Apollo down

The news last month that Nielsen and Arbitron had finally pulled the plug on Apollo probably came to no surprise to those following the slow grind of pace. If nothing else the glacial rate of progress contributed to Apollo’s downfall. Not withstanding the hubris that surrounded its launch, it became quickly clear that both technology but most importantly the media landscape were going to change at a faster rate and Apollo would be left in the dust.

That perhaps the retail media industry can enjoy a moment of schadenfreude is down to the fact that Apollo studiously ignored this medium and the notion that it was ever going to meaningfully link media behaviour to in-store purchase behaviour was highly suspect.

(*) The link to the announcement that apollo was down has had to be replaced with a link to a reference to it as the apollo site has reverted to network solutions and now talks about the NASA Apollo missions.

Retail Media and the possible recession

Sadly we can now be assured that we're about to plunge into a deep and possibly long recession. Some commentators are saying it might last until 2010.
What can we, in retail-media, expect:

1) Customers don't stop buying everything in a recession but what they do is:

- look ever more keenly for value. This may mean they trade down but it can also mean they stick with a premium-priced product because it still offers better performance and therefore value.

- stick to their regular brand but reduce frequency of use.

- mix and match premium and cheaper products

- but yes, some stop buying a brand altogether

The key need for brands is to communicate directly with their most loyal users with a message that will ensure they remain loyal and maintain consumption levels. This is absolutely essential for the premium brands - in a recession the first job is stop customer migration.

2) Customers are likely to become very promotional savvy if for no other reason then they will be bombarded with them. Retail media can help make a brand's promotion stand-out in a very crowded environment.

3) ROI and absolute cost will dominate the CFO’s marketing agenda. Here is a great opportunity to leverage retail media’s accountability, scale, precision targeting and value equation. The smart marketer should be using retail media. However, it's going to be dog-fight as every media owner will be putting together 'their case.' TV will almost certainly see price deflation for example as they try to maintain their share. Making every penny count (retail media’s targeting advantage) should be a mantra.

4) All the evidence shows that those advertisers who continue to spend in a recession tend to always do well – retail media has to make sure it gets a fair share of the pie.

Finally, in a recent survey among US marketers reported in Ad Age:

Shifting dollars
Nearly half (47%) of the marketers surveyed said a recession is likely, and in the event of one, the same percentage said they would keep marketing budgets at their current levels but reallocate spending. While direct mail may be one of the harder-hit areas -- 42% said they would reduce postage expenses -- other direct methods such as e-mail marketing (50%), database segmentation (44%) and search-engine optimization (35%) would see an increase in funding.

Price and perception

Baba Shiv, a professor of marketing at Stanford University has shown that price can alter a consumer's perception of a products ‘performance’ in a very real sense. In the research paper, Marketing Actions Can Modulate Neural Representation of Experienced Pleasantness he describes how a group of subjects had better taste experiences from a bottle of wine when told it was expensive. This was measured through magnetic resonance imaging showing that there was more neural activity in the pleasure centres of the brain as well as using the subject's reports.

Much of his research has leant weight to the notion that low price equates to low quality. This is backed up by other research which shows that the trappings of quality in packaging change the customer experience and so their perception of the brand. In one example Brandy was found to taste better out of a more up market (read expensive) bottle

Extrapolating this thinking might lead to the idea that product stickiness i.e. the loyalty that customers show to products increases with price – on a relative basis within a category.

So does this mean that categories with high in-store promotional activity tend generally to have customers who are less committed to particular brands? Shampoos and carbonated drinks spring to mind as two categories which seem to be on almost constant promotion. My personal favourite seems to cross the lines being an up market biscuit which I only buy when it is on a two for one offer as it has a high price. It is on bogof sufficiently often that I can reliably purchase at the lower price point.

There’s no certain answer currently but perceived wisdom says that yes cheaper items go to less brand committed buyers. I am not sure, but I like to think that my behaviour buying the biscuits means that they have not yet eroded their brand perception to this extent.

Rufus Evison

Retail Media Humor and BS Bingo (*)

It is time for some food for thought over the Easter weekend. Whether you celebrate Easter as the pagan festival, the egg sale bonanza, the christian celebration, any of the above or not at all you may appreciate the following bits an pieces. OK so these aren’t just retail media howlers but they are objects of fun nonetheless:

‘The rulebook has been torn up’ – often used to when arguing that traditional media is dead. In the US, 25% of advertising monies were spent on some form of TV in 1990; in 2006 it was…25%.

