Trials of in-store TV have yet to convince brand owners of the benefits. Siân Harrington reports
“This is a make or break year,” believes Paul Zwillenberg, media and entertainment director at OC&C Strategy Consultants, which works with blue chip firms to develop shareholder value-maximising strategies.
It was heralded as the great new media, reaching millions of consumers every week, offering brands an unrivalled opportunity to influence shoppers at the point of purchase and presenting retailers with a way to tap into the above-the-line advertising spend. Yet, two years since Tesco pioneered the medium, in-store TV is stuck on standby mode.
Spar has yet to capitalise on a promising trial, even though it was talking about plans for Europe’s largest in-store network. Asda is assessing its two-store trial nine months after launch, despite indicating that it hoped to roll it out after six months.
Meanwhile, Tesco TV is still in 100 stores, not the 300 it earmarked. Its media sales agency JC Decaux has slashed its original rate card from £40k to £15k. And the multiple reportedly approached ITV in March for help selling advertising on its 5,500 screens after struggling to generate enough revenue.
“There is quite a bit of sizzle, but it is not crystal clear where the stake is. There is a risk that brand owners will start to lose interest and that retailers are going to have to pull screens out of their stores. It could be an expensive white elephant.”
So why is in-store TV proving to be more of a turn-off than a turn-on?
The problem is that it’s still not clear how retailers and suppliers are going to make money out of the media. “The good news is that brands, retailers and media owners are starting to figure it out,” says Zwillenberg. “The bad news is there isn’t a sufficient body of data to persuade people to spend on in-store TV, especially in comparison to other store media such as six-sheets.”
The call for robust data proving the effectiveness of in-store digital networks is not new. But what is interesting is that Zwillenberg’s viewpoint is informed by an independent evaluation of the UK captive audience network market, which OC&C carried out on behalf of a European retailer. It concluded that there was little consensus on the impact of in-store networks, but retailers and network operators were generally more bullish than brand owners.
This is perhaps unsurprising, for while there has been huge hype around in-store TV, with impressive figures bandied about by retailers and network providers, the fact is that there are wide variations in sales uplifts and it’s hard to account for other influences, such as whether the purchase was driven by the screen advertising or clinched by the two-for-one price offer at the shelf.
Return on investment is the number one issue for brand owners and until they see greater evidence of this, they will remain lukewarm. One supplier told OC&C: “The main problem with this channel is there is currently no metric with which I can measure my ROI.” Another said: “We compared in-store TV to six-sheets, trolleys and other in-store activity. It didn’t get as good a return.”
Retailers seem to be pricing in-store TV above levels that allow most brands to achieve sufficient ROI. “They are not looking at in-store TV with the same discipline and rigour as they do their own media buying. They are just putting in screens and expecting the money to follow,” says Zwillenberg. “There is no consistency in how they are pitching the message.”
He believes any revenue from selling in-store TV as a broadcast media is “the icing on the cake, not the bread and butter”. “If you are targeting above-the-line spend, you need to think like a TV broadcaster, with cost per thousand, reach and frequency, pre and post campaign impact. Supermarkets trying to prove this case need to move from consumer experience to ROI.”
Indeed, OC&C believes funds will increasingly come from below-the-line budgets as networks cannibalise cardboard point of purchase (PoP) advertising. But new research by Storecheck Marketing shows sales directors don’t want to fund in-store TV campaigns. Six in 10 say investment should come from above-the-line budgets. “They are worried they will lose an element of their budget,” says Storecheck MD Colin Harper.
A quarter of those polled said they felt under pressure to invest in in-store digital media, while only 10% said they did not feel under any pressure. It seems retailers are determined to find a way of making these new networks generate revenue.
Harper believes suppliers would be better off spending money on analysing how to get value for money from less costly traditional PoP. On the argument that in-store TV tackles poor compliance, he says: “It appears Tesco is charging more money for the deficiencies of its own PoP compliance. It would be better to concentrate on executing traditional in-store campaigns correctly in the first place.”
This could be a more sensible option, given that a study by shopper behaviour specialists Shoppercentric shows that, while customers are broadly positive about in-store screens, very few actually interact with them. Its research found two-thirds of regular shoppers had not noticed Tesco TV, despite shopping in stores which had featured screens for at least six months.
“It’s not just a case of not noticing the screens, but shoppers don’t understand the reason for them,” says Shoppercentric’s managing director Danielle Pinnington.
