Techno Marketing: A Promo Special Report

Digital P-O-P

It’s expensive. It’s more bother than good old cardboard. And it’s a difficult sell to retailers. But digital P-O-P is coming. Advanced communications technology revolutionizing the customization of account-specific programs will almost surely see to that.

Intranets and other forms of fast, sophisticated digital communications are on the verge of turning retail locations into local marketing theaters for cutting-edge brands. Digital point-of-purchase displays, whose messages can be individualized by store and altered by day-part through remote networks, will serve as the commercial moving picture screens. Imagine an English message on a Campbell Soup display in White Plains and a Spanish one in Miami. Or Duracell announcing a battery special as a snowstorm approaches in Minneapolis.

Sears, McDonald’s, and United Airlines are among the companies currently testing digital display technology.

The essential technology comes not in the displays themselves, but in the networking software that manages the disbursement of multiple messages and images to different locations. Chicago-based Siren Technologies, a unit of Frankel & Co. that is one of the leaders of the digital P-O-P movement, doesn’t even sell displays.

“We’ll help clients figure out what display technology to use, but we’re not in the hardware business,” says Siren president Richard Mandeberg. “What we’re selling is the software and the expertise to manage the distribution of information to sites.” Siren’s system, he claims, is capable of sending messages to tens of thousands of displays.

The high cost of deploying thousands of permanent, electronic display units, not to mention the obstacles to placing them in all the desired retail accounts, is slowing the arrival of digital P-O-P as a viable promotional medium. But once brands willing to make the investment succeed in building the infrastructure, the payoff can be sizeable. While it can take anywhere from 10 to 18 weeks to create cardboard displays and place them in stores, new message flights or campaigns can be transmitted to digital display networks in less than two weeks. Initial sell-in may prove difficult at retail chains, but once the digital displays are in, they’re in. One key selling point: Store personnel need spend none of their valuable time erecting or maintaining digital P-O-P.

Digital displays promise to be more effective consumer-grabbers than cardboard. “Our research shows that people read moving messages more than they read static ones,” says Mandeberg. “And these displays contribute to making retail more dynamic.”

Brands, no doubt, will be able to realize dynamic results as well from a technology that can help them establish their own, closed-circuit communications networks at the point of sale. But it won’t come cheap, and it won’t come easy.

Two-Dimensional Scanners

The Universal Product Code revolutionized the retail industry some 30 years ago, simplifying checkout and streamlining inventory management to the point where we could not even imagine how the world would work without the simple black-and-white bar code.

Marketing wags have long criticized retailers, however, for not taking full advantage of the UPC’s marketing potential. And while advances have been made in purchase-behavior data collection and custom offers to individual shoppers, the flavor of the majority of loyalty card programs remains pure vanilla. Is the consumer products world ready for Rocky Road?

We’ll soon find out as a new service from Valassis Communications – yes, they of the free-standing inserts – unleashes a scanner-based technology that will empower retailers with awesome one-to-one marketing capabilities and enable consumer products manufacturers to construct their own, highly detailed local databases. It’s based on the two-dimensional Aztec code, a square, dime-sized imprint that can hold 240 bits of data and identify a consumer by name, address, size of household, credit card preference, and even distance from the store where the code is scanned.

“To hold the amount of information contained on an Aztec code, a regular bar code would have to be 26 inches long,” says John Thompson, vp-customer relationship marketing at Livonia, MI-based Valassis.

The Aztec code, a technology of Welch Allyn, Inc. in Skaneateles Falls, NY, has been used for operations management in manufacturing, transportation logistics, and postal delivery. The Valassis venture marks its debut in the marketing arena, made possible through a digital printing process from Xerox Corp. that allows for 100-percent variability from page to page. In other words, each coupon sent in a mass mailing can be imprinted with an Aztec code that identifies an individual consumer when he or she redeems it. Tracking software developed by East Lansing, MI-based Group InfoTech enables marketers to measure a promotion’s effectiveness instantaneously and use the information to construct highly detailed databases that can be used to customize future offers.

“This is a cost-efficient way to build a database,” says Thompson. “You only pay for the data once, because you don’t have to bounce the scanner information off of other databases. Everything you need to know is right there on the Aztec code.”

Special two-dimensional code scanners are necessary to read Aztec, but retailers don’t need to re-equip their stores to use the technology. Valassis employs an outside service to scan Aztec coupons on a project basis.

Valassis’s primary target for Aztec in the early going is the retail industry, which can use the technology to hone loyalty programs to a fine edge. “Retailers spend $3.5 billion sending out fliers, but they don’t tap into all the information that’s available to them to customize the mailings,” says Valassis communications director Lynn Liddle. “Aztec can help them save a lot of money and improve their results.”

For manufacturers, Aztec represents an opportunity to fine-tune account-specific efforts like never before. When coupons encrypted with Aztec codes are redeemed and scanned, the coded information is stored in electronic “store forward” boxes from UniComp division Smoky Mountain Technologies and transmitted on a private line to Valassis, which captures it in a database and presents customized reports to clients.

