The year 2005 was a breakthrough one for in-store
television. Too bad 2006 started off on such a down
note.
With Target, Albertsons, Kroger, and numerous
smaller retailers introducing narrowcast networks
for content and advertising into their stores in
2005, the narrowcasting industry finally had the
banner year some had been predicting for nearly a
decade.
Then came 2006, and reports from the U.K. that
the chain-wide rollout of "Tesco TV" had stalled,
presumably because the initiative has engendered
little interest among the network's primary
advertising base of top packaged goods companies.
And thus, the other shoe has dropped before most
of the retail world has even put on its socks.
Tesco's deployment has been the bellwether, the
model retailers here in the U.S. (or, at least, the
suppliers presenting them with proposals) have
thought to emulate as they cautiously enter the Age
of Retail Media.
All hope, however, should not be abandoned --
unless those hopes have been pinned on a
get-rich-quick-plan to sell ad blocks on in-store TV
networks. It's already common knowledge that
traditional TV spots don't work in the store
environment; retailers and advertisers should
likewise understand that in-store TV networks can't
operate the way broadcast networks do.
In a
report on the state of in-store digital media
written for the Institute, co-authors Bill Collins
and Laura Davis Taylor posit that retailers should
not be looking at narrowcast or digital signage
networks solely as a method of generating
advertising revenue. Instead, they should examine
the potential for digital media to enhance the
shopping experience for customers, improve the work
environment for employees, and, by doing those two
things, increase sales and profitability. Collins
calls it the Indirect Revenue Model. He notes that
this approach doesn't exclude the inclusion of paid
advertising.
What it does exclude is TV networks that aren't
fully integrated into the retailer's marketing and
merchandising strategies. In its most basic form,
integration means displaying the advertised products
near the screens. Studies on the sales lift produced
by networks tested at two other U.K. retailers, Asda
and Spar, found that in-store advertising works far
better when the product is right there.
And what the Indirect Revenue Model requires is a
network that compliments, rather than distracts
from, the store's intended atmosphere and makes it
easier, not harder, to shop. A satellite beaming in
hours of product advertising is never going to do that.
A better bellwether for the industry may, in
fact, be Target, which very
quietly rolled out a digital network in 2005
whose strategy appears more closely aligned with
Collins' Indirect Revenue Model than most previous
network rollouts. The company is keeping mum on its
plans, but what's obvious from visiting stores is
that the goal is to make in-store TV a seamless
addition to the environment.
That's not to say Target's plan ultimately will
prove perfect, or even that Tesco's is unsound just
because advertisers are proving reluctant initially.
There's still a lot of work to be done before the
ideal model (or models) for in-store networks is
achieved.
So watch out for more shoes.
Peter Breen
Managing Director, Content
In-Store Marketing Institute
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