“They are pretty clued up on how cardboard PoP is used and know that if they like promotions they should look at gondola ends or red flashes in-store. But as far as shoppers are concerned, TV is just stuck there and they can’t see what role it plays.”
She adds: “If a manufacturer asked me today if it should go on screen, I would say I would be wary of putting money into it.”
Another consultancy interviewed by OC&C estimates that only 3-10% of people have any interaction with screens, be it glancing up, watching or touching them, while a major brand owner’s research showed only 15% of customers looked up.
“Shoppers are not there to look at TV screens. They look for the pack and can take in shelf messages but if they are starting to look elsewhere it is usually because they are lost,” says Shopper Insight’s Rob Barker.
It may still be too early to write off in-store digital networks, but if they are to succeed, retailers need to consider a number of issues. For example, looking at how people shop and locating screens accordingly.
And the message needs to fit the location. “When we visited Tesco it was advertising Baileys at the store entrance. Yet shoppers need to walk to the end of store and for 20 minutes before they reach the product,” says Pinnington. “At the entrance the screens
should show an Every Little Helps message or the latest price communication.”
She adds that brand owners should only advertise on a screen if their product is underneath it. With the inflexibility of screen location, this could prove to be a major obstacle to future success. But a cross-category message may well work and in emotive areas, such as clothing and home entertainment, screens may prove beneficial.
Zwillenberg believes there can be a viable future, provided networks are sponsored at the highest level.
“It can’t be someone’s third or fourth role, it needs to be their first priority. And the manager needs to come from a media sales or in-store background,” he says.
But, in-store TV’s role in the marketing mix is uncertain. And only Tesco is anywhere near critical mass. Most retailers neither have in-store TV nor have plans to test it.
In short, it’s the classic chicken-and-egg scenario. If retailers do not commit to expanding their networks, advertisers will simply continue to participate in small trials. Only when retailers deliver critical mass and prove return on investment will brand owners shift their pounds into this new medium.
Retailer model: Tesco
>>tesco network the only one to achieve critical mass
Tesco was the first to commit strongly to this new medium with a trial in March 2003 and roll-out to its 100 largest stores, which makes it the only retailer with any critical mass. It has plans to extend the network to 300 stores, but is behind its timescale on this.
The network has 55 screens per store, with plasmas in the power aisle and LCD flat-panel display screens in category aisles. The store is divided into seven zones: grocery, entertainment, café, BWS, counters, health and beauty, and power aisle. Content varies in each zone.
Half the content is Tesco advertising and the rest from brand owners, though the ratio varies between stores. Content also includes recipes and live news.
Tesco sees the network as a way of sweating its assets.
In this model, the content is generally owned and controlled by the retailer and is therefore specific to it. It is funded primarily by advertising revenues from brand owners of products sold in-store as well as products that are not available in-store, such as cars and local services.
The rationale is new revenue generation, improved customer experience and a marketing tool for the store.
Tesco has conducted 9,500 consumer interviews, observed 19,000 shopper trips and 40 focus groups.
It claims advertised brands have increased sales 10-15%, although ‘How to Make a Better Pimm’s advertising achieved a 77% uplift, which was better than reducing the price of a bottle.
Despite the fact that Tesco TV has not been the immediate success many predicted, the retailer should be praised for pioneering this new channel and will surely find a way to make it work.
Brand model: Néstle
>>nestlé first to test screens in cash and carries
In January Nestlé became the first to test LCD screens for promotions and new product information in cash and carries.
The fmcg giant owns the network, which guarantees its messages appear where and when it stipulates, and third-party operator IQ Group manages it.
The pilot ran in three landmark depots: Parfetts in Sheffield and Stockport and Hyperama in Nottingham. A 32 or 37-inch screen is sited on a gondola end at the entrance to confectionery, with a smaller 19-inch screen positioned next to Nestlé products. Nestlé says the added visibility is helping independent retailers become aware of its activity. They have been observed watching the screens and then purchasing, especially screens in the confectionery aisle. Audio is now to be tested to see if it also captures attention.
During the trial, kids’ 20p lines were 10% of Nestlé sales in depots with screens and 5% without. It sold twice as many kids’ lines to Stockport, with a screen, than to Aintree, without.
Aintree now has screens, as does East End Foods in West Bromwich, and Nestlé is planning to roll out more. It is also talking to other customers.