‘Media-savvy consumers…’ – to suggest that consumers don’t view advertising like they used to. Really? {Ed: yes really, in the good old days they would view advertising through new-fangled spectacles now they use "shade" and Glasses"}

‘Marketing campaigns need to be synergistic at all touch-points so they are relevant to their target audiences.’ –how many clichés can you get in one sentence? Does this mean put the same ad everywhere? Or the same brand promise? Or the same brand even?

‘Brand should have conversations with their consumers’ – I’ve been talking to this pack of Tide for 25 minutes and it still hasn’t said a word.

‘Original buzz’ – seen recently in an article. What would unoriginal buzz be?

‘e’ – still used as a prefix e.g. e-marketers. Are they really electronic? Do their batteries ever wear down? Should we prefix all marketers? TV-marketers, DM-marketers, ambient –marketers, bog-off-marketers…

‘Contextual based’ – just seen this written in a sentence that included contextual-marketers. Often used by media agencies to justify buying one media platform over another…it has better context for the brand.

‘marketing funnel’ – as consumers are herded like sheep into the slippery inescapable funnel of brand purchase.

These lead nicely into the game of BS Bingo (*) which is played as follows:

Players each take a selection of the terms above, supplement them from the list below and create a 5x5 grid. At a presentation or a large meeting you cross off each term as it is said. The first person to have a line of 5 or five strikes in a single box wins if they can find a way of getting the word bingo into a sentence that does not get them fired.

(*) That is Brand Statement Bingo. No honestly it is!

More terms to include:
Starter for 10
Optioning
Win for all stakeholders
One stop shop
Soup to nuts
Solids {Ed: ???}
Call out
Going forward
Win-win situation
Big bet
We are where we are
Virtual team
Appetite for
Stakeholder buy in
The "as is" vs the "to be"
Here's my take on it
Alignment
Net-net {Ed: I am assured by people in finance that this means something, but so far none of them have been able to explain what}
Ducks in a row
Strawman
Point
Up to speed
Pre-booked/pre-recorded/pre-registered {Ed: well post booking has always been my habit}
Who't got the A?
Move the goal posts
Why wouldn't you/they?
Same page/same hymn sheet
Does it make the car go faster?
Forward planning {Ed: That reverse planning is really tricky stuff}
Move with pace
Touchpoints
Quantage
Unilaterally
In a silo
Does it wash it's face?
Stepping stones/steps on the way/milestones
I've got a concern
Natural Team Work
Functionality
Locked and loaded
We need to sit down
Take it offline
Move the dial
Close of play {Ed:Does this mean they are talking about playing BS Bingo or is work really play?}

There is another term hidden in some of the initial letters if you look closely enough. First to put a comment correctly identifying it is wins a round of applause. And finally if anyone can suggest a change of order for the list that shows an amusing sentence we will be more than happy to re-order it and credit them.

These have been gathered from a variety of sources, but special credit should go to Joel Hopwood who is a connoisseur of such things and was able to provide the initial list.

Retail Media Commentary: Screen Media or Digital Signage

Digital Signage – a horrible description. Captive Audience Network? The term sums up the inadequacy of the organisations who run them. An audience is captive? Maybe that’s what the Mad Men thought in the 1960s but the world’s moved on, love.

Screens should make the shopping trip exciting and fun. They should captivate the shopper, making the shopping trip easier, perhaps more rewarding.

Captive Audience Networks are all about delivering expensive digital wallpaper. They’re another expression of lift (elevator) muzak. In a Mori poll a couple of years ago, 17% of respondents said that "the thing they most detest about daily modern life" is the use of muzak. Screens will go the same way if they continue to deliver dull, pernicious, irrelevant, intrusive content.

In fact, consumer research on video screens suggests that perhaps becoming wallpaper is the least of their problem as shoppers don’t seem to pay them much attention.

In 2005, Arbitron published some research that showed:

- 33% of US consumers have watched in-store video. (So 66% haven’t.)

- 10% of shoppers make a habit of watching in-store video (So 90% don’t.)

- 5% of shoppers think that more stores should have video screens.

More recent research in the UK showed that for a grocery retailer video, some 37% of shoppers in stores with video screens installed were able to recall them (aided and unaided). (Whilst using different methodologies this bears some relationship to the Arbitron findings.)

Having noted this, Joel Hopwood at various POPAI presentations in the UK has shown recent case histories that prove conclusively that video screens can build a brand’s business in the grocery sector.

Matthew Tillek

Frequency versus Penetration

In a recent Admap article, Tom Lloyd of Metametricsmakes an argument for not following a ‘frequency/loyalty/weight-of-purchase’ brand-building strategy but argues instead that brand marketers should focus on growing a brand through increased penetration – though he qualifies this by saying that ‘most of our growth in penetration will come from lapsed users.’

