The Value Pyramid of Shopper Media

Measurement schemes are coming thick and fast from various groups claiming to have the last word on measurement of shopper media. At last count at least three groups were competing over this:

The P.R.I.S.M. (Pioneering Research for an In-Store Metric) project, originally organized by the In-Store Marketing Institute (www.instoremarketer.org) in 2006, has been an important catalyst for the marketplace. Now in phase II, a 26-week market test, the stated goal is to develop an “in-store GRP” or gross rating point, aimed at a identifying a comfortable metric for the media buying establishment. With strong support from Nielsen In-Store and numerous large brand marketers and ad agencies, P.R.I.S.M. is a leadership voice in establishing a standard for store-level data.

Not to be outdone, OVAB, the Out-of-home Video Advertising Bureau, (www.ovab.org) released its Audience Metrics Guidelines report in August. The report advocates an “average unit audience” principle for measuring digital media in various physical settings that incorporates both opportunities to see and variable units of viewing time appropriate to each viewing context.

POPAI, the Point-of-Purchase Advertising Institute, which bills itself as the “global association for marketing at retail,” (www.popai.com), released its report, Digital Signage. The Global Study. Opportunities and Risks in August in conjunction with the German association, GIM (Gesellschaft für innovative Martkforschung). The scope is broad – on the global digital out-of-home (DOOH) marketplace, and the focus is again largely on audience measurement.

In addition, Digital Signage Today (www.digitalsignagetoday.com) released a sponsored report, Measurement and analysis for digital signage, that explores audience measurement and proposes a multi-tier way of looking at in-store ad value, encompassing proof of ad delivery, proof of audience delivery and sales uplift. There’s promise in this approach, I think.

All these measurement studies attempt to bring welcome rigor to the realm of shopper media metrics. It’s widely understood now that simply counting the number of people who walk in the front door of a store does not adequately document an audience. Nor does it come close to reflecting its value to advertisers using an in-store network. P.R.I.S.M. has introduced a useful scheme for dividing a retail store into messaging “zones” or channels corresponding to merchandise departments and high-traffic power alleys. This is a welcome refinement versus a people-counter at the front door, but I think it’s only a step toward the ultimate requirement, a sales and ROI sensitive measurement system.

Audience metrics are necessary, but not sufficient. The Shopper Media ROI Pyramid, pictured here, presents a conceptual framework for a more robust value metric:

O2C: At the base are “opportunities to see” – communications that have reach and frequency only. This is what the PRISM initiative has learned how to measure in Cost Per Thousand Impressions. This is a metric best expressed in some analog to gross rating points (GRP). It reflects how many messages are sent and the theoretical size of their audience. O2Cs are cheap and plentiful – and, like “traditional” media, linked tenuously to actual sales lift.

View: Next up are views that can be actually proved. Some current shopper media are capable of metering actual views through use of electric-eye people counters, embedded cameras, shopping carts with embedded RFID tags, digital image analyses, etc. This is a “page view” metric, to use a Web metaphor – greater in number than O2C but still relatively low in individual value.

Do: Next up the scale are communications that stimulate some kind of interaction that might precede a sale. This may include pressing a touch screen for further information, taking a coupon or “take-one”, trying a sample. This is a “click-through” metric, fewer in number but of greater value to marketers.

Buy: Next up the pyramid are communications that may be directly related to product trial or sale. This “purchase” metric will be more scarce, but even more valuable.

Loyal Behavior: At the pinnacle are in-store communications that contribute not just to a single purchase but to enduring affective and behavioral change. We call this loyalty, and it is rarest and dearest of all. Loyalty may only be detected by a marketer with a plan – a frequent shopper card program or other longitudinal tracking mechanism capable of linking together multiple purchase events by the same shopper.

As a marketer, I would require that all these layers be measured and modeled so that I can truly understand the ROI of my in-store communications. As a retailer hosting these messages, I would require that I get paid in accordance to the value delivered at each of these levels. As an in-store network operator, I would seek a way to justify compensation at each level as well. As a brand marketer, I would pay almost any price for provable sales ROI metrics and probably donate a vital organ for reliable proof of loyal purchase behavior.

My opinion? Opportunities to see are a poor proxy for measuring sales lift and repeat purchase behavior. I’m unimpressed by in-store GRPs and believe shopper marketers will require direct ROI measures. If this prospect makes the media buying establishment feel a bit queasy, I say get over it. It’s a digital world. Sampling and averages reflect outdated, analog thinking.

© Copyright 2008 James Tenser

NOT TV!