Third-party model: Spar
>>spar trial achieved sales uplifts for a number of products
Spar’s trial of in-store TV caused much excitement when it launched back in July 2003. It set the scene for the development of the medium in the convenience sector and was also the first to conduct independent verification.
Point-of-purchase industry body POPAI sponsored research comparing the trial
stores with control stores.
The network, owned and operated by IQ Group, features screens of different sizes at different locations in four Blakemore and two Capper stores. Screen content is tailored to match nearby products and screens are located at shelf level as well as at the end of middle aisles.
Brands such as Smirnoff, John Smith’s, Weetabix, Birds Eye and The Sun have taken space. IQ Group bore the costs together with suppliers, who invested a few thousand pounds each.
A three-week bogof on ‘I Can’t Believe It’s Not Butter’ - one of Spar’s Real Deals promotions - achieved a weighted sales uplift of 44% in both value and volume. An increase of 18% was sustained afterwards. Price promotions were the favoured option for suppliers, although BEW tested a general brand message in the notoriously price-sensitive frozen category and still achieved sales uplifts. Alcohol saw the greatest uplifts overall.
OC&C believes the Spar trial to be the most advanced to date. Yet Spar UK managing director Jerry Marwood has still to roll it out. The company has now put the contract out to pitch, with IQ Group believed to be up against three other companies.
Other trials
>>what the rest of retailers are up to
Asda: Trial in Wembley and York is being run out of the Asda media centre, but there has been no roll-out yet. It has reported 8.7% uplift in sales.
Jacksons: Has 100 stores with screens, run by Firebrand Media. Sales up 15-20% compared with control stores.
Sainsbury: Plans a six-month trial of Fresh TV in three of its largest stores. It tested shelf-edge screens in July 2003.
Costcutter: Six-month trial in Dunnington with ads from suppliers and local firms. If successful, it will be rolled out in 30 stores.
Nisa-Today’s: Straight to roll-out this summer with ads appearing as they are announced on its in-store radio. Run by DMX Music, it will go into 50 stores.
CJ Lang: Trial run by I-Dare Innovation has “exceeded expectations”.
Somerfield (The Grocer, October 25,
1997): Nothing is new and back in 1997 Somerfield said in-store TV in 12 stores was a big hit with customers and upping sales. Some 72% were aware of content, such as staff welcomes, ads, recipes and hourly news bulletins from Sky.
“This is a make or break year,” believes Paul Zwillenberg, media and entertainment director at OC&C Strategy Consultants, which works with blue chip firms to develop shareholder value-maximising strategies.
It was heralded as the great new media, reaching millions of consumers every week, offering brands an unrivalled opportunity to influence shoppers at the point of purchase and presenting retailers with a way to tap into the above-the-line advertising spend. Yet, two years since Tesco pioneered the medium, in-store TV is stuck on standby mode.
Spar has yet to capitalise on a promising trial, even though it was talking about plans for Europe’s largest in-store network. Asda is assessing its two-store trial nine months after launch, despite indicating that it hoped to roll it out after six months.
Meanwhile, Tesco TV is still in 100 stores, not the 300 it earmarked. Its media sales agency JC Decaux has slashed its original rate card from £40k to £15k. And the multiple reportedly approached ITV in March for help selling advertising on its 5,500 screens after struggling to generate enough revenue.
“There is quite a bit of sizzle, but it is not crystal clear where the stake is. There is a risk that brand owners will start to lose interest and that retailers are going to have to pull screens out of their stores. It could be an expensive white elephant.”
So why is in-store TV proving to be more of a turn-off than a turn-on?
The problem is that it’s still not clear how retailers and suppliers are going to make money out of the media. “The good news is that brands, retailers and media owners are starting to figure it out,” says Zwillenberg. “The bad news is there isn’t a sufficient body of data to persuade people to spend on in-store TV, especially in comparison to other store media such as six-sheets.”
The call for robust data proving the effectiveness of in-store digital networks is not new. But what is interesting is that Zwillenberg’s viewpoint is informed by an independent evaluation of the UK captive audience network market, which OC&C carried out on behalf of a European retailer. It concluded that there was little consensus on the impact of in-store networks, but retailers and network operators were generally more bullish than brand owners.
This is perhaps unsurprising, for while there has been huge hype around in-store TV, with impressive figures bandied about by retailers and network providers, the fact is that there are wide variations in sales uplifts and it’s hard to account for other influences, such as whether the purchase was driven by the screen advertising or clinched by the two-for-one price offer at the shelf.
