Shopper marketing may not be sexy, but it gets results. More evidence of this: Grey Group is setting up a new shopper marketing operation to work for client Procter & Gamble now that G2, the agency’s retail unit, is merging with OgilvyAction to create a bigger activation agency. The Grey launch underscores the importance of the retail discipline to mainstream agencies as something more than a tactical effort left to specialty shops.
Shopper marketing runs the gamut from displays, packaging and promotion to sales. It has been growing at more than 21 percent annually, according to Deloitte and the Grocery Manufacturers Association, with companies like P&G said to spend at least $500 million at point of purchase annually.
“There’s growing recognition that retail is the center of gravity in marketing. In all its manifestations, whether online, e-commerce, in-store or mobile, retail is in the center of everything a brand touches,” said Tim Manners, founder of retail marketing The Hub Magazine. “There’s also greater recognition of its potential as a marketing platform, not just a distribution channel. Retail is unique. It’s the one place where both sales and marketing happen at the same time.”
In the Hub’s newest annual ranking of the top 20 shopper marketing agencies and brands, it noted that marketers are placing more importance on the practice when ranking agencies. “Shopper marketing concept and understanding” rose to the No. 1 criteria among agencies, up from No. 9 in 2012. Another change: P&G regained the top spot among brands, bypassing Unilever, which was ranked No. 1 last year.
P&G is widely considered to be a pioneer in shopper marketing, with former chief A.G. Lafley calling it “the first moment of truth.”
Dina Howell, worldwide chief executive of Saatchi & Saatchi X, was the leading architect of those initiatives at P&G. Her first project was for Walmart in 1997. The retailer was frustrated because 70 percent of moms’ baby purchases were for lower-margin diapers and formulas. Howell oversaw creation of the first baby center where infant products, previously dispersed through the store, were organized in one aisle.
“It quickly got results that showed moms lingered longer and spent more money. It was more profitable for retailers and better for the manufacturer because they were able to have more of a dialogue with these moms,” Howell said. “It changed the way marketing happens with shoppers. A marketing plan is not complete without understanding how a shopper shops. People are in their final throes of getting ready to spend money, and they are very open to new information.”
Selling at retail has become more than sales promotion. It’s become a necessary part of a brand’s efforts to gain share and build equity, proponents argue.
“P&G was the first company to get into it and view it as strategic marketing,” said Chris Hoyt, a former P&G exec, of consulting firm Hoyt & Co. “Shopper marketing is really marketing today. Sorry we still consider it as a separate discipline.”