To illustrate his argument, he has a table showing penetration and annual purchase frequency of UK detergents. What this shows is that brands vary in terms of penetration but that most have very similar purchase frequency (generally ranging from 4.1 times a year to 2.3 on the TNS Panel.)

Two thoughts:

- the difference between 2.3 and 4 is almost x2…so it’s perfectly possible to double this brands volume by increasing loyalty.

- how do you define a lapsed users? That is over what time period does someone qualify to be lapsed as opposed to being a serial repertoire purchaser. If they’re the latter (which is often the case) the task is to then get them to be less repertoire and more loyal.

However, looking at different and much bigger data source – in this instance washing powders in the UK - some interesting new insights emerge:

- purchase frequency shows a similar variation to the TNS data but when looked at by SKUs within a brand, it becomes immediately clear that a brand doesn’t have a purchase frequency per se but SKU’s do. And surprise surprise this is mostly driven by pack size. So a 950g pack might have a purchase frequency of 3 whereas a 4.75kg pack is 2. Ergo, brand purchase frequency is a largely meaningless number.

- on one SKU (a 950g size), annual sales went from £0.9m to £1.8m by increasing the frequency of purchase from 1.78 to 2.74, whilst customer penetration remained flat

- repeat purchase rates are also significant. On another leading brand, the repeat purchase rate declined by just 1 percentage point but this led to a sales decline of close on £500K (and at a time when the average cost per pack went up marginally.)

So it would seem that repeat purchase and frequency perhaps have a bigger role to play than Tom suggests.

Retail Media Spotlight : Customer Magazines

What are customer magazines? In the UK the industry body defines them as:

“Customer magazines are magazines published by companies or organisations for their customers/members.

They provide an effective and sophisticated form of marketing communication with millions of readers enjoying well-targeted editorial and responding positively to the "soft sell" that a customer magazine allows.

While customer magazines are recognised by consumers as marketing collateral Henley Centre research shows that they are treated differently because 'they give as well as take'.”

www.APA.co.uk

Do customer magazines work? Contract publishers will say YES!
But what does work mean?

Industry research offers the following metrics as indicative of success:

Retail magazine readers research (across 8 titles)

• Average retail magazine read time = 23 mins

• 62% keep the magazine for over a week

• 24% are more positive toward the brand

• 51% have bought a featured product/service

(Source: APA Advantage Study 07)

In the UK this last week there were two stories: the first noted that all the ad-funded customer magazines were losing money; then there was the announcement that Morrisons are launching their own bi-monthly magazine that would be offered free to customers in-store.

That ad-funded magazines lose money would not be disputed by anyone so why invest in them. (Received wisdom suggests that a typical publication might be losing a couple of millions dollars on a print run of several million per issue– for the sake of argument that’s working out at less than 10p or 20 cents a copy.) Well if that’s the case and consumer feedback is positive then perhaps it’s money well worth investing.

Of course, not all customer magazines are free. In the UK both Sainsbury’s and Waitrose have a cover price. There is an argument from media agencies that this makes the magazine more valued - a spurious argument that is if the APA research results are taken at face value – clearly even the free ones are appreciated by readers.

What would Baba Shiv make of this cover price issue?

Graham Thomas

Retail media, brand awareness and advertising performance?

Is brand awareness a valid measure of advertising performance?

And should anyone involved with retail media care?

As can be seen from the post on the Reeves Fallacy and the comments it generated, the validity of measuring brand awareness as an evaluation of advertising effectiveness is a hot topic. (Well if two comments make something ‘hot.’)

But you only need to read most issues of Admap to see that indeed it is a hot topic. As Roderick White writes in the Feb 2008 issue, ‘advertising agencies, in particular, have always tended to shy away from trying to tie their contribution to a business to the ultimate bottom line, which is where CEOs would like to focus: with a certain amount of justification, they have argued that there are too many outside factors that can affect a brand’s performance to attempt to look beyond what are recognisably advertising effects: awareness, brand reputation, intention to purchase, for example.

The importance of brand awareness is rooted in the ‘hierarchy of effects’ theory (a theory that’s been formalised for decades and has taken a number of reiterations but all along the same lines):

Daniel Starch, 1923: 'To be effective, an advertisement must be . . .seen - read - believed - remembered - acted upon'

E.K. Strong , 1925: 'AIDA': attention - interest - desire - action

Robert C. Lavidge and G.A. Steiner, 1961: 'Hierarchy of Effects': awareness - knowledge - liking - preference - conviction - action.