Return on investment is the number one issue for brand owners and until they see greater evidence of this, they will remain lukewarm. One supplier told OC&C: “The main problem with this channel is there is currently no metric with which I can measure my ROI.” Another said: “We compared in-store TV to six-sheets, trolleys and other in-store activity. It didn’t get as good a return.”
Retailers seem to be pricing in-store TV above levels that allow most brands to achieve sufficient ROI. “They are not looking at in-store TV with the same discipline and rigour as they do their own media buying. They are just putting in screens and expecting the money to follow,” says Zwillenberg. “There is no consistency in how they are pitching the message.”
He believes any revenue from selling in-store TV as a broadcast media is “the icing on the cake, not the bread and butter”. “If you are targeting above-the-line spend, you need to think like a TV broadcaster, with cost per thousand, reach and frequency, pre and post campaign impact. Supermarkets trying to prove this case need to move from consumer experience to ROI.”
Indeed, OC&C believes funds will increasingly come from below-the-line budgets as networks cannibalise cardboard point of purchase (PoP) advertising. But new research by Storecheck Marketing shows sales directors don’t want to fund in-store TV campaigns. Six in 10 say investment should come from above-the-line budgets. “They are worried they will lose an element of their budget,” says Storecheck MD Colin Harper.
A quarter of those polled said they felt under pressure to invest in in-store digital media, while only 10% said they did not feel under any pressure. It seems retailers are determined to find a way of making these new networks generate revenue.
Harper believes suppliers would be better off spending money on analysing how to get value for money from less costly traditional PoP. On the argument that in-store TV tackles poor compliance, he says: “It appears Tesco is charging more money for the deficiencies of its own PoP compliance. It would be better to concentrate on executing traditional in-store campaigns correctly in the first place.”
This could be a more sensible option, given that a study by shopper behaviour specialists Shoppercentric shows that, while customers are broadly positive about in-store screens, very few actually interact with them. Its research found two-thirds of regular shoppers had not noticed Tesco TV, despite shopping in stores which had featured screens for at least six months.
“It’s not just a case of not noticing the screens, but shoppers don’t understand the reason for them,” says Shoppercentric’s managing director Danielle Pinnington.
“They are pretty clued up on how cardboard PoP is used and know that if they like promotions they should look at gondola ends or red flashes in-store. But as far as shoppers are concerned, TV is just stuck there and they can’t see what role it plays.”
She adds: “If a manufacturer asked me today if it should go on screen, I would say I would be wary of putting money into it.”
Another consultancy interviewed by OC&C estimates that only 3-10% of people have any interaction with screens, be it glancing up, watching or touching them, while a major brand owner’s research showed only 15% of customers looked up.
“Shoppers are not there to look at TV screens. They look for the pack and can take in shelf messages but if they are starting to look elsewhere it is usually because they are lost,” says Shopper Insight’s Rob Barker.
It may still be too early to write off in-store digital networks, but if they are to succeed, retailers need to consider a number of issues. For example, looking at how people shop and locating screens accordingly.
And the message needs to fit the location. “When we visited Tesco it was advertising Baileys at the store entrance. Yet shoppers need to walk to the end of store and for 20 minutes before they reach the product,” says Pinnington. “At the entrance the screens
should show an Every Little Helps message or the latest price communication.”
She adds that brand owners should only advertise on a screen if their product is underneath it. With the inflexibility of screen location, this could prove to be a major obstacle to future success. But a cross-category message may well work and in emotive areas, such as clothing and home entertainment, screens may prove beneficial.
Zwillenberg believes there can be a viable future, provided networks are sponsored at the highest level.
“It can’t be someone’s third or fourth role, it needs to be their first priority. And the manager needs to come from a media sales or in-store background,” he says.
But, in-store TV’s role in the marketing mix is uncertain. And only Tesco is anywhere near critical mass. Most retailers neither have in-store TV nor have plans to test it.
In short, it’s the classic chicken-and-egg scenario. If retailers do not commit to expanding their networks, advertisers will simply continue to participate in small trials. Only when retailers deliver critical mass and prove return on investment will brand owners shift their pounds into this new medium.
Retailer model: Tesco
>>tesco network the only one to achieve critical mass
Tesco was the first to commit strongly to this new medium with a trial in March 2003 and roll-out to its 100 largest stores, which makes it the only retailer with any critical mass. It has plans to extend the network to 300 stores, but is behind its timescale on this.
