How not to annoy your customers

Font Size

Print

Feedback

Email

Discuss

: 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.

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, 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. 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 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.