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Communication at the First Moment of TruthRetail Media Networks


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Retail Media Networks Communication at the First Moment of Truth

Contents

1. Introduction 2

2. Profiting from Retail Media Networks 3

2.1 Advertisers 3

2.2 Retailers 4

3. Digital Signage One Medium, Many Screens 5

4. In-Store Radio Tuning into your Brand 6

5. Interactive Kiosks Sales at your Fingertips 7

6. Content Creating the Difference 8

7. Conclusion 9


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1. Introduction

Two trends are re-shaping the advertising industry today. The first

is the decline of mass media. The second is the realisation that

communication at the 'first moment of truth' at the point at

which consumers become shoppers has a more direct impact

upon buying patterns than do traditional forms of advertising.

Today, brands and retailers are using a new media estate Retail

Media Networks to exploit the opportunities created by these

trends and address consumers directly at the 'first moment

of truth.'

In 2005, Bob Jeffrey, CEO of the international advertising

agency JWT said, It's a forgone conclusion that network TV

will decline if it continues to operate on the same model," and

predicted that brand spend on television advertising would halve

over the next five years. The reasons for this decline are not

hard to figure out. The increase in the number of TV channels

has made audiences harder to find, while the growth of new

media the Internet and mobile phones, for example means

that, for many, TV is no longer the prime source of multimedia

content. Also, Digital Video Recorders (DVRs) have made it

easier for consumers to skip ads today's DVR early adopters

watch 60% of their TV from the hard drive and skip 92% of

ads in those programmes1

. And Video on Demand threatens

to eliminate television advertising altogether.

While television has declined, insight into consumer behaviour

has improved. Traditionally, the term consumer has been used

simply as a synonym for people. In fact, there is a clear

distinction between shoppers and consumers, as their

fundamental state of mind is different. Shoppers are selecting

and buying one of a large variety of different products, often in

a distracted state, with a need to find the products they want

quickly. Consumers are using products in action. Consumergoods giant P&G describes these states of mind as the first and

second moments of truth.

The problem is that, so far, the advertising industry has focused

solely on the second moment: what the product does (it washes

whiter). But, as the Point of Purchase Association International

(PoPAI) points out, around 70% of product decisions are made

at the point of sale2

at the first moment of truth. As Jim

Stengel, Chief Marketing Officer of P&G explains, "There must

be and is life beyond the thirty second spot... We must

accept the fact that there is no 'mass' in mass media any

more, and leverage more targeted approaches.

Against this background, Retail Media Networks (RMNs) have

emerged as a powerful new medium for brand advertisers. As

industry analyst Forrester says, Retail Media Networks reach

consumers who are otherwise opting out, fast forwarding, and

just plain tuning out advertising. Retailers, manufacturers, and

media companies benefit from reaching shoppers where they are

naturally receptive to selling messages.3

Collectively, the decline of mass media, the growing realisation

of the importance of reaching shoppers at the first moment of

truth, and the emergence of RMNs have encouraged the major

brands to move significant amounts of their advertising spend

away from traditional media. For example, P&G have restructured

their promotional mix, moving a substantial portion of their

marketing spend from TV advertising to in-store media4

. They are

not alone: international brewer Heineken recently announced

that they would no longer do TV advertising (apart from break

bumper idents) as their core consumers young, affluent males

are watching less and less TV. Instead, Heineken will focus

solely on in-store promotion and sponsorship.

RMNs bring in-store advertising alive using still pictures or

dynamic video animations on plasma or LCD digital screens of

different sizes. However, an RMN is not merely about screens

or technology: it is a sophisticated communications medium

that brings the inspiring messages from communications and

marketing professionals to the shopper audience. It embraces

the business and creative processes required to produce,

schedule and deliver content that creates real revenues for

both advertisers and retailers. Just as importantly, it also has

its sophisticated technical side, which requires the skills

and experience of communications experts to ensure

flawless functionality.

Hughes is helping a number of retailers, including Wal-Mart

and Tesco, to exploit the revenue-generating opportunities made

possible by Retail Media Networks. This White Paper captures

that experience and provides a guide to how RMNs provide

retailers and brand advertisers with exciting, cost-effective new

tools to accomplish their goals and stay ahead of the competition

in the demanding retail marketplace.


