The Tech Trek

Posted on September 1, 2006 by Chief Marketer Staff

When promo shop Colangelo wanted to brainstorm some new in-store marketing ideas, it invited 100 clients — and a handful of high-tech vendors — in for a drink.

The shop held its first Innovation Celebration in June to showcase innovative technologies and jumpstart ideas for 2007 retail promotions.

Marketers can use the help. As shopper marketing wins more attention (and dollars), the parade of techie new tools that accompanies each budget-planning cycle has taken on new intensity. Marketers who’ve spent the past few months planning their 2007 budgets and strategies have their ears trained to hear new options for in-store reach.

Interest is high, and budgets are starting to catch up. Spending on in-store services rose 8% last year to $922 million, according to PROMO estimates (April PROMO). It’s a big chunk of the $19.35 billion that U.S. marketers spent on retail marketing. (P-O-P came in at $17.4 billion, retail merchandising at $1.03 billion.) And more than 7% of marketers rank in-store services among their top three tactics, per PROMO’s Industry Trends survey.

Spending will continue to edge up as marketers and retailers test new ways to serve shoppers (see “Listening to Shoppers, p. 30).

“Spending will be significant, but not explosive,” says Peter Breen, director of content for the In-Store Marketing Institute. “New technology invites new spending, but they have to prove out before marketers will really commit long-term.”

Packaged goods brands historically have funded pilot tests in a few stores for a few months to establish new technology.

The goal, of course, is to be on the ground floor when a new technology takes off, and get first dibs (usually category exclusivity) when it rolls out, increasing reach while cutting costs.

Ironically, the flurry of interest in in-store media is shifting measurement to advertising benchmarks (such as cost-per-thousand viewers) from promotion benchmarks (percent of sales accompanied by feature and/or display). That makes it easier to sell in, but harder to show sales-related results. “It’s good for media companies, but not for tactics that truly are promotional,” says retail consultant David Diamond.

So how do marketers find new vehicles, and how do they vet them?

Big CPGs (think Procter & Gamble or Kraft) have new-technology staffers who hunt up The Next Big Thing, then brief brand teams. The problem is, the new-tech group “is detached from the day-to-day work of brand teams, and they don’t champion ideas internally,” Diamond says. “And their job for next year is to find something else new, not make this year’s new ideas work for the brands.”

Brand managers will test a handful of new tools, but “their appetite for risk is low, and they have limited budgets and time,” he adds.

“CPG brands are willing to try almost anything as long as it doesn’t require a large investment,” Breen says. Marketers with wide portfolios and a heavy reliance on shelf-presence are more adventurous; among retailers, “everyone seems willing to try something,” Breen says.

At the same time, agencies with retail experience — or those eager to build a retail-savvy reputation — are hosting mini-expos for their own clients. Colangelo staged its first expo as a cocktail party, vetting a dozen vendors to present to nearly 100 clients. The brands — packaged goods, alcohol, tobacco — are heavy in-store marketers, running as many as 100 in-store efforts a year.

Attendees ranged from purchasing department staff and brand managers to promotion and trade marketing managers. Colangelo staffers walked the floor first, then escorted clients through, brainstorming ways to use the tactics in-store and out-of-home.

“When you’re discovering the technology together, it opens up the dialogue,” says Susan Cocco, executive marketing director for Darien, CT-based Colangelo.

“We wanted to start every conversation with, ‘Imagine the possibilities,’” says Jennifer Kruper, Colangelo’s associate director of operations, who coordinated the event.

The expo helped Church & Dwight Co. navigate “an incredibly cluttered landscape of services,” says James Daniels, VP-marketing for Trojan condoms at Princeton, NJ-based Church & Dwight. “Not only was our team able to explore the various solutions, but our partners from Colangelo helped us identify products they knew were most appropriate for our brand.”

Thano Chaltas took home three ideas that his company, U.S. Smokeless Tobacco, plans to use in P-O-P, direct marketing and event marketing. The exhibitors were “much broader than I expected, from very high-tech things to new takes on traditional P-O-P. A lot of it was very cool, but I couldn’t use it across 10,000 c-stores without breaking the bank.”

Colangelo sought out vendors through networking and online research, then held auditions with a panel of Colangelo staffers. “We wanted really new things that we hadn’t seen before,” Kruper says.

Colangelo told vendors to forget the hard sales pitch, and policed the show floor.