SHOPPER MEDIA – digital and not – are one class of tools for shopper marketing. Almost any in-store message, measured in isolation in a controlled test, can deliver a sales lift. In this mode, the message does its magic by “activating” shoppers’ pre-existing propensity to select an item or a brand. Or to put it in crude terms–it helps them to notice the product, then buy it.

Not rocket science. Retailers today can use very simple and low-cost digital display systems to promote their higher-margin store brands this way. They can measure the success of this activity at the POS and prove ROI. It’s a very valid and easily attainable use for digital shopper media.

Walmart’s network provides a channel for brands. With 140 million shoppers per week, it claims network-sized audience numbers. No doubt it sells some incremental product, but it is profitable up front because what it really sells is audience access to advertisers. It’s got impressions by the megaton, which may seem attractive and familiar to advertisers, but not so much to promoters.

For 2009 I foresee a rise in awareness of shopper media for promotional purposes – with applications that will slash technology and content production costs and deliver a higher, clearer return on investment: Small screens, not large. Locations at the point of decision, not in lobbies or power aisles. Store brand focus on par with national brands. And tailored to shopper experience – not an assault on the senses.

The new in-store audience measurement methods are designed to help agency media buyers feel better about spending their client’s ad dollars on a media environment they really don’t understand. “Customization” in this context seems to mean playing different messages in different areas of the store or during different dayparts. I suppose breaking a large store up into virtual “channels” this way holds some validity, but it feels forced to me.

Despite the glowing screens, this is not TV. It’s a mistake to carry the metaphor too far in the retail environment. And there are marvelous opportunities ahead for retailers to deploy shopper media as integral elements of their selling machinery and shopper experience.

© Copyright 2008 James Tenser

Marketside Rises in Phoenix

IT’S NOT QUITE your grandmother’s corner grocery store.

I had the opportunity to join residents of several East Valley communities near Phoenix at a preview of a possible small-supermarket future on Oct.4, when Walmart simultaneously opened of four 15,000 square foot Marketside stores.

The Marketside openings seem like a challenge to UK grocery powerhouse Tesco, which already operates 25 of its small-footprint Fresh & Easy Neighborhood Markets throughout greater Phoenix.

“This is a conventional grocery store shrunk down,” said John Rand, director of retail insight for Management Ventures, Inc., who was spotted taking notes at the Tempe Marketside location. “Shoppers will understand it immediately, whereas people are still figuring out Fresh & Easy.”

The Marketside assortment heavily features national brands, a marked contrast with Fresh & Easy, which emphasizes private label. However like the Tesco format, this new effort from Walmart features an appealing range of ready-to-eat, and ready-to-prepare foods and meal kits, evidently intended to serve the grab-and-go lifestyle of many busy consumers. The company also claims some 300 natural and organic products throughout the store. Prices were deemed “competitive” by several observers and competitors on the scene – some visibly lower than conventional supermarkets, but only a few matched the Walmart Supercenters that seem to permeate the area.

The four Marketplace units are located in freestanding former Osco drug store locations. At least one location still had its drive-thru intact – a porte-cochere-like structure that could be adapted for grocery pre-order pickup, although no such services were offered. On the opening Saturday, arriving crowds were tempted by indoor and outdoor sampling stations offering deli meats and cheeses from suppliers Dietz & Watson, Sushi rolls from Chef Select, Marketside pizza, and 8 ounce bottles of Vitamin Water beverages.

A variety of prepared food items – side dishes, entrées and “family sized” meals – were offered for $2, $4, $6 and $8 each, displayed in sleek coffin coolers. Shrink-wrapped meal kits, priced at around $10 and $11 included chopped raw ingredients and sauces for such dishes as chicken fajitas, Mongolian beef stir fry and Asian orange chicken. Staffers clearly were challenged to keep these displays filled, as shoppers armed with opening day coupons (one offered a discounted price on an entrée of six cents) emptied them into their carts.

All prepared and ready-to-prepare foods had two-inch wide adhesive labels indicating the date each item was prepared and when it should be used by. These items are packed and delivered to the stores by an area contractor, according to an employee. In contrast with Tesco’s Fresh & Easy operation, which does its own food prep and pack at a centralized facility for shipment to the stores, Walmart has not yet set up such a facility.

We learned some local residents had received gift bags filled with product samples and coupons in the days prior to the opening. They may have brought in the crowd at the Chandler store on Saturday morning, but there were also an impressive number of observers, staff, and local Walmart employees on hand, and at one point a busload of Asian visitors who were evidently on an organized tour.

