In-Store Media Matures as Sales Slowly Increase

In-store media appears to be on the upswing, but it hasn't been an exactly picture-perfect year for the industry. Emarc, formerly In-Store Advertising, is a case in point. Representing a network of electronic LED signs that feature promotional messages from packaged-goods manufacturers, Emarc spent a good portion of 1993 fighting for its corporate life, before it was purchased by Valassis Communications Inc. in March.According to David Brandon, president and chief executive officer of Livonia, Mich.-based Valassis, Emarc's ISA Network "operationally works well, but it's a concept that needs to be improved. We bought a technology and an infrastructure that's solid and proven and shows great capability, but it's gone through some tough times." Brandon cites Emarc's seemingly "revolving-door management" as a contributing factor in its earlier woes."But we can eliminate the problems and stabilize its resources quickly," Brandon adds. "We did not buy it on the basis of being a well-oiled machine. We'll reposition it where we need to, where it has more appeal to more customers." The ISA Network will continue to operate in its existing supermarket locations, but as Valassis enhances the system, the classes of trade and geography will also be expanded, Brandon says.Valassis, a Fortune 500 company that produces and distributes coupon-ladened FSIs, views the Emarc acquisition as "an opportunity to close a very important loop," Brandon says. "We've communicated directly with consumers and the grocery trade, but we never participated in a program in closing the loop with retailers to consumers."Emarc will function as a separate division of Valassis and will not be integrated into its FSI programs, Brandon explains. The divisions will operate independently, but he hopes they will work closely together for turnkey events."It's a great platform for us to learn and grow," he adds. "There are even better products and services that can be offered. We have every intention of utilizing the current technology and platform to build new and companion products," but those products will only be developed after careful research."We think in-store media can be a growing area," Brandon says. "There have been many companies with flawed business plans that have lost a bunch of money, and that's why we didn't jump in sooner." In addition, Brandon notes that the packaged-goods manufacturers have also been under pressure, and their budgets are under scrutiny. As a result, they are not as free with their advertising dollars and want figures to back up their investment. "Many packaged-goods manufacturers are in a retrenchment mode and will be very, very careful. They're looking for far more measurable results. They won't just jump in and see what happens. They don't have the luxury of doing that anymore," he adds.The Nasty '90sPaul Kessinger, vice president of Actmedia Inc., based in Norwalk, Conn., agrees that in-store media has seen a lot of fallout in the past year. "It's been a back-to-basics year," he says. "Programs that handle basic communication and goals are those that had a super year. The flyers on high technology had a tough time. It's the 'nasty '90s value,' and I think it's the way it's going to be. Packaged-goods companies aren't going to fund the roll outs. Our clients are much more attuned in the '90s to immediate payback, rather than long-term 'here's the benefit of the brand,' " he adds.According to Kessinger, the most basic program that Actmedia has is its Instant Coupon Machine. It's also the most popular. "It ain't the information superhighway," he admits. "People are looking for value and simplicity in the '90s." Adds Brendan Culligan, president of Westfield, N.J.-based Inmarket: "There has to be a reasonable cost/benefit ratio. Programs with big capital investments are becoming increasingly risky. The trend is back to more basic advertising programs."Mike Perry, director of media at Nabisco Biscuit Co. in East Hanover, N.J., believes it is a question of viability, and says many marketers are attaching payout criteria to in-store media: It has to pay for itself and deliver a profit. "All this high-tech audio and video equipment is expensive to install and maintain. You have to drive a lot of incremental volume to justify using it," he notes.Time-conscious ConsumersToday's consumers are busy and get down to business immediately. Most of the experts are leery of any attempt to slow the consumer down, and if you do, there better be something worthwhile in it for the consumer, they agree. "The consumer is focused and directed. He or she doesn't go there to play games," says Inmarket's Culligan. Mickey Clerc, spokesman for the Jacksonville, Fla.-based Winn-Dixie supermarket chain, says: "Supermarket shoppers don't want to be entertained. Their primary function is to buy groceries and get out of there."The idea of kiosks for specialty information is a good one, but it's difficult to corral customers. Our limited experience is not conclusive that it's a mass medium. It may have to be category exclusive to be useful. Well await someone else's experimentation to show how it works," Clerc adds.Rick Brenner, vice president of marketing at Advanced Promotion Technologies Inc., Pompano Beach, Fla., agrees that entertainment isn't going to be a big part of in-store media. He does, however, predict a move away from passive media. "There has to be more than passive messages," he insists. "You have to have more and more in it for the consumer. And if there's something in it for them, they'll spend the time."It's all part of treating your best shoppers better, Brenner says, which he believes will be an important part of the future. Retailers and product marketers are interested in keeping the consumers happy. Marketers want to establish brand loyalty. Retailers want to keep the consumer coming back to their particular store, and one way they can ensure that is by providing the consumer with something that no other store can offer, like a private-label brand, for instance."Retailers are desperately hungry to get you to come back to their store, and if they build loyalty, you have to come back to their store," notes Inmarket's Culligan. "You can always buy Tide at any store. You can't buy a private-label brand in just any store." So the retailer starts thinking, acting and promoting his brand/store just like any other marketer would, which includes supporting the brand with in-store media.Culligan says retailers have increased the level of support they give to private-label brands, and points to the A&P supermarket chain as a case in point. According to Culligan, A&P strongly supports its own America's Choice and Master's Choice brands, and the retailer currently is using Inmarket's Incheck program to promote the two private-label brands.The In-store Environmentof in-store media are used, they must blend in with the retail environment. One of the biggest mistakes a network can make, says Don Ershow, senior vice president of sales and marketing at New