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www.hughes-retail-solutions.com 3

2. Profiting from Retail Media Networks

2.1 Advertisers

From an advertisers perspective, the advantages of RMNs are

all to do with getting more bang for the advertising buck. Retail

Media Networks can provide advertisers with cost-effective

access to ABC audiences in the millions. Whats more, whatever

the RMN or network TV slots being compared, the RMN

audience is qualitatively much better than the traditional

network TV audience in one crucial aspect: TV viewers may

watch an advert, but only shoppers buy. Through moving

advertising from a passive environment (in-home TV) to one

where shoppers can simply pick the item from the shelf,

advertising becomes dramatically and measurably

more effective.

Most retailers have an excellent understanding of their footfall:

who shops in their stores, when, how often, and increasingly

with the on-going growth of loyalty programmes exactly who

they are. This is valuable information to the advertiser who, withthe high costs and fragmentation of traditional media, is

struggling to reach this audience in a cost-effective manner.

It is also an excellent basis on which to build an advertising

campaign. With a few million customer visits per week, a major

retailers footfall quickly adds up to a higher rating than most

TV programmes can offer!

As with traditional forms of advertising, the level of return on

Retail Media Network advertising mainly depends on the size

of the audience (i.e., the number of customers exposed to the

RMN) and how the RMN is deployed resulting in a measure

of the opportunities to see (OTS). For example, Tesco TV uses

a ratecard developed by JCDecaux that offers advertisers 4.6

million OTS in the beers, wines & spirits section or 11.5 million

OTS in the power (main) aisle, on a bi-weekly basis.

Hughes generally encourages retailers to show content

appropriate for the different zones in the store in which Digital

Signage is situated, whereby each zone would typically have its

own channel. As well, in order to give the brands a clear idea of

the return on investment they can expect, Hughes recommends

that retailers follow the example of Tesco and other leading

retailers and utilise a ratecard, which provides advertisers with

a clear idea of the costs entailed and the number and type of

customers typically reached.

Retail Media Networks can have significant impact on positive

brand equity, leading to both immediate purchase motivation

as well as repeat purchases. For example, one study shows that

brand recall for viewers of Wal-Mart TV was 65%, versus only

23% for in-home broadcast television viewers5

. Another study

shows that shoppers are 52% likelier to agree with positive

statements about a brand after viewing advertisements on a

Retail Media Network, compared to shoppers who did not see

the advert6

.

While traditional advertising measurements revolve around

issues such as attitudes, likelihood to purchase and brand

equity, advertising on Retail Media Networks directly at the point

of sale adds another, more immediate dimension to effectiveness

measurement: sales receipts. By comparing results with control

stores, the return on in-store advertising on an RMN can be

accurately measured. Figures vary, of course, but one example

shows the potential: alcoholic drinks manufacturer Pimmsdeveloped an infomercial for Tescos Retail Media Network that

showed how to mix this classic summer drink; combined with a

spell of hot weather, this drove a sales increase of 77%7

. How

immediately and significantly RMN advertising can influence

shopper purchase decisions was determined by the 2005 study

above, which showed that shoppers were over three times as

likely to purchase advertised products today, compared to

those they did not see advertised.




2. Profiting from Retail Media Networks

2.2 Retailers

Two of the key benefits that Retail Media Networks offer to the

retailer have been implied in the previous section. The first is

the sales uplift driven by brand advertising, which is of equal

benefit to both the advertiser and the retailer. To this must be

added additional sales uplift from the retailers own promotional

activities. The second benefit to the retailer is the opportunity to

generate revenue from the sale of advertising time on in-store

media which is the flip side of the advertisers purchase of thistime. In this respect, the retailer is acting much the same as any

other media owner that sells advertising on their estate.

Beyond brand advertising revenues and sales uplift, RMNs

provide the retailer with other significant benefits, including

providing images or entertainment content to enhance both the

shopping experience and the retailers brand identity, as well as

enhanced flexibility and significant cost reductions versus

traditional media such as posters.

As todays consumers spend more time at work and have less

time for leisure, shopping must become easier and more

entertaining if it is to compete successfully for the attention of

the consumer. A Retail Media Network can help achieve this by

creating a stimulating visual environment that extends beyond

traditional promotional information. Whats more, in store

windows, particularly in a high-street environment, RMNs

increase traffic or footfall into the store, potentially even

supported by a sound system that uses the window surface

as the loudspeaker.