“We can measure on a consumer-by-consumer basis, and we can peel off reports immediately,” says Thompson.

Since introducing Aztec technology for print promotions in 1997, Valassis has done a number of limited programs, including a recent one involving a partnership between a mass merchandiser and a large packaged goods company that it would not name. Look for the squiggly little codes to proliferate in the next few years as retailers begin to adopt them to trim their direct-mail costs and build profit-making partnerships with packaged goods marketers.

Interactive Systems

There is new technology that opens up the marketer’s mind to untold uses, and then there is old technology that marketers simply under-use. Nothing could exemplify this contradiction so boldly and glaringly as Coca-Cola’s current summer blowout promotion for teens, IYDKYDG (If You Don’t Know You Don’t Go, pronounced ID-ik-ID-ig for those out of the loop.) Coke sent out direct-mail pieces containing five IYDKYDG cards to 1.2 million teenagers, inviting them and their friends to get free phone time and their own personal voice-mail boxes by answering a few questions when activating the card. To get more phone time and more voice-mail usages, kids need only buy a 20-oz. or one-liter bottle of Coke, call in a new PIN number located under the cap, and maybe answer a few more questions, listen to some announcements from their sponsor, or win instant prizes.

To pull off IYDKYDG, Coke had to set up the world’s largest voice-mail system. (Your company have a couple thousand voice-mail boxes? Imagine five million.) It also purchased 50 billion PINs to tuck under all those bottle caps. (That’s right, billion.) It is being hailed as perhaps the biggest promotion and most ambitious consumer research product ever undertaken by the cola giant, and awe-inspiring as its scope may be, it is made possible by phone technology that’s been available for some time.

“We’ve had the ability to do this for eight years,” says Nicole Rohlman, director of marketing at Atlanta-based U.S. South Communications, which is directing interactive phone operations for IYDKYDG. “I don’t think the marketing community at large knows this. I don’t think they understand that phonecards go beyond premiums and incentives.”

Such a far-ranging program does require latitude on the part of the phone supplier. Unlike some of the larger phone companies that offer a menu of turn-key programs for phonecard promotions, U.S. South works off a proprietary software platform that gives wide berth to customization.

IYDKYDG demonstrates that interactive phone programs can not only serve as purchase incentives, but also as continuity programs and intensive research vehicles. Survey response rates for phonecard activation are known to register as high as 40 percent. With millions of kids giving personal information to the IYDKYDG line, Coke has the potential to build one of the most powerful and knowledgeable consumer databases ever constructed. And again, it’s being done with old technology. Recordings of callers are transcribed daily by humans at keyboards and reported to Coke marketers.

But advanced voice-recognition technology lurking just around the corner promises to bring mind-boggling possibities to interactive data capture.

“When voice recognition gets to the point where the computer itself can do the transcription, the potential is almost limitless,” says Rohlman. “The Census Bureau could use interactive phone technology to do the census. And think about political campaigns. George W. Bush could send a phonecard to every voter in the country, not just Republicans or certain economic classes. He could send them to everybody and find out who’s voting for him, who’s not, and why or why not.”

Okay, Ms. Rohlman, now you’re scaring us.

THE WILD BLUE YONDER

Interactive phone technology is also beginning to merge with the Internet to build promotions with far greater reach than either medium could achieve singly. Always an aerospace technology leader, U.S. Air Force is now setting an example for marketers by employing an Internet/phone-based program designed to boost morale for airmen and their families stationed in Europe.

In its Around the World in 90 Days program, USAFE awards points in the form of peel-back cards to attendees at educational and recreational events held at bases throughout the continent. Participants can register to win prizes for accumulated points through a toll-free number or on the Internet. They can access their point totals through either contact point, though contest administrators find most contestants use both. The phone is the most convenient communication device, but the Internet is more entertaining and detailed, with its photo-catalog of awards and overall rankings of contestants throughout Europe.

The rapid coalescing of communications technologies in promotion has astonished even some old industry hands. “I was at first skeptical that the Internet could do anything more than what we could do with interactive voice response, but now 80 percent of our programs have an IVR and an Internet component,” says Brad Wendkos, president of Fort Lauderdale-based Phoneworks, the Aspen Marketing division behind the USAFE effort. “Now if you bring in smart databases and link the three together, you can do things with response rates we never dreamed of. I’ve been in this business for 17 years, and all of a sudden I feel like a kid in a candy store again.”

Another Phoneworks client, Gerber, is using a blend of technologies in the follow-up to its popular $250,000 scholarship sweeps of 1998. Moms still have to mail in proofs of purchase, but they can check their account balances via toll-free number or a Web site, where they can learn how to tally additional points and view rewards such as luggage and housewares.

“It’s Pepsi Stuff in a totally electronic environment,” says Wendkos.

