By Nikki Baird, Managing Partner
9/16/2008
If the last few months are any indication, there are enormous changes coming to the role of digital media in stores. First on my radar was the Wall Street Journal article about Dunkin’ Donuts’ test of screens at registers. An exec from Saatchi & Saatchi X is quoted as a skeptic of in-store technology and digital advertising in stores in particular, underscoring one of the biggest barriers to the technology – getting ad agencies to “get it”.
That article pretty much took us back to the stone age in terms of understanding the value and the potential of the medium, first keying in on using cameras and facial recognition technologies as a way to target the ads, and then saying that marketers haven’t done even basic research on which ads are effective or the best way to present the medium to consumers. A most misleading combination of things to say about retail media networks.
I was depressed. I’ve written about “digital signage” since 2005, and things had been mostly quiet on the retail media network front since the tail end of 2007, from my perspective. Then this article. It seemed that the industry was moving backwards, not forwards.
Then came the announcement of Smart Network, Walmart’s “WalmarTV 2.0”, the next generation of their in-store media strategy. Smart Network is striving to do almost everything that people – including myself – first pointed out as the real potential for retail media networks. Everything from multiple category “channels” in stores, to welcoming messages at store entries, to different messages on the video wall in the electronics section, to deep, inventory-specific messages on screens at end caps.
Walmart has long been a pioneer in the realm of in-store media, in fact to the point that most retailers considering the capability don’t want to hear about what Walmart is up to. The common refrain has been, “Yeah, well, they’re Walmart. They can strong-arm vendors to participate if they want to. We can’t compete at that level, so just because they can justify a network doesn’t mean that we can.”
But this is where things begin to shift rapidly – moving away from the stone-age reality described by WSJ, and much closer towards a strategic – and permanent – role for in-store media as part of the communication and engagement that retailers seek to create with consumers. This is no longer a story about Walmart squeezing ad money out of suppliers. This is a story about creating a communications platform in stores for creating engaging brand conversations.
According to Richard Fisher, PRN’s president, the company is having a very different conversation with retailers than it did just a few short years ago. This sentiment was echoed by Josh Kempel at YCD Multimedia, the company providing Dunkin’ Donuts’ network. Here are three big changes they see at play today:
· A “branded house” vs. a “house of brands”. This applies much more in the case of a company like Walmart than Dunkin’ Donuts, but is still a significant shift in perception. When in-store media first became a hot topic, there was a lot of discussion about it being a real estate play for retailers – they basically found a new way to auction off some real estate in stores for a quick-hit revenue stream that could be added to the revenue garnered from shopping cart ads, floor graphics, shelf talkers, and so on. A house of brands.
But the potential is for so much more. Walmart initially tapped into “so much more” by using its network to battle a rash of negative publicity against the company, profiling store managers and employees and promoting its philanthropic works on its in-store network. But it’s grown to beyond self-promotion, to become an enabler of a brand conversation for the retailer – not just a conduit for pushing manufacturers’ branded products at the shelf. A branded house. More and more retailers are realizing the value of this and engaging with network providers with brand objectives in mind, rather than revenue streams – a strategic play, instead of a real estate move.
· Content is getting better. Not only is there more of it, there is more quality, supported by better measurements. One of the most significant pieces of the SmartNet announcement is the formation of Studio-squared, which will focus on creating content specifically for the Walmart network. This is a huge leap forward for the industry – a content house for in-store networks – that will hopefully begin to alleviate two of the biggest blocks in the industry today: one, a lack of content designed for stores, and two, a lack of agencies that understand the value of content designed specifically for stores.
· Stores are on the cusp of interactive. A lot of the screens being implemented for SmartNet are touch screens, and while there won’t be a lot of interactive capabilities out of the box, the fact that Walmart is making the investment now speaks to how soon they feel they may be able to take advantage of that capability. YCD is looking at displaying contextual content in the next iteration of its implementation to start tying cross-sell and up-sell promotions based on what a cashier enters as part of the order at the counter. And then there is the little Blockbuster/NCR initiative, taking aim at solving the challenge of digital movie content delivery for self service. For Pete’s sake, if as an industry we can figure out how to sell digital music and movies to consumers at a kiosk, figuring out how to sign them up for e-offers, or deliver coupons to their mobile phones should be a piece of cake.
It’s easy to make proclamations about the future of the industry – in 2005, when pressed, I said that the earliest that I could see in-store media really taking off was 2007, and maybe more like 2008. Revisiting that prediction, obviously it’s taking a little bit longer, but far from a return to the stone age of in-store networks, it looks like major evolution is happening. I beg to disagree with the executive from Saatchi & Saatchi X: digital content and the technologies that support its delivery to consumers in stores is not only going to happen, it will fundamentally change the way consumers engage with brands, retailer or otherwise – for the positive. That is one prediction I will stand by.
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