Selling Where People Buy: The Rise Of In-store TV

You probably haven’t heard of the Out of Home Video Advertising Bureau, but it’s just been incorporated as the latest advertising trade association. It will serve as a clearinghouse for information about in-store TV advertising, which is still a relatively tiny business by TV ad standards. But the medium is gaining greater acceptance by ad agencies, and advertisers are using it increasingly as a branding vehicle and not just as a promotion tool to move product off the shelf.

Mark Mitchell, evp, ad sales, Premier Retail Networks (PRN) and one of the organizers of the new group, said there’s a need to have a coordinated, industry-supported effort to help advertisers and agencies tap into the burgeoning medium. The group will market and promote ad-supported TV networks in retail chains like Wal-Mart, Kroger’s and Circuit City. Organizers said they expect to formally unveil the new organization in September with roughly 20 charter members. The search is now on for an executive director to run it.

The appeal of in-store TV is obvious: advertising to consumers as they’re looking to purchase. Up until recently, Mitchell said, clients have been more open to the medium than their agencies. But that’s changing, and agencies are embracing the sector as the media landscape has become more complex, Mitchell said. “I would say the top trend in this space is really agencies looking at in-store television as an integrated part of the overall media and communications campaign,” he said. “360 communications planning used to stop outside the retailer, but now you can integrate it because you have a national television audience inside the store that you can build into the planning process.”

Agencies acknowledge that they see in-store as a more viable option in today’s fractured media environment. “In the past I don’t think agencies did consider in-store TV,” said Bob Bernstein, evp, media director at Interpublic Group’s Draft FCB Group. But now, in the increasingly media-neutral world, he said, “everything’s open, including in-store.”

PRN, which provides ad-supported content to 6,000 stores nationwide, reaches 225 million viewers a month, said Mitchell. About 150 million of them are Wal-Mart shoppers.

Estimates on the size of in-store TV advertising vary, and one of the tasks of the new trade group will be to calculate an accurate tally. PQ Media puts the total at just under $100 million for 2005, up 45 percent from the previous year. But Mitchell said PRN by itself sold about $100 million in ads two years ago and that sales have grown more than 10 percent for each of the past two years. PRN hasn’t disclosed sales figures since being acquired in 2005 by Thomson, the video technology company, for $285 million. Other in-store network providers include SignStorey and Ignition.

Another major player in the category, InStore Broadcasting Network (IBN), believes ad dollars in the sector may reach $1 billion by 2008. IBN provides both TV and radio ad-supported networks to over 15,000 grocery and drugstores. IBN CEO Rob Brazell said one major packaged-goods company plans to spend $350 million on in-store TV next year.

And where are those in-store dollars coming from? “About 99 percent of this budget is coming from traditional television,” said Brazell. “No one has told us it’s coming from elsewhere.”

While still a tiny medium (total TV ad dollars this year are $75 billion by comparison), the Wal-Mart Network actually has its own ‘upfront,’ this year to be held on Sept. 21. Last year’s event drew 325 ad execs, up 25 percent from the previous year.

Agency executives agree that in-store advertising is growing at the expense of traditional TV. “Where you used to be able to aggregate a mass audience with TV, now the only place those brands can reach the target demographic is at the point of purchase in the store,” said David Sommer, managing partner of MEC Retail, a unit of WPP’s Mediaedge:cia.

What’s more, advertisers and their agencies increasingly see in-store TV as a branding opportunity. “We’re looking at it as another layer in an integrated campaign, to build upon the message,” said Gene Kelsey, vp, Brand Strategy Group, Panasonic. “So we use it in conjunction with other media options. We know that these messages at the point of retail get people talking about the brand and get them talking about the product.”

Carmaker Toyota is a Wal-Mart Network advertiser, and, for the first time, Bank of America is testing some ads on that system as well. Chevrolet buys ads on the in-store networks in both Best Buy and Circuit City.

“There’s growing interest in catching the consumer while they’re out and about and potentially looking for that next car,” said Chistina Radigan, associate director, marketing and communications, at the out-of-home arm of Omincom’s OMD.

“You’re seeing more of an interest among advertisers to focus on the branding campaign,” said Diane Williams, product manager at Arbitron who has overseen market research studies on retail media usage. “Since consumers see retail media as more upscale and progressive, the medium itself can influence the perceptions of the brand and the store.”

Clients are also producing more original ads for in-store use, instead of just repurposing traditional 30-second TV spots. One example: Earlier this year, Unilever ran a unique-to-Wal-Mart spot tied to its “real beauty” campaign. But instead of featuring a bevy of babes with different body types posing in their underwear, the Wal-Mart spot featured an elderly company employee talking about how pretty she feels, wrinkles and all. Unilever declined to comment for this story.