Russell H. COLLEY, 1961: 'DAGMAR': unawareness - awareness - comprehension - conviction - action.

(Source: http://www.westburnpublishers.com/marketing-dictionary/h/hierarchy-of-effects.aspx)

There seems to be some irrefutable logic here. After all, if a consumer is unaware of a brand how on earth can it be considered and then bought. ‘If you don’t know what you don’t know….’ well perhaps we won’t get diverted down there but…?

Academics such as Palda (Journal of Marketing Research, Feb 1966) and more recently Ehrenberg have criticised the model on such grounds that there is no such linear progression; that consumers may jump or miss out steps or, for example, that changes in attitude and awareness may follow rather than precede purchase (impulse purchase being a cited case.) Neither has been able to correlate the model to sales (and that after all is the end result of the model). Conversely, MacDonald and Sharp in 2000 concluded: brand awareness differentials seem to be a powerful influence on brand choice in a repeat purchase consumer product context. ‘Consumers,’ they say, ‘show a strong tendency to use awareness as a heuristic and show a degree of inertia in changing from the habit of using this heuristic.’

In fairness: it would best be said that the case isn’t proven either way.

Why those in retail media should care is that one reason why retail media is often not considered as part of the media plan (yes excuse the pun) is because there is scepticism among media planners that indeed retail media can contribute to the hierarchy of effects that most planners still rigidly adhere to. How can it help build my brand’s awareness they will argue?

But there is an interesting insight from the Ehrenberg-Bass Institute (Brand Salience. What it is and why it matters. Jenni Romaniuk and Byron Sharp. March 2004). Here, it is argued that brand saliency does have an important part to play in the purchase decisions but that this is radically different from brand awareness. (Different because it is an infinitely more complex memory process than mere recall of a brand name.) One of their conclusions is that advertising should not be used primarily for persuasion but instead for publicity in order that to ‘put the spotlight on the brand and refresh the part of memory devoted to the brand.’

Would you be surprised therefore that this leads me to the inexorable conclusion that retail media can play a critical role in this process of refreshment, reminding the customer at precisely the right time that a brand exists.

In-store will become the central theatre for mobile phone communication

There’s no doubt that in the next decade, the mobile phone will open up many new and exciting communication opportunities in the world around us.

But in my view it is in-store, in the retail environment itself, that the mobile phone will have the most profound effect. Let me explain…

Today, in-store communication is a repressed child. Retailers, on the whole, believe that there are many other factors which influence shopper behaviour more than communication – service levels, environment, stock levels, shopper value perception, and so on.

They remain unconvinced that communications can do much more than simply incentivising shoppers through promotional messaging. For this reason, retailers today have stripped away a lot of the historical ‘cardboard’ in the interest of cleaning up the aisles for shoppers and making the shopping trip easier. They’re also reactive, not pro-active. They say ‘no’ to manufacturer communication initiatives, often as a matter of course, without necessarily having good reasons or having a reference point on how communication can and should be used differently, in different parts of the store, for different types of categories, and for different share brands within a category.

So right now in most markets we’re now in a catch-22. Retailers are reactive and unconvinced; and there’s a lack of high impact communication formats to break the deadlock … which is where the opportunity for the mobile phone comes in.

Sitting in Europe, my perspective is we are now on the verge of a revolution in how we use the mobile phone. It’s already happening in Asia. And the biggest impact of this revolution will be in-store…..

The mobile phone of today is already commonly used in-store - usually (as we all know) to phone home to ask about something we’ve just forgotten. But in the near future – in the next five to ten years - it will be the device that allows retailer and manufacturer much more leverage over shopper behaviour ….such as driving perimeter shoppers into aisle; driving up frequency of visits to low frequency categories; creating stronger conversion mechanics to increase rate of sale for planned or non-planned purchases, but in a way that doesn’t kill margin; creating a reason to spend longer at fixture.

In order to achieve all this it will need to make the shopping experience much more engaging for the shopper.

In trying to define how the mobile could be used for in-store communication in the future, I’ve tried to filter out a lot of the blue-sky notions that currently abound, and stick to the bigger areas that are more likely to emerge…

There are four big areas of innovation that I believe will come to the fore.

The first big area of innovation will be around retailer loyalty schemes, using the mobile phone to serve up and allow redemption of tailored promotional coupons in-store.

Already in this space there are emergent providers, like Light in the UK, and CypherEdge in the US. To date, neither of these companies has convinced a top-ten Retailer to adopt the mobile platform for their loyalty scheme, ahead of direct mail through the post. But once logistical issues have been overcome, it’s only a matter of a few years before a challenger retailer brand adopts this platform for their loyalty scheme. And bingo, shoppers will be scurrying through the aisles being served up tailored promotional offers, based on their previous purchasing behaviour.

