By Nikki Baird, Managing Partner
12/11/2007
This week heralds an announcement by Nobel Biocare of a new network aimed at dental office lobbies, and powered by c3ms and Real Digital Media. I’ve covered retail media networks for awhile now, but even for me, this gets a bit outside my coverage area. So why write about a healthcare media network? This one is different – and it has some important lessons for retailers.
There are two unique things about Nobel Biocare’s network, called “NobelVision”:
- A manufacturer is running and promoting it. While c3ms operates NobelVision, and RDM is the company providing the technology to power the network, Nobel Biocare is the one who is on the hook for this network. They provide the content, and they are providing the feet on the street – through their already substantial product sales force – to convince dental offices to sign up for (and invest in) the service. The retail parallel is as if Frito-Lay went out and sold a network to a bunch of independent grocers, using their product sales people – and promotional deals tied to product sales – to convince grocers to jump on the bandwagon. (I’m just picking on Frito-Lay, by the way – they have no plans to do this as far as I know).
Why is this so key? Because it eliminates a serious catch-22 that plagues retail media networks. As an independent network provider, you have to go out and convince retailers to sign up for the network by promising that after they spend the pain (and potentially money, depending on how the deal is structured) to get the network installed in stores, some kind of ad revenue benefit will follow even though the network has few if any committed advertisers to-date. And on the advertising side, the network is just as stymied: you have to go to advertisers promising that they will have substantial reach – once you get your screens installed in stores – if they’ll just commit to advertising up front. As retailers and brand advertisers eye each other from afar, waiting for the other guy to commit, the network suffers from both a lack of advertisers and a lack of screens and never gets off the ground. Because Nobel Biocare is pushing the network through its established relationships between dental offices and the company’s reps, and it has a long relationship with its customers, it eliminates both the commitment problem – clearly Nobel is committed to the “NobelVision” network – and the reach problem, by having a built-in sales force to convince its customers to sign up.
- The main business case is not the advertising. While NobelVision will carry ads targeted to end consumers, it’s the educational benefits to the locations, not the ad revenue that is driving the business case. Retailers typically dismiss these as “later” or “soft only”, as our research panel confirmed in our report on the business case for retail media networks. For Nobel Biocare, this is actually a major benefit, both to them as the host for training, and to the dental offices, who typically have to travel and take time away from their businesses in order to take training.
While retailers don’t usually have continuing education certification requirements like doctors do, training is something that continues to perplex retail. In our research on Workforce Management, retailers identified major challenges around being able to provide developmental benefits to employees, and in our loss prevention research, training plays a critical role in reducing LP claims – particularly the “paper” kind that result from not following procedures. In off hours, retail media networks offer an opportunity to connect more closely with employees through a powerful digital medium, and if there is an emotional connection, odds are better that they won’t steal from you and they’ll stick with you longer. One thing our research has shown is that the cost of not addressing this is understated.
So what does all this mean for network providers?
- Get yourself a marquis brand to help sell your network. Rather than going after the retail chain first, go after the manufacturer. Don’t worry about conflict of interest – identify the biggest brand in your category and go for it. This is why Frito-Lay is a good example of the retail parallel for NobelVision. You don’t lose much other snack food ad revenue potential by targeting Frito-Lay as a sponsor, because they practically own the salty snack aisle. You might encounter some issues when it comes to the soft drink aisle, since Pepsi is the parent company of Frito-Lay and not likely to want Coca-Cola on the network, but there’s still the whole rest of the center store to go after as potential advertisers that don’t compete against Frito.
- Go after product brands that have a high training requirement. Push employee training as the main driver of the business case – the ad revenue can come later. This is going to be a tougher sell to retailers, who see the value in training but not as something big enough to pursue as the main driver of the business case. But it is certainly worth putting pen to paper to better define the cost – and the value – of training retail employees.
I used to work in the home goods business, and manufacturers like Henckels and Nambe would send their reps to train our employees all the time. It might be “NambeVision” and they may not support a relationship with, say, Wilton-Armetale, their closest competitor, but a company like Nambe could have a real value proposition based off of training alone. They wouldn’t have any competitive conflict with cookware or kitchen electronics or even some of the dinnerware manufacturers, so there would be lots of opportunities for partnership. And a network in stores that trains employees on how to sell these high-end products, coupled with built-in commitments to advertise during store hours, benefits both retailers and manufacturers. Then manufacturer reps could focus on selling products to the retailer, rather than on training employees on how to sell what they already carry, and the retailer moves more bigger ticket, higher margin products – a real win-win.
There has been worry as of late as to whether retail media networks have lost their steam. That’s not the case at all – they are rather still in a phase where they are trying to define and refine a business model and a business case that is compelling to all participants. NobelVision is an interesting step in that direction, and the first real innovation in network business model that I’ve seen in awhile.
|