The flexibility of the medium allows content to be varied by time

of day and day of the week according to shopper demographics.

Entertaining videos or stock market data, traffic information or

the weekends weather forecast make content even more relevant

to shoppers.

Additionally, both advertisers and retailers can combine

Interactive Kiosks with large Digital Signage displays to generate

significant additional customer attention, particularly in the

Home & Entertainment section. These displays either generate

customer interest for new titles (by making the top-100 chart

titles available for preview) or stimulate interest in older stock

that needs to be sold.

RMNs also provide other benefits that contribute directly to the

bottom line. Replacing cardboard with Digital Signage revolu-

tionises the customer engagement by enabling retailers to react

swiftly to circumstances, both internal and external, in order to

influence consumer behaviour in real time. Links to the retailers

stock management system allow the retailer to promote goods

that would otherwise have to be marked down or to automatically

pull adverts if a particular product is sold out (even on a store-

by-store basis).

For example, if perishable goods are nearing their sell-by date

or fashion items need to be shifted before the seasons or public

tastes move on, then this stock can be promoted almost instantly

via Digital Signage or even In-Store Radio. In the face of

changing external circumstances, e.g. when weather conditions

increase demand for cold & flu remedies or sunglasses, the

retailer can quickly also use the RMN to promote the

appropriate merchandise.

In terms of cost savings, digital content produced for use on

an RMN is produced only once and provided wherever and

whenever it is needed. The costs of doing so can often be orders

of magnitude less than the cost of creating cardboard POP

materials which then have to be physically distributed and

installed. For many retailers, the savings can amount to millions

of Euros or Pounds a year and represent a significant return on

the Retail Media Network.

However the Digital Signage, In-Store Radio or Interactive Kiosk

components of Retail Media Networks are used, regarding them

as a straight replacement for classic POP advertising that simply

substitutes moving pictures for static ones or provides greater

depth to audio, catalogue or how-to offerings significantlyundersells their value to shoppers, retailers and advertisers.

Illustrations of the many uses and benefits of these components

are provided in greater detail below. Almost any retail outlet,

whether banks, insurance companies, hairdressers, DIY stores,

car dealerships, pharmacies, grocery retailers, fashion stores,

travel agencies or any other type of business can benefit from

communicating at the first moment of truth.


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3. Digital Signage One Medium, Many Screens

Screens are obviously the most visible component of a Retail

Media Network. With the plummeting costs of screen technology,

a wide range of screens is increasingly replacing traditional,

static cardboard materials or displays. The spectrum of Digital

Signage varies from 6 to 8-inch screens that can be integrated

with the goods on the shelf up to 60-inch LCD and plasma

screens that are typically mounted at or above eye-level in open

areas of the store, such as aisles. Even larger displays can be

created using video walls which link several screens together

to make 2 x 2, 3 x 3 screens, or even larger displays.

Clearly, shelf-space is a retailers most valuable asset, so it is

important to complement this space with types of screens that

are appropriate both to different parts of the store and to

different types of content. At the same time, there are no

hard-and-fast rules about the size or position of the display.

The unit price of the advertised goods, the significance of the

shelf space, in-store traffic patterns and the need to move

particular lines of stock are all part of the decision-making

process when planning Digital Signage.

Of course, traditional printed materials dont make many

inroads into available shelf-space and the retailer planning

Digital Signage should ensure that the screens fit into a similar

environment: they need to be small enough to maximise shelf-

space while not hiding the product itself, but still large enough

for the content to attract the shoppers attention and influence

the first moment of truth.

Large screens are typically deployed overhead at the entrance

or in the main aisles and provide corporate messages relevant

to the retailers business as a whole: branding, customer service,

loyalty programmes, etc. Product-related messages applying tothe whole store (such as special offers or new products), menus

consisting of items found throughout the grocery store or

complete outfits displayed in different areas of the fashion

boutique may be appropriate for the main aisle: however, more

detailed information about individual products is generally

better suited to smaller screens in the individual category zones.

Information services such as news, weather or traffic updates

also make good content for such large screens. Big indoor

displays, combined with an In-Store Radio channel, can

enhance the shopping experience by creating an even more

attractive destination inside the store and help to ensure that

shoppers return.