The second big area of innovation will be around facilitating effortless shopping and bringing alive the Shopping List.

In future we will be able to create retailer-specific shopping lists at home on our mobiles, typing them into pre-loaded retailer-specific applications. Once in-store, via WiFi, these will then automatically translate into a route map around the store.

Furthermore, we’ll also be able to subscribe to and programme in, GPS-enabled reminders. So you (or your spouse, more like) might programme in a series of products or brands you need to be reminded of and where (at the store). Once in the store, the GPS chip in your phone knows you’re there and the reminders are activated (*).

The third big area of innovation will be around price comparison on mobile. This makes great sense if you think about it, particularly in retail stores selling higher ticket items where consumers are likely to be very keen to check prices whilst out and about in the actual store, before parting with money. Price comparison mobile portals are already available in US and the UK – the scale is small, but the use of price comparison through mobiles is set to grow.

The fourth big area of innovation will be around NFC Interactivity.

Near Fields Communication, or NFC, is an RFID technology that is much easier to use than Bluetooth or even QR codes. On a mobile device, all it takes is to just hold the device next to an NFC tag, for it to work. No fiddling around and trying to turn it on first! At the moment NFC is being used in payment cards, particularly those tied to transport systems – like the Octopus card in Hong Kong and the Oyster card in London. But from late this year, manufacturers will start putting NFC applications onto all new mobile phones, as the technology to enable m-payment. By 2009, half of mobile handsets in manufacture will feature integrated NFC capabilities, and by 2012, Icon Mobile predicts there will be 292m handsets worldwide in circulation with NFC integration.

The by-product of this rush into m-payment is that NFC will bring interactivity to static, everyday objects. It will allow mobile devices to read information or content stored in NFC tags on posters, bus stop signs, street signs, medicines, certificates, food packaging, newspapers, magazines, and so on. With NFC tags in ads on posters, consumers can use their NFC-enabled phones to download content and music, information on a new film, or tap into service initiation — accessing hotlines etc.

NFC tags will be prevalent in store. Brands will sponsor content downloads and games. For example, instead of Axe deodorant running a 10 second ad on a plasma screen high up above the shelf (which is what happens today), in future shoppers could download a game via a small piece of NFC signage at shelf, play the game and win a half-priced coupon at the end.

Paramount might – via NFC signage at shelf - provide a 60 second film trailer to download and watch, to confirm your choice of DVD. Or Nescafe might – via NFC signage at shelf - provide a 60 second news up-date at shelf, to download then watch later whilst drinking your coffee.

Retailers might also use the same mechanic to drive category growth. They might create reference points for consumers to get information on all the different brands and products (and provenance) in a category, directly onto their phone, via the WiFi network which will become the norm in all big grocers. Or, they might encourage downloading a 30 second piece of content with recipe suggestions themed by day-of-week.

Furthermore, given the inconspicuous size of this NFC signage, retailers won’t have to give up valuable shelf space for interactive devices.

NFC on mobile phones will obviously also extend to payment in-store. In future, retailers are likely to embrace m-payment as a quicker way for shoppers to pay on exit, using their phones.

What is more, convenience stores in particular are likely to create new services to facilitate quick shopping. Via a pre-loaded application, a store like 7/11 might create a pre-ordering service, whereby you could choose, order and buy some products, while walking towards the store on your way home. Upon arrival you pop in and pick up what you’ve just ordered and bought.

Having now thought a little about all four areas of innovation, what’s clear is that the mobile phone has the potential to become the device which can liberate and transform in-store communication. That is, provided we don’t abuse the shopper’s permission in the first place.

Assuming we can remain somewhat restrained from spamming the poor shopper to death, everyone will win. Communication will demonstrably create brand and category growth. Retailers will be able to gain a new revenue stream from manufacturers without having to clutter up the aisles. And manufacturers will be only too happy to pay for it.

Within the manufacturer organisations, there might even be an interesting by-product of all this. Namely, because ‘mobile’ is currently a ‘marketing’ communication channel, when it moves into the store environment, it will challenge trade marketing’s historical dominance of ‘in-store’. As a result, we’re more likely to see genuine integration between marketing and trade marketing, of communication budgets and efforts, in this environment.

Jim Taylor
Regional Director, Retail
Mediaedge:cia

(*) Presumably this will also be extended to offer reminders that you had something to buy in a given store when you happen to be passing the store.