Wednesday, September 21, 2005

Marketers Beef Up Ad Spending Inside Stores

Full credit to Lyle Bunn, Director, Digital Display & Rich Media BTV+ (and Chair, Education Committee, POPAI North America Digital Signage Group) for sending Webpavement the following information.

Thought you would appreciate this heads up - the Page 1 headline of the September 21 Wall Street Journal is “In a Shift, Marketers Beef Up Ad Spending Inside Stores”.

The lengthy article starts with “Proctor & Gamble believes shoppers make up their mind about a product in about the time it takes to read this paragraph”. The Proctor & Gamble approach to in-store marketing, Wal-Mart TV, ad agency response and examples of in-store marketing are profiled.

The article is very good news for the profile of digital signage. Some other highlights..

  • In store marketing spending was $17 billion in 2004 and is projected to accelerate to over $23 billion by 2009
  • P&G (makers of Tide, Crest, Pampers) has cut its commitment to advertise on cable channels by 25% and its broadcast TV allotment is down about 5%. At the same time overall ad spending rose slightly.
  • Last year 122 new products were launched on Wal-Mart TV.
  • Wal-Mart sells advertising like TV networks, imitating “upfronts” the ad sales extravaganzas put on by the networks.
  • PRN says its rates are comparable to those of cable TV.
  • Some TV executives say in-store advertising isn’t necessarily competitive. Chris Carlisle, Exec. VP of News Corp.’s Fox network contrasts the relaxed home atmosphere with that of a rushed shopping environment. Fox itself buys ads on in-store networks to pitch DVDs.
  • No standard system for measuring the audience for in-store ads exists, and therefore no easy way to charge for the space. The fees for each project are negotiated on a case-by-case basis, a time-consuming task.
  • A wrinkle is in how ad agencies get paid. For years, agencies were paid a percentage of the overall ad budget. P&G changed that model several years ago because it worried ad agencies would naturally gravitate toward costly TV ads. It now ties ad agency compensation to product sales increases.

Emily Nelson and Sarah Ellison have written an excellent article. This is one to frame.

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