on a task who want to get their stuff and go. Messages that are not relevant to their mission of the moment or located away from the product in question have very low value. And measuring opportunities to see a message is a poor proxy for tracking behavior that may be influenced by the message.

That said, I am an enthusiastic advocate of shopper media. The store environment offers an outstanding opportunity to reach and influence shoppers. But framing its value in the antique conception of 1950s television advertising is worse than quaint–from the perspective of the brands themselves, it’s probably negligent.
James Tenser, Principal, VSN Strategies

How consumers are using mobile direct advertising

July 22, 2008

Many of us are trying to bend our brains about the how the relationship between interactive mobile and digital screen networks is supposed to work.

One of the key challenges has been trying to sort out how consumers might interact with advertising, and how that correlates to screens.

We offer no answers here, but have found some interesting data from Marketing Charts on how consumers are responding to mobile marketing.

The most notable finding – text messaging gets action.

Some 70 percent of consumers who have responded to a mobile marketing offer say they’ve responded to a marketing text message – compared with 41 percent who’ve responded to a survey and 30 percent to email offers – according to the Direct Marketing Association (DMA), writes MarketingCharts.

Among other findings:

* Teens 15-17 years old (19 percent) and young adults 21-30 years old (19 percent) are twice as likely to respond to offers on their mobile devices as those 18-20 years old (7 percent).
* Single (never married) respondents were the most likely of all groups to respond to mobile marketing appeals.
* Overall, higher-income respondents making more than $60,000 per year were more likely to respond to mobile offers.
* Responders to mobile marketing were typically more tech savvy – for example, responders were twice as likely than non-responders to subscribe to internet-based music subscription services.
* Buyers of entertainment/music/video products were the most likely to respond to mobile offers.
* Categories of mobile offers were dominated by entertainment/music/video (44 percent), followed by…
o Food/beverage (21 percent) and telecommunications/mobile (21 percent)
o Beauty/personal care (15 percent)
o Automotive/transportation, business services, consumer electronics, financial services, and vacation/travel (12 percent each)
o Healthcare/pharmaceutical and real estate (7 percent each)

“These findings suggest that mobile marketing will continue growing into a multibillion-dollar industry as more mobile phone users are enticed by falling prices to purchase data plans and broadband enabled devices,” said Edward T. Manzitti, Ph.D., author of the DMA’s report and VP, Research & Market Intelligence, at DMA.

User generated content draws few ad dollars

July 18, 2008

Every few months people get all whipped up about some buzz phrase or technology that will be a big part of the future of this industry.

For a while last year, people were blabbering away about user generated content, and how video material supplied by the great unwashed would be a cool thing to build in to a network’s content offer.

Never mind the technical challenges of that, the bigger problem is most user generated content is horrible, and sifting though the piles to find something engaging is a massive chore.

This seems to be backed up by the online video streaming industry, which is reporting that while user generated vids account for 42 per cent of all video streams, it generates four per cent of the ad revenue.

From MarketWatch:

User-Generated Video (UGV) will continue to account for close to half of total online video streams between 2008 and 2013, but disappointingly will produce no more than 4% of ad-related online video revenue at any time during this period. According TDG’s latest analysis, Online TV and the Future of Digital Video Advertising, the prospects for online video advertising have little to do with UGV, except as an indirect way of drawing more viewers to professional online video sites capable of generating sustainable ad-related revenue.

According to Mugs Buckley, a veteran of TV and video advertising and author of TDG’s new report, UGV currently accounts for 42% of online video streams, yet generates less than 4% of video ad-related revenue. Conversely, professional online video (including both short-clip and long-form content) accounts for 58% of streams and 96% of ad-related revenue, a reality unlikely to change over the next five years.

Yes … Mugs Buckley.

Anyway … without a doubt, there’s a place for this stuff on networks – like stupid pet trick videos submitted into a network targeting pet supply stores. But it’s just a little piece of the puzzle and few advertisers want to be associated with unpolished material unless it is really, really special.

Crappy economy slowing bar traffic

July 17, 2008

Media Buyer Planner is reporting that fewer people are heading out to bars and clubs and of those that do go, they’re skipping the Grey Goose and drinking Absolut.

Nearly 44 percent of bar managers, bar owners and bartenders report a decrease in consumer traffic at their establishments, according to a May 2008 study from The Nielsen Company and Bevinco, writes MarketingCharts.

Among the 500 bar operators surveyed, 25 percent note a decrease in the number of on-premise drinks ordered, and 22 percent say customers are ordering less-expensive drinks.

The bars were located in U.S. nightclubs, hotels, casual restaurants and fine-dining restaurants. Among these types of establishments, the casual dining sector appears hardest hit, with 46 percent of respondents reporting a decline.

I mention this because bars and clubs are one of the hotter sectors in the Digital Out Of Home space, and fewer eyeballs is not all that great a thing. On the other hand, there is an argument to be made that the premium brands need to work a little harder to inspire purchases, or that thinned out crowds are actually a better demographic.

There’s also reason to think a lot of people will be about as disciplined in cutting back their barhopping as they are about going on diets every new year.

A related story mentions that retailers are seeing no real drop in booze sales, which means people are still getting silly, but they’re doing so in backyards, kitchens and dorm rooms.

Maybe there’s a business case for running screen networks in frat houses and off-campus rooming houses, but someone has to be prepared to install a new screen every hour or so.

M&A guys have a look over digital out of home, issue their notes

July 10, 2008

Investment banker PetskyPrunier has issued a pretty detailed report looking at the growth prospects for the out-of-home sector, and leads off with digital.

It’s an upbeat look, which shouldn’t be all the surprising since that’s the sandbox where the plays and makes its money. There are no real predictions or projections, but for someone just starting to look into the spaceĀ  as an investment, and wanting to understand at a high level, this quarterly Deal Notes looks like a pretty hand piece of work.

Arbitron releases free report on bar media

July 8, 2008

A whole bunch of my clients and prospects are building out networks in the bar and restaurant industries, and for good reason.

  • Long dwell times.
  • Hard to reach young audiences.
  • And site surveys that are way more fun to do than at most venues!

Media measurement house Arbitron has just released a new study that takes a close look at what it calls bar media, with the intent of profiling and quantifying this audience for advertisers.

If you are involved in this sector or looking at, this is required reading. While it does not go into digital signage directly, it provides a very good snapshot of who is in those bars and what they’re all about.

You can download the report here.