The network has 55 screens per store, with plasmas in the power aisle and LCD flat-panel display screens in category aisles. The store is divided into seven zones: grocery, entertainment, café, BWS, counters, health and beauty, and power aisle. Content varies in each zone.
Half the content is Tesco advertising and the rest from brand owners, though the ratio varies between stores. Content also includes recipes and live news.
Tesco sees the network as a way of sweating its assets.
In this model, the content is generally owned and controlled by the retailer and is therefore specific to it. It is funded primarily by advertising revenues from brand owners of products sold in-store as well as products that are not available in-store, such as cars and local services.
The rationale is new revenue generation, improved customer experience and a marketing tool for the store.
Tesco has conducted 9,500 consumer interviews, observed 19,000 shopper trips and 40 focus groups.
It claims advertised brands have increased sales 10-15%, although ‘How to Make a Better Pimm’s advertising achieved a 77% uplift, which was better than reducing the price of a bottle.
Despite the fact that Tesco TV has not been the immediate success many predicted, the retailer should be praised for pioneering this new channel and will surely find a way to make it work.
Brand model: Néstle
>>nestlé first to test screens in cash and carries
In January Nestlé became the first to test LCD screens for promotions and new product information in cash and carries.
The fmcg giant owns the network, which guarantees its messages appear where and when it stipulates, and third-party operator IQ Group manages it.
The pilot ran in three landmark depots: Parfetts in Sheffield and Stockport and Hyperama in Nottingham. A 32 or 37-inch screen is sited on a gondola end at the entrance to confectionery, with a smaller 19-inch screen positioned next to Nestlé products. Nestlé says the added visibility is helping independent retailers become aware of its activity. They have been observed watching the screens and then purchasing, especially screens in the confectionery aisle. Audio is now to be tested to see if it also captures attention.
During the trial, kids’ 20p lines were 10% of Nestlé sales in depots with screens and 5% without. It sold twice as many kids’ lines to Stockport, with a screen, than to Aintree, without.
Aintree now has screens, as does East End Foods in West Bromwich, and Nestlé is planning to roll out more. It is also talking to other customers.
Third-party model: Spar
>>spar trial achieved sales uplifts for a number of products
Spar’s trial of in-store TV caused much excitement when it launched back in July 2003. It set the scene for the development of the medium in the convenience sector and was also the first to conduct independent verification.
Point-of-purchase industry body POPAI sponsored research comparing the trial
stores with control stores.
The network, owned and operated by IQ Group, features screens of different sizes at different locations in four Blakemore and two Capper stores. Screen content is tailored to match nearby products and screens are located at shelf level as well as at the end of middle aisles.
Brands such as Smirnoff, John Smith’s, Weetabix, Birds Eye and The Sun have taken space. IQ Group bore the costs together with suppliers, who invested a few thousand pounds each.
A three-week bogof on ‘I Can’t Believe It’s Not Butter’ - one of Spar’s Real Deals promotions - achieved a weighted sales uplift of 44% in both value and volume. An increase of 18% was sustained afterwards. Price promotions were the favoured option for suppliers, although BEW tested a general brand message in the notoriously price-sensitive frozen category and still achieved sales uplifts. Alcohol saw the greatest uplifts overall.
OC&C believes the Spar trial to be the most advanced to date. Yet Spar UK managing director Jerry Marwood has still to roll it out. The company has now put the contract out to pitch, with IQ Group believed to be up against three other companies.
Other trials
>>what the rest of retailers are up to
Asda: Trial in Wembley and York is being run out of the Asda media centre, but there has been no roll-out yet. It has reported 8.7% uplift in sales.
Jacksons: Has 100 stores with screens, run by Firebrand Media. Sales up 15-20% compared with control stores.
Sainsbury: Plans a six-month trial of Fresh TV in three of its largest stores. It tested shelf-edge screens in July 2003.
Costcutter: Six-month trial in Dunnington with ads from suppliers and local firms. If successful, it will be rolled out in 30 stores.
Nisa-Today’s: Straight to roll-out this summer with ads appearing as they are announced on its in-store radio. Run by DMX Music, it will go into 50 stores.
CJ Lang: Trial run by I-Dare Innovation has “exceeded expectations”.
Somerfield (The Grocer, October 25,
1997): Nothing is new and back in 1997 Somerfield said in-store TV in 12 stores was a big hit with customers and upping sales. Some 72% were aware of content, such as staff welcomes, ads, recipes and hourly news bulletins from Sky.
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