Alphanumeric Pagers

It’s not enough that the public at large is bombarded with images of professional wrestling figures on covers of TV Guide, cable TV, talk shows, and even in governor’s mansions. Now the folks who started it all at the Stamford, CT-based World Wrestling Federation have their own closed-circuit marketing network. Thousands of religious fans who took advantage of a WWF pager offer with purchase of videos and licensed merchandise get beeped not only by their moms and girlfriends, but also by Vince McMahon himself, entreating them to “Watch Raw Is War on USA Network Tonight” or “Sign Up For Wrestlemania This Sunday.”

The WWF has truly got its targets’ numbers thanks to alphanumeric pagers – not a new technology, but one that is still in its embryonic stages as a marketing tool. While basic pagers beep and display the phone number of the person looking to make contact, alphanumeric pagers display a written message.

To marketers, that’s a veritable electronic dinner bell for the people most hungry for their products and services. You may catch some of your targets surfing the Net or watching their favorite TV show, but alpha pagers are a direct conduit to their eyes.

PageMaster Corp., the Thousand Oaks, CA, company that helped the WWF set up its pager plan, currently handles few alphanumeric programs. But the company predicts a future explosion of this dedicated marketing medium. President Craig Resnick says the company is close to signing six deals for programs similar to the WWF’s.

“This is a new twist in pager promotions,” says Resnick. “It allows companies to send promotional messages as often as they’d like to all pager holders.”

To keep consumers interested, companies can also include editorial content such as weather reports, sports updates, and news on the pagers. And aside from the telephone messaging company, no third-party service provider is needed to run the program. PageMaster offers clients a software package that gives them full control of the content and timing of alpha-message deliveries.

Clearly, this high-tech and expensive tool (alpha pagers cost as much as $25 more than basic ones) is not for everyone. It would be hard to envision millions of people monitoring their Green Giant pagers for notice of a canned-corn special. But for brands with loyal and fanatic followers such as WWF, the upside is tremendous.

“The only complaints we heard from the people with the WWF pagers,” says Resnick, “is that they weren’t getting enough messages.”

IntraNets

After the big ideas have been thought up, after the tactics chosen and the creative designed, what then is a promotion but heaps and mounds and stacks of paper?

But perhaps not for long. Intranets are springing up at manufacturing companies, research firms, retail chains, and service suppliers that can – an account-specific program, for instance – neatly customize execution to as many as 60 different criteria by individual store. No paper is needed; all orders, messages, and instructions flit among a network of electronic mailboxes.

“When someone is executing a promotion in a particular store, one click on the store number on the computer will tell him what kind of in-store coupon to use, what the POS restrictions are, which local demo company handles it – just about everything you need to know,” says Tim Hawkes, president of Wesport, CT-based Trade Zone.

Hawkes’ company has spent the last three years melding a promotional intranet system that is now getting off the ground in fits and starts. It uses individual store information from Wilton, CT-based Trade Dimensions plus link-ups with research firms such as Spectra Marketing and IRI to provide marketers and their field forces with up-to-the-minute intelligence on the nation’s retail infrastructure. Trade Zone calls its system “technology-enhanced execution.”

“Walk into any agency doing a big promotion and you see a big room with stacks of paper for the salespeople. This sales guy gets this piece of paper but not that one, and that sales guy gets this piece. It’s like the backroom at a Chinese restaurant,” says Hawkes. “Intranets will allow two-person agencies to handle the logistics of national account-specific promotions.”

A store-specific promotion plan dropped in the intranet file of, say, Nabisco, is automatically disseminated in customized fashion to route drivers, field marketing people, retailers, and local demo and P-O-P agencies. Because the retail information is constantly updated with store closings and changes of ownership, field marketing people are more apt to execute the plans as they come from headquarters, rather than go their own way because HQ’s take is laughably out of date with the shape of their local markets.

“We can also use the system to clean out undesirable locations,” says Hawkes. “For instance, if a company has a promotion aimed at Hispanics, we’ll eliminate bodegas too small to handle P-O-P or demos.”

Intranet communications in promotional execution is “truly a killer app,” says Trade Dimensions marketing director Scott Taylor. “This allows marketers to do multiple, customized events together in mass fashion. It used to take rooms full of people to organize this.”

Not all consumer marketing companies are sold on intranets as yet, and not all retailers are even set up to handle them. Hawkes says he was amazed to find, on a recent sales call, that a large chain in the South didn’t communicate among its network of 800 stores electronically, but through snail-mail. This could prove a choice opportunity, however, for providers such as Hawkes to install their systems at retail: They can offer to lift retailers into the cyber-world by setting them up on their intranets.

Some agencies are using less ambitious technology to keep their clients’ field marketing operations marching in unison. Great Neck, NY-based Inmark Enterprises, whose four divisions offer such diverse services as account-specific programs, sampling, and direct marketing, employs a CD-ROM system it calls its “e-marketing suite.” The CD-ROMs are used in the field for training, dissemination of promotional programs, policy updates for use of business development funds, and even personnel interview techniques. They are regularly updated through the dissemination of new CDs.

“There are some cost-savings in this system. Some things are too cumbersome to download online,” says Inmark president John Benfield. “As bandwidth expands, capabilities will also expand, but you don’t have to be on the bleeding edge to take advantage of technology.”