Three of the four stores offer beer and wine, however the Chandler location did not, and employees volunteered that this was because of its location directly next door to a KinderCare day care facility. As a result, the Chandler store had a little bit of floor space to spare, which was largely absorbed by what may be described as a “power square” where temporary promotional displays were located. One pallet display was stacked with cases of Niagara drinking water, 24-count half-liter bottles, priced at $2.97. Another offered 3.25-ounce bags of Pop Chips, “market value” at $1.50 each. Other display tables offered baked goods and fresh fruit – bananas were 68 cents a pound, and medium honeydew melons were $3.27 each. One shopper commented that this area, at least 20 feet wide, would easily accommodate eight or more café tables and chairs during the lunch trade.

A visiting Walmart operations person informed that energy-saving features adapted from the well-known Walmart green project stores in Texas included pull-down “shades” on the cooler cases that can be closed at night to save on electricity use. Overhead lighting was compact fluorescent throughout, with liberal use of LED lighting in the black-framed freezer cases that made product stand out clearly, even through the double-glass doors.

Notably, package sizes throughout the store were small, a contrast with Walmart’s supercenters. Individual steaks were available in the meat case, and the largest size liquid laundry detergent available was the 50-load concentrate. This perhaps reveals a great deal about the Marketside method – it’s designed to serve the grab and go world of commuters and single-person households. Mass consumers would do better to pilot the SUV over to Sam’s Club or the Supercenter.

© Copyright 2008 James Tenser

Bulletin from the Big Easy: Giant Killers

I RETURNED FRIDAY from the Northshore Business Conference, sponsored by the Southeastern Louisiana University Small Business Development Center, where I was privileged to be invited as the keynote speaker. (The event brochure may be downloaded here.)

The event took place Sept. 25 in Slidell, LA, a fast-growing town located north of Lake Pontchartrain, which makes it a bedroom community for both Baton Rouge and New Orleans. The area is enjoying a modest economic boost due in part to the displacement caused by hurricane Katrina a little more than three years ago.

Conference delegates represented regional retail, wholesale, service, finance and other trades. Especially considering the duress some of their businesses had just suffered due to the one-two punch delivered by hurricanes Gustav and Ike, I was grateful for their attendance.

My talk delivered a snapshot of current economic, retail, consumer trends; discussed where they are leading the industry; and proposed how independent retailers – “Giant Killers” – might position themselves for success within that competitive landscape.

Preparing for and attending this conference was a learning experience for me. In particular, I’d like to relate two brief anecdotes about the flexibility and resilience of businesses in Louisiana’s North Shore that are worth at least a second thought.

First is from an area fencing wholesaler who attended the conference and was evidently engaged and enthusiastic throughout. At the break he described how post-Katrina re-development had caused demand for fencing materials to boom. His business had grown considerably and he had expanded his facilities. Some retail competitors were not so lucky, however, so home and business owners were coming in to his warehouse searching for materials and parts which had become harder to find locally.

“We are being pushed into retailing,” he said, expressing some regret that his newly enlarged warehouse did not have a showroom area set aside for the walk-in business. The good news: some of the parts now in greater demand bring higher margins. The bad news: the new direct-to-customer business adds complexity, expands his assortment, and requires longer weekend operating hours. Talking to this energetic and positive business owner, I had little doubt that he would rise to the opportunity.

The second anecdote involves Folse Seafood, a retail and catering business operated by Jerry Folse and his son Jay out of Gonzales, LA. I was impressed by some press coverage I uncovered while researching my talk, and decided to give them a call. The answering machine indicated that the shop was temporarily closed following Gustav and Ike, but gave another number for Jerry, which I dialed.

To my surprise, Jerry answered his cell phone from the cab of an 18-wheeler. He and Jay were caravaning in two rigs toward one of the oil refineries in southwestern Louisiana, on a catering job. It seems the 2,000 workers laboring around the clock to bring the refinery back on line needed to be fed, and Folse Seafood had thousands of pounds of frozen shrimp and house specialty crawfish bisque that could keep the hungry workers nourished.

“Our power was out, and I knew the merchandise in our freezers would eventually go bad,” Jerry told me. “I sent ten emails to contacts I had at the oil refineries and other businesses along the Gulf Coast and six of them responded ‘yes we need you’.”

He booked a month’s worth of catering business at facilities in Louisiana and Texas, closed the retail location, loaded the trucks and hit the road. I asked Jerry if he was worried about the consequences of closing his doors for so long and the certainty of his answer impressed me deeply: “Our customers will come back to us in late October when the new crawfish season begins.”

Both these stories tell us something about the resilience and ingenuity of independent business owners in the face of extraordinary circumstances. I can hardly imagine a chain retailer responding to local challenges with these levels of commitment and creativity. Hats off to these “giant killers” and their peers across the Gulf Coast who are battling their way back to prosperity with grit, smarts and heart.

© Copyright 2008 James Tenser