The big hits? Reactrix’s interactive displays, triggered by shoppers’ movement; Cinema Scene’s video projections through a die-cut of the brand’s logo; Intellimat’s video-screen floor mats, whose content is controlled remotely via computer.

What should marketers consider? “Technologies that offer information and shopping assistance, rather than ad or brand messages,” Breen advises. “Systems controlled by retailers rather than third-party suppliers, and systems that shoppers can choose — shelf systems activated by pushing a button, not by a motion detector in the aisle.”

Ready to shop? Here are some tools that show potential.

Shopperavenu

SuperValu is rolling out Shopperavenu kiosks that trigger tailored offers based on a shopper’s purchase history. The shopper scans her Preferred Card at the kiosk when she enters the store; the kiosk prints out up to 12 offers, based on past purchases tracked by the loyalty card. Offers are automatically connected to the card, so discounts are deducted automatically when the shopper’s card is swiped at checkout.

Concept Shopping, Chicago, is rolling the system into 1,000 stores this fall; it’s already in 200 Jewel stores in the Midwest and 300 Albertson’s stores in California. CPGs using the system include P&G, Kraft, Sara Lee, PepsiCo and Cadbury Schweppes.

Concept Shopping starts with the grocer’s data, then overlays a profiling system so it can set parameters to trigger offers — a discount on stock-ups for light users; a new-product trial for shoppers who buy similar items (such as organic foods). Response to past offers can shape future deals: A loyal user who redeemed a $2 coupon may get a $1.50 coupon next time.

Marketers pay only for the deals that shoppers redeem. “We have very low distribution compared to coupons, but the offers are so targeted, we can close a lot more deals,” says John Hennessy, VP-sales and marketing for Concept Shopping.

CPGs measure incremental sales, and can slice their audience very finely to track varying offers. Retailers measure frequency of trips and household sales; they can also compare the basket of a participant with that of a shopper who would qualify for the same offer, but didn’t scan her card at the kiosk.

Marketers don’t get category exclusivity — “that doesn’t help the customer,” Hennessy explains — and they can’t target a competitor’s loyal users: “You have to show us that they’re open to your brand. Otherwise, we respect their purchase history that shows they don’t want it.”

Concept Shopping is mulling ways to put recipes (and ingredient lists) on its printouts, and talking with retailers outside grocery, “formats with lots of SKUs and regular purchase cycles, like office supply and do-it-yourself stores,” Hennessy says. For now, the focus is supermarkets: “That’s where the treasure trove of data is.”

Staying-Connected

Field marketers are consumers, too. So why not court them as shoppers and boost word-of-mouth buzz?

Event and sampling shop Mass Connections has started using its three-year-old staffing database as a sampling and research venue, targeting its 100,000 members by 25 lifestyle factors. Mass Connections recruits 10,000 to 15,000 new members each month, and expects to have 200,000 names by yearend.

Kmart is using the system to e-mail “Friends and Family” online coupons to targeted Staying-Connected members. Kmart tracks which members access the coupon (through a password-protected link), then redeem it. Mass Connections can also pull scanner data to show how many purchases made during the promotional window are accompanied by the coupons.

All applicants undergo a background check for criminal history, and to verify the data given. (About 2% of applicants don’t pass the screening.)

Members earn points for answering surveys or responding to offers, then redeem them for gift cards from retailers including Kmart, Target, Wal-Mart and several grocers.

Cerritos, CA-based Mass Connections has begun recruiting individuals just for the consumer applications — but they still go through a background check, which is updated monthly.

“We may never get to a million people, but at least we know who we’ve got,” says Mass Connections CEO Caroline Cotten Nakken. “If manufacturers are going to spend the money to target an audience, they want the right people.”

The agency has held about 30 virtual focus groups, reaching an average 10,000 members with e-mail questionnaires and turning around results in four days — at far less cost than traditional research, Nakken says.

Wireless P-O-P

Fiesta Supermarkets is rolling out P.O.P. ShelfAds, a shelf-display system that plays video and audio messages at the shelf (April PROMO). And H-E-B, Albertsons and Safeway are gearing up for pilot tests, as are grocers in the U.K. and Australia.

ShelfAds marketer P.O.P. Broadcasting Co. has fine-tuned the system since testing it in Fiesta stores in Texas last fall: It made the LED scrolling screen bigger, improved the sound quality, doubled the video capacity to 16MB, and added flashing lights on the side of each box to catch shoppers’ attention when they enter the aisle.