York-based On Site Media, "is not fitting seamlessly in the environment." However, Ershow does not consider NBC On Site, a silent out-of-home TV network, to be traditional in-store media.Notes Ershow: "You have to work with the retailer as a partner. It's their space. [When installing a network program], you have to make the place look better. And if not better, at least not worse," he adds. Advanced Promotion's Brenner agrees. "If it gets to 'urban blight in my food store,' " he says, "it's a danger and a backlash."According to Inmarket's Culligan, retailers are recognizing that their store is a form of packaging, and they are controlling that environment to motivate the customer to come back. "The retailer wants to control as much as possible what their overall environment will look like." This, of course, means customization. Systems are now being customized on a chain-by-chain basis.Adds Winn-Dixie's Clerc: "Whatever we do, we want it to blend in, be a part of the atmosphere of the store and not just a giant advertisement sticking in the way. We want the advertisement to add sales excitement to the shopping experience and not be a negative."In-store media is different from other forms of advertising. It should add to the value of the customer's shopping experience; information that helps them in their shopping and adds value," Clerc adds. "Shopping is an experience," says On Site's Ershow. "The question is, is it a positive or negative experience. For most people, it's a negative experience. And anything you can do to make it better, more productive or even get a smile," he says, can be used to reach the consumer when he or she is in the buying mode.Although supermarkets have been the main playground for in-store media, the networks are slowly branching out to include other classes of trade. In the past year, Actmedia has worked itself and its networks into drug stores, and, according to Kessinger, its expansion will not stop there. He sees tremendous, but slow-going opportunities with all types of superstores and c-stores.Where one supermarket is pretty comparable to another supermarket, Kessinger explains, one drug chain is not the same as another. "Growth won't come in big bursts like the supermarkets." He cites the wide variety of convenience stores as an example: "Some will take a shot at c-stores, but there's 100,000 out there, and it won't happen overnight."Sampling: the "In" ThingSampling has been the hot growth area in the past year, the experts agree. "Sampling is terrific for new products," says On Site's Ershow. "It's expensive to do, but it enables you to get products into people's hands, and that's one of the hardest things to do." Inmarket's Culligan credits the dramatic increase of in-store sampling and coupon distribution to "good third-party companies that deliver a higher percentage of performance."Advanced Promotion's Brenner views sampling as a critical marketing tool for retailers, especially with the increased interest in private-label brands. "It's a wonderful, immediate approach to getting from no awareness to some knowledge. I see that area completely exploding in the next 10 years," Brenner says.Optimistic OutlookAlthough the past year has been somewhat turbulent for some in-store media companies, the experts agree that the industry is healthy and growing in sales, although it is not yet mature. Richard K. Blatt, executive director of the Point-of-Purchase Advertising Institute, says: "It's been a slow process of growing recognition of the merits of in-store media.""The real long-term trend," adds Inmarket's Culligan, "is establishing the industry as legitimate in-store advertising, where dollars are secured from advertising agencies. If the industry is to get some level of maturity, in-store media has to become a part of a line category. So the brands, as they prepare their budgets, give a percentage to in-store media. That's when our industry will have matured," he says.POPAI's formation of the Association of In-Store Marketing has been a positive step in that direction, the experts agree. In the past year, the industry has established a set of guidelines for research methodologies. Previously, companies had their own standards and practices for measuring the effectiveness of in-store media networks, POPAI's Blatt explains. "The credentials weren't as strong because everyone was saying their system was the best. The guidebook has leveled the playing field and provided a threshold through which the industry could step forward. It provides a benchmark against which they could all be measured. It instills some consistency in the way in-store companies are measured.""That's been a big thing," says Actmedia's Kessinger. "The foundation of AISM and solid research guidelines are signs of the industry coming of age." The industry has played a key role in piquing the interest of advertising agencies, which have been a tough nut to crack. "There's been more interest from advertising agencies in the past 12 months," notes Inmarket's Culligan, "but not substantial buys to date."Actmedia's Kessinger agrees. "We're finally getting legitimate attention from mainstream advertising agencies, but it hasn't translated itself into enough sales." The curiosity about and general knowledge of in-store media is finally there, Kessinger says. "They approach in-store media as a legitimate thing and not a wacky sales promotion."Hurdles AheadThe road to success isn't necessarily a paved one, and in-store media has a number of challenges awaiting. Nabisco's Perry says he's "waiting for them to grow up, to become an industry rather than a lot of fragments working against each other. It needs to solidify as a professional, organized entity. It's moving in that direction, but I think it has a way to go."Inmarket's Culligan says one of the most obvious challenges is the ability of third-party companies to reach a broad base of retailers and address their requirements while making it easy for advertisers. And, he says, the system must continue to accommodate consumers.POPAI's Blatt says: "There are still as many questions as answers, but we do believe good progress has been made in the past year." Blatt says the association's plans include "providing forums for in-store growth through which greater exposure and credentials can be achieved," such as initiating a speakers bureau, providing seminars and updating its guidebook.Actmedia's Kessinger is anxious for the industry to be a part of the mainstream. So many people refer to the industry as new, but in Kessinger's opinion, it isn't new at all. "Actmedia has been around for 25 years," he says, "and has done business with all 25 of the top 25 packaged-goods companies in the U.S. They've been using it all along, but have been quiet about it."In so many cases, in-store media is used in the fourth quarter to pick up sales. If it's so valuable in the fourth quarter, why not use it all year long," he wonders. "Instead of being a basic building block, you're their pinch hitter."

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