2006 P-O-P Trends Report

Although media buyers continue to think in terms of cost per thousand and viewership metrics, savvy consumer goods marketers and retailers alike are beginning to realize that the point of brand decision is coming closer and closer to the point of sale.Results from the annual Retail Marketer Survey certainly support the shift. When asked what areas of their marketing budgets were receiving greater emphasis, 47% of all respondents said P-O-P displays/signs, which tied Internet marketing for the top two spots among selected tactics. Only 15.2% reported an increase in TV advertising, and just 12.5% reported an increase in radio ads.Internet marketing and P-O-P remain in the top spots even when companies that don't normally buy TV advertising are omitted from the results. Among the TV advertisers, more than 62% responded they would give Internet marketing more emphasis, compared to 47.4% for P-O-P. Interestingly, 24.1% of these repondents also reported they decreased emphasis on TV ads, the largest decrease among the categories.Most respondents agree Internet marketing will continue to increase. "It's because of its massive pre-purchase influence," says Michael Harris, head of the Boston office of promotional agency Marketing Drive Worldwide, Wilton, CT. "Consumers are researching products online prior to actually visiting stores. A Web outreach strategy is now critical in many 'big ticket' categories.""There are closer and closer ties between in-store and online," says Aaron Keller, cofounder and managing principal of Capsule, a brand development and design firm in Minneapolis. "If you look at a store's sales circular, you'll find that most of the items shown include instructions for ordering them online."Keller believes P-O-P is faced with a big opportunity right now. "Procter & Gamble likes to call the point of sale 'the moment of truth,' and it is," he says. "But now is the moment of truth for brand marketers as well as for consumers. As the sheer number of brand messages directed to consumers continues to grow exponentially, it becomes more and more difficult for any one message to break out of the pack and become effective.""Branding is still important, but doing it through mass communication is becoming both more difficult and less effective," says Chip Hoyt, executive vice president of 141 Worldwide, New York."Over the past few years, there has been a huge proliferation of different marketing communications vehicles. The increase in the number of cable channels is pretty obvious, but that's only the tip of the iceberg," Hoyt says. "Internet advertising is exploding. Some of the search engines are now charging as much for a one-day ad on their home page as the networks are charging for a 30-second spot on prime time TV. Product placement on TV shows and movies has become a multi-billion dollar industry.... Consumers are becoming overwhelmed, but one thing remains constant. They are still going to stores, and marketers need to find new ways to leverage them as conduits."Shopper Insights WantedFor some retailers, the offer of just a great display is no longer enough. Retailers often demand data, statistics and "shopper insights" indicating how well the display is expected to work and how shoppers will react to it in a store environment. According to the results of the survey, this is especially true of big box retailers such as Wal-Mart, Target, The Home Depot, Lowe's, Costco and Sam's Club. "They look for it continually from their major brand marketers," says Harris."The concept of shopper insights is being pushed by brand marketers as much as it is being demanded by retailers," says Capsule's Keller. "They see it as another way to gain a competitive advantage in the quest for valuable floor space."However the data is used, most agree that the means used to generate it must be very different from a typical consumer opinion poll. "It must be much more hands-on," says Keller. "I'm not interested in what consumers intend to do. I'm interested in what shoppers actually do when they encounter the display in a real retail environment. I want to see the subtle nuances of where they stand, what they look at and touch and what their body language is saying."Kristen des Chatelets, chief marketing officer of BDS Marketing, Irvine, CA, says, "We're looking for insights that will allow us to improve the customer experience at the point of sale. That may involve training the sales staff to interact with the display in ways that will enhance the overall experience. In the old days, P-O-P was totally customer-driven, but now the store staff is part of the audience. It's also important to be consistent from store to store."Brian Mitchell, vice president, marketing with Thomas Nelson Publishers, Nashville, TN, says of retailers, "In their quest to provide a different or better offer than other retailers, they sometimes demand displays that are unique to them. This can result in different messages, price points or premium offers in different stores. This is good business strategy for them, but it increases a marketer's costs and the time required to meet their demands."In spite of the added costs, many approve of the trend toward more hands-on testing. "We need to measure actions versus intentions," says