Smaller LCD screens can be used on the shelf to show

information directly related to adjacent products. This includes

even the refrigerated areas where small screens can bring

advertising clips directly to the shopper selecting a brand of

ready-made dinners or ice cream. The shoppers selection of

more complex goods can be aided with the addition of

Interactive Kiosks.

It is worth considering different sizes of screens in the same

area for different purposes, e.g. larger ones for the whole zone,

to deliver branding messages and enhance the shopping

experience, medium-sized screens for product information

(possibly even as Interactive Kiosks) and smaller ones to draw

attention to or provide information about individual products.

Digital Signage solutions can also be deployed in the shop

window, acting as a kind of barker to increase footfall by

attracting passers-by into the store. This is particularly popular

with real estate or travel agents who have constantly rotating

information on the latest homes or holiday deals.

Longer pieces of content are appropriate to areas with high

dwell time, such as the deli counter, whereas content in the

main aisles must capture the shoppers attention and deliver

the message in just a few moments.

There are particular lighting requirements for some types of

Digital Signage plasma screens are not sufficiently visible in

bright daylight conditions, so high-brightness LCD screens must

be used. It is also important for screens to have a wide viewing

angle to maximise the reach of the content shown. Screens can

also be used outdoors, e.g. in petrol stations but, of course,

must not only be visible, but also sufficiently robust to handlethe climate.

Perhaps surprisingly, however the Digital Signage shapes up,

Hughes experience is that this type of customer communication

is not only much more effective than traditional posters or light

boxes but, in many cases, is actually cheaper. Looking slightly

further into the future, new technologies, such as Radio

Frequency Identification (RFID)-enabled shelves can be used

to communicate with the customer by providing information on

how to combine the chosen garment with other items in store,

for example.




4. In-Store Radio Tuning into your Brand

In-Store Radio uses entertainment as a selling mechanism.

A variety of different types of music can be tailored to match the

needs of individual retailers, and adverts are provided on a

regional, local or even individual store level. True In-Store Radio

is live or semi-live, so as to connect directly with shoppers.

It also reflects the time of day, special events, news and environ-

mental information like traffic and weather. In-Store Radio helps

the retailer to sell more effectively and react quickly to changing

circumstances, such as stock levels, trends and events, or envi-

ronmental factors. In contrast to some other audio, In-Store

Radio minimises the risk of annoying staff by avoiding

repetition, and can even include special staff content such

as birthday announcements.

A heightened experience can be achieved by integrating In-Store

Radio with Digital Signage by, for example, aligning video in

multiple Digital Signage zones with radio clips and DJ announce-

ments. Sophisticated Retail Media Networks combine appealing

content with opportunities to show shoppers useful or interesting

information about services and entertainment all of which is

synchronised with sponsored segments of an In-Store Radio

show. The Digital Signage video supports key messages at

precisely the right moment, and at other times provides

information, ambience, entertainment and brand support.

Whats more, audio can be integrated into Digital Signage even

without implementing In-Store Radio. This can be done very

effectively in shop windows and outdoors in order to attract

additional customer footfall to the store. The transient nature of

those hearing the content means there is a good chance of the

sound drawing their attention and drawing them into the store.

Indoors, the use of audio has a different set of considerations.Here, highly-directional speakers can be used to create sound

islands where the audio is clear in the island but inaudible

elsewhere. There are some particularly innovative uses of this:

for example, a brand of Finnish beer is strongly associated with

the bark of a dog and, in some stores in Finland, directional

speakers are used to project the sound of the dog barking to

attract shoppers attention to the beer section! Motion sensors

that recognise the presence of a shopper and then trigger audio

playback are another good way of maximising the impact on

buying decisions.

Overall, Hughes experience supports the use of sound, but a

number of caveats apply, as shoppers set high standards for

audio: it must be interesting, relevant, offer a good variety of

content, and be of top quality. Not respecting these caveats

can lead to shoppers, and staff, becoming annoyed and even

switching the sound off altogether! In-Store Radio is the

optimal solution to meet this demanding set of criteria.


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Retail Media Networks with their Digital Signage, In-Store

Radio and Interactive Kiosk flavours allow the retailer and

advertiser to communicate almost any message in a broad range

of formats: audio, still pictures, animation or full-motion video.