P.O.P. Broadcasting is signing up CPGs now; the 50-store Fiesta rollout includes cereal, frozen-dinner, bread, sauce and canned-goods brands. CPGs that took part in the initial fall 2005 test include Coca-Cola Co. (Coke and Minute Maid), Frito-Lay, Kraft (Maxwell House) and Bimbo bakery.

DS-IQ:Measuring Digital P-O-P Against Sales

Digital P-O-P, especially in-store TV monitors, have become nearly ubiquitous in the last two years, but are too often measured and sold like traditional TV ad time. Measurement service from Bellevue, WA-based DS-IQ links digital P-O-P performance with product sales. The service tracks when and where ads run, then overlays that with scanner data from that time period to correlate P-O-P reach and sales.

Marketers can test different versions of ads and compare results by time of day, cluster of stores, and creative treatment.

The tracking service is bundled with in-store network sales as an added value for advertisers. DS-IQ is tracking display programs in 1,000 stores across several retail chains; one partner, Meijer, is piggybacking DS-IQ research on its fall rollout of its in-store ABC TV network to Meijer’s 179 Midwestern stores.

DS-IQ gives brands a customized dashboard of analysis, updated as frequently as daily, depending on how frequently retailers provide scanner data. The data is housed on DS-IQ’s site, with password protection.

DS-IQ also tracks static digital P-O-P (such as plasma-screen signs with messages controlled remotely) and measures P-O-P reach in combination with temporary price reductions and other promotional tactics.

“As long as we know when and where content has been played, we can match it to scanner data,” says DS-IQ President, CEO Tom Opdycke.

How does independent DS-IQ maintain its objectivity when its success (or failure) rides on the back of its in-store network partners?

“Advertisers scrutinize our methodology; it would be short-sighted to fudge the numbers to make in-store networks look better than they are,” Opdycke says. “If we can’t stand up to the scrutiny of P&G or Kraft, we won’t have a business.”

MediaCart: Just-in-time Advertising

This winter, grocers will begin testing MediaCart, a system that runs ads on high-resolution video screens attached to shopping carts. A brand’s ad is triggered when a cart approaches the brand’s aisle or display; sensors throughout the store track RFID chips in each cart to play ads just as shoppers approach the brand or a related item.

Shoppers can download their list, and MediaCart will put items in aisle order. Shoppers can scan and bag items as they shop, which speeds up checkout. A query option uses a map to help shoppers find items.

The RFID tags track shoppers’ traffic patterns — useful data for grocers — and tie into checkout scanners to match basket sales with ad displays. The system correlates ads to sales by tracking when ads run on a cart, and whether the advertised item is in that cart. Advertisers pay for each time their ad runs.

Dallas-based MediaCart Holdings plans to begin pilot tests in two stores in fourth-quarter with a handful of CPG brands.

Theater-quality Holograms

Cinema Scene is bringing the hologram displays that movie studios have been using in theater lobbies to retail and restaurants. Lexus hired Cinema Scene last December to project a hologram of its latest model in the carmaker’s pop-up Times Square store; touch pads let shoppers change the car’s color and other features. A different automaker takes its own hologram into pop-up stores in 10 malls this fall. Cinema Scene handled similar projects for Toyota in Europe and Sony Ericsson in Tokyo earlier this year.

The holograms are part of Los Angeles-based Cinema Scene’s stable of ViZoo Imaging Network services. In addition to Free Format holograms, Cinema Scene offers VideoLogo, which projects video messages through an acrylic screen cut into the shape of the brand’s logo. A third service, Cheoptics360, uses kiosks to deliver filmed messages.

Listening to Shoppers

Marketers’ craving for “shopper insights” got Willard Bishop wondering: How do brands find, fund and use shopper research? Here are some stats from the retail consultancy’s summer 2006 study, Walking the Talk About Shopper Centricity.

Shopper insights are “important” to 93% of retailers and 84% of manufacturers
More marketers (91%) say shopper insights will become more important than those (82%) who say shopper marketing will (and only 21% think category management will grow)
32% of manufacturers spend $1 million to $2 million on shopper insights each year
26% spend $2 million-plus
25% of manufacturers have dedicated shopper-marketing departments
32% glean research through category management departments (19% via market-research divisions, 12% via sales staff)
Twice as many manufacturers (62%) as retailers (31%) say they benefit from shopper insights
Retailers want research to boost total sales and average basket size, keep current customers and court new ones.
Manufacturers use research to open doors with retailers and persuade them to change, and set product assortment