Alan Katz, president of display supplier Henschel-Steinau, Englewood, NJ. "We need to be able to say, 'This is better than that,' and have data to back it up."Of course, sharing data is a two-way street. Not surprisingly, the survey found that Wal-Mart, the most data-demanding retailer of them all, also leads the way when it comes to sharing shopper insights with authorized vendors.When asked which retailer is most forthcoming in data sharing, Marketing Drive's Harris says, "definitely Wal-Mart via its Retail Link program. Most grocery retailers, in spite of priding themselves on their customer loyalty programs, have yet to master data collection and analysis."Supermarkets rely much too heavily on trade promotion dollars, according to 141 Worldwide's Hoyt. "When it comes to groceries, the customer business model is broken," he says. "Many supermarket chains generate more income through trade allowances than they do from sales."Who Makes the Final Decision?Once the data has been generated, who needs to see it? This year's survey asked respondents to gauge whether store managers or corporate headquarters had more control in getting displays set up."It depends on the industry," says Marketing Drive's Harris. "In the case of our major retail customers -- the big chain bookstores -- it's definitely corporate headquarters," says Thomas Nelson's Mitchell.In other categories, such as golf balls and equipment, individual store managers rule, says Keith Duffy, marketing coordinator, golf balls, for Acushnet Co. of Fairhaven, MA.One thing on which almost everyone agrees is that use of in-store TV networks carrying brand marketer commercials will increase. "It's not because they are effective in motivating shopper behavior," says Hoyt. "In fact, they can be downright irritating. When people avoid watching them at home, why would they want to watch them while they're shopping? It's a profit center for the retailer, another way to gain access to brand marketer advertising dollars. Some retailers are even selling exclusivity at premium prices."Harris agrees. "Brand marketers are placing ads on these networks but they hate them," he says. "They see it as a way to influence the retailer to provide them with more display space."Another retailer practice that rankles some brand marketers is demanding use of only approved suppliers in order to gain acceptance of a display, although the practice doesn't seem to be nearly as widespread as it is generally perceived to be. Some channels appear to be affected more than others. Harris reports it rarely happens, but Mitchell disagrees. "Maybe the publishing industry is unique," says Mitchell, "but it happens and it strains our relationship when it does."Private Label a ConcernAnother issue that can strain the retailer/marketer relationship is private label brands. "Brand marketers and retailers are not and cannot be partners," says 141 Worldwide's Hoyt. "They can try to find strategies that will provide mutual benefits to both, but their relationship will always be tactical, not strategic. Brand marketers do get some benefit from private label brands that they manufacture in terms of volumes and economies of scale, but both retailers and brand marketers need to find a middle ground where both can benefit."In spite of their differences, however, brand marketers and retailers can still collaborate to improve the shopping experience for consumers. "Anything we as creators of displays can do to simplify their choices and make shopping easier for them is good," says Katz. "I think retailers are coming to this realization more quickly than brand marketers, especially savvy retailers like Target, for example. If brand marketers watch and observe what's happening, they can learn from them."Thomas Nelson's Mitchell agrees that retailers are trying to take back their stores, but isn't so sure that this is a good thing."Retail chains are increasingly limiting their selection of products and campaigns for which they will provide promotional space," Mitchell observes. "Limited locations for merchandising equates to less P-O-P and higher costs per unit to the manufacturer. Additionally, more retailers are taking control of P-O-P and creating their own signage, shelf inserts and even floor dumps. While this approach makes sense for the retailer, allowing them to avoid clutter and create a cohesive appealing look throughout the store, it dilutes the marketing message and its impact by homogenizing all products. Nobody wins in this situation."The Role of P-O-PSome marketers feel P-O-P's role is shifting to include more long-term brand-building objectives than in the past."Marketers used to think of mass advertising in terms of building brands over long periods of time and P-O-P in terms of short-term sales hits," says Marketing Drive's Harris. "With the proliferation of communications channels we have today, however, that is no longer necessarily true. It is much too easy to miss the commercials on TV by switching to another channel, and there are hundreds to choose from, or by recording the program and blowing through the commercials when you watch it later."And broadcast is only one of the channels that has become less effective than it used to be. "Newspaper readership is declining," says Harris. "There