While Retail Media Networks provide a significantly enhanced

medium, the same rules apply as with any more traditional

medium: material that shoppers find genuinely useful is more

likely to generate a positive response than very aggressive

promotional tactics. While Forrester enthusiastically

recommend[s] pursuing in-store networks, they advise

advertisers and retailers to avoid hard-sell tactics that

would turn consumers off.8

At the same time, a Retail Media Network is a medium in

its own right, and like any other medium, must have content

appropriate to its context. As Simon Hathaway, managing

director, Saatchi & Saatchi X, said, In the home where

individuals are sitting comfortably, perhaps with a glass of wine

in hand, and quite happy to watch an entertaining 30-second

spot, emotional engagement is relatively easy to achieve. In a

supermarket environment, perhaps with the car on a meter and

kids in tow, this is much harder to accomplish. So far, few

brands have tried to do so: the information on in-store screens

is invariably rational product and price information yet,

ultimately, the purchase decision at the first moment of truth

is an emotional one.

Spencer Berwin, managing director, Sales for JCDecaux

Tescos media sales partner for its RMN also commented,

In the process of implementing Tesco TV, we learned that

in-store media is posters plus, not TV minus the trick is to

build upon the value of static point-of-sale materials, not trim

TV content for consumption in store. Its not another television

channel, but an electronic poster you can change copy

according to changing conditions and target different parts of

the store in different ways.

Pampers have got it right with protect your babys sleep for

twelve hours, which positions the long-lasting absorbance of the

product very strongly as an emotional benefit. Transferring the

emotional appeal of the TV advertisement to provide the same

impact at the shelf is a key element of success that the industry

is addressing with Retail Media Networks.

Irrespective of the kind of Retail Media Network that the retailer

operates, content generation and management are critical

components that can make or break the endeavour. Central

management is important if the user experience is to be

consistent across individual stores. If the dynamic nature of the

medium is to be exploited, the content must be distributed in

real-time relying on DVDs means information easily becomes

outdated, plus there is no guarantee that the right content will

be shown. This means setting up a network that is able to

support in a secure and reliable way the mass distributionof large files. Just as with traditional television, satellite

communications fits this bill perfectly and is a logical part

of any infrastructure decision.

6. Content Creating the Difference


8 www.hughes-retail-solutions.com


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7. Conclusion

Retail Media Networks are providing advertisers with an

attractive alternative medium for reaching consumers and

are revolutionising the way that retailers interact with their

customers at the first moment of truth where shopper, product

and advertisement all come together to ensure business success

for the retailer and brand manufacturer. There is already a

plethora of compelling examples that underscore how leading

retailers are using Digital Signage, In-Store Radio and Interactive

Kiosks to create a more appealing and successful shopping

experience, to enhance customer loyalty and, ultimately,

to improve sales revenue.

However, this is only the tip of the iceberg as Retail Media

Networks mature and more focus is applied to this fast-growing

medium, ever more innovative solutions are appearing. In the

US, Wal-Mart TV reaches approximately 336 million shoppers

every month, making it the fifth-largest broadcasting network

in the country9

. As more and more retailers seize the potential

of the medium, as more and more tailored creative content

becomes available, and as the costs of the technology decline,

Retail Media Networks are becoming a ubiquitous presence in

stores everywhere. Communication at the first moment of truth

is bringing retailers closer to their shoppers and shoppers closer

to their retailers to the benefit of both.

1 What Next For TV Advertising? Forrester, December 23, 2004.

2 Measuring At-Retail Advertising in Chain Drug Stores: Sales Effectiveness & Presence Reporting, POPAI, 2004.

3 Expanding TVs Reach To The Retail Point Of Sale, Forrester, June 17, 2005.

4 Shelf Promotion: In a Shift, Marketers Beef Up Ad Spending Inside Stores, WSJ, September 21, 2005.

5 Cathy Booth Thomas, Wal-Martainment, Time Magazine, December 6, 2004.

6 TNS study of PRN Wal-Mart Television Network, PRN, November 15, 2005.

7 Catch Them if you Can, Media Week, September 25, 2003.

8 What Next For TV Advertising? Forrester, December 23, 2004.

9 Forrester, ibid.




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For more information contact us:

Hughes Network Systems Ltd.

Sunrise Parkway, Linford Wood,

Milton Keynes MK14 6LS, UK

Phone: +44 (0) 1908-425-300

Fax: +44 (0) 1908