1. Advertising | How not to annoy your customers | Economist.com Page 1 of 2
Advertising
How not to annoy your customers
Jan 3rd 2008
From The Economist print edition
Is in-store television an effective advertising tool? Perhaps, if done right
IN-STORE television would seem to be a no-brainer for big retailers. It makes their
shops more attractive to consumer-goods companies because they can advertise
their wares direct to a captive audience. It lets retailers run their own advertisements
and promotions. It keeps shoppers informed and entertained. And after an
(admittedly large) investment in the in-store network, it can be a lucrative source of
advertising revenue.
AP Even so, in-store television has so
far worked well for only some
retailers in some countries.
America's Wal-Mart, the world's
biggest retailer, started with in-
store TV ten years ago in
partnership with Premier Retail
Networks (PRN), a firm based in
San Francisco that is owned by
Thomson, a French technology
firm. It has the world's biggest
network, with screens in over
3,000 of its huge shops in
America. After much trial and
error it seems to have learnt how
to carry it off. Some 140 firms,
Now available in stores everywhere including Procter & Gamble (P&G)
and Unilever, the world's biggest
consumer-goods companies, pay to advertise on Wal-Mart TV. (Wal-Mart and PRN
split the proceeds, but will not say how.) A survey of retailers by Retail Systems
Research (RSR), a consultancy, found that in-store TV increased overall sales by 2%.
Wal-Mart started with a single in-store channel but now has six, covering subjects
such as food, electronics and health, which are shown on giant screens in a store's
various departments. Since the attention span of busy shoppers is short, these
channels differ from ordinary television. A 30-second spot created for TV is too long,
except for people stuck in check-out lines. Spots of five to 15 seconds, with one or
two messages, work best. Non-stop advertising puts shoppers off, so Wal-Mart mixes
advertising with entertainment, weather reports and cooking tips. On average,
customers watch one minute of programming per visit. They get annoyed if it is too
loud, so Wal-Mart turns down the volume when its shops are less busy.
In Britain the in-store network
being built by Tesco, the
world's third-biggest retailer, is
at an earlier stage. After
launching its system to great
fanfare in 2004 with JCDecaux,
a French outdoor-advertising
company, Tesco failed to win
many advertisers and almost
pulled the plug on the whole
project. But in 2006 it asked
dunnhumby, a British
marketing company, to
relaunch “Tesco TV” in 100 of
its supermarkets, with about
one-third of the chain's sales.
There are now closer ties
between what appears on the
screen and other in-store
promotions. A new “brand
sting” format is said to have lifted sales of some products by as much as 25%.
The greatest hope for in-store TV may be in emerging markets, where shoppers are
hungrier for branded consumer goods than they are in the rich world. In November
PRN said it was helping Carrefour, the world's second-largest retailer, kit out all of its
hypermarkets in Brazil with in-store TV. (It has already fitted Carrefour's shops in
Poland.) In China Focus Media, a local company, is dotting the retail landscape with
giant screens.
The business model for in-store TV varies. Sometimes a company such as PRN pays
for the screens, sells the advertising slots and pockets most of the revenue, with a
cut going to the retailer; sometimes the retailer pays for the screens, gets another
firm to run them and keeps the revenue for itself. In-store television networks make
most sense for big retailers, says Nikki Baird of RSR, because of the cost of installing
screens (typically $4,000 per shop) and updating content. Big retail chains also find it
easier to attract advertisers, because they can promise more screens in more places.
All of this depends on the willingness of consumer-goods companies to buy
http://www.economist.com/research/articlesbysubject/displaystory.cfm?subjectid=1780456... 29-Jan-08

2. Advertising | How not to annoy your customers | Economist.com Page 2 of 2
advertising slots, however. Though about 80% of them renew their in-store TV deals,
they are still not totally sure about the idea. Paul Fox of P&G says it is too soon to
judge the new medium. The company is not yet certain, he says, how in-store TV fits
into the broader mix of marketing. But studies suggest that three-quarters of all
decisions to buy something are made inside shops, so done the right way, in-store TV
advertising could, in theory, make a big difference. Stay tuned.
http://www.economist.com/research/articlesbysubject/displaystory.cfm?subjectid=1780456... 29-Jan-08