are too many magazine titles and not enough time to read them, so people flip through them without taking the time to look at the ads. Internet advertising is growing rapidly, but it's so easy to just delete and ignore it. The only vehicle that continues to be both intrusive and captivating is P-O-P, especially displays that involve hands-on interaction and not just passive observation. Used properly, P-O-P can indeed play a role in long-term brand building."Other marketers apparently agree. "In 1980, consumer advertising accounted for 45% of total promotional spending," says 141 Worldwide's Hoyt. "Today, although there is even greater knowledge of and emphasis on brand building, it accounts for only 25%.""We have always used our P-O-P displays to draw attention and build brand equity as well as to encourage immediate sales," Acushnet's Duffy explains. "Now our competitors have recognized the need for displays that create an impact at the point of purchase and have greatly increased their spending."While not increasing spending overall, Acushnet is beginning to use more premium materials such as laminates and molded plastics, according to Duffy. "We are creating fewer corrugated temporary structures and have reallocated some spending into more permanent displays," he notes. "In the future, we will need to be more creative in order to generate the same level of excitement with fewer dollars to spend."Marketing Drive's Harris agrees. "I'm seeing a move away from short-term and cheaper materials such as corrugated toward more permanent premium materials such as metals and high-end molded plastics. I'm also seeing greater use of technology such as touchscreens and remotely programmable signage."Technology Has ImpactAdvances in technology, especially creation and constant improvement of the Internet, have revolutionized the world of P-O-P. "Internet marketing didn't even exist until fairly recently," says Henschel-Steinau's Katz. "Now, for some retailers, it accounts for more than 50% of their volume."Retailers are also embracing technology inside their stores. "They're using technology to become smarter about their customers," says BDS Marketing's des Chatelets. "In a few years, scanners and barcodes will seem as old-fashioned as manual cash registers and adding machines."Thomas Nelson's Mitchell agrees. "We are embracing new methods of reaching consumers with our marketing message not just to compete in 2006, but also to compete in 2011," he says. "We have to think about where our customers will be in the next five years and beyond. For the 18- to 34-year-old consumer, if the message is not online, the message does not exist. We're traveling down avenues such as Podcasting and blog advertising."RFID (radio frequency identification) is widely publicized for its ability to improve supply-chain efficiencies, but the technology has more direct P-O-P applications as well. For consumers, RFID systems can be used to display product-specific information on a video screen when shoppers pick the item off the shelf or display. The information displayed can be text, pictures or diagrams, an audio or video clip, or any combination of these. The technology is also being used to track display compliance at Walgreens and is in test at other retailers."New technology is always being tested and is getting more sophisticated all the time," says Capsule's Keller. "Not only electronics, but materials as well, are constantly evolving. In the future, I think we'll see more use of tactile materials. One of the most exciting new innovations in plastics, for example, is a new acrylic sheet with fragrance actually embedded in the plastic.... It's not scratch-and-sniff. The aroma is there all the time and you'll smell it when you simply walk by the display."Some advances in technology combine electronics with materials. The world's first woven LED sign material, for example, integrates super-bright light-emitting diodes (LEDs) with woven fabric to create a low-cost, light-weight messaging medium for signs, displays, trade show booths and other applications. Users can instantly change messages using a laptop computer or hand-held device.Even advances in biology are having an effect on P-O-P. The world's first DNA-tagged label security system, for example, combines specially processed DNA from a plant or animal with anti-counterfeit ink, which can then be applied to paper, cloth or plastic labels. Since every plant and animal has its own specific DNA gene sequence, the labels can be easily tested for authenticity with a simple plastic and cotton swab that glows when that DNA is detected and traced to their authorized point of origin.The technology is especially applicable to retail P-O-P because the types of items most likely to be counterfeited are exactly the kind of small, high-value merchandise often sold from a display. This includes expensive brand name merchandise such as designer leather goods, watches and other jewelry. In many cases, the retailer is not even aware that the products he is restocking his display with are counterfeit. The new technology, however, offers a quick, easy, inexpensive way to determine the authenticity of the merchandise.

2006 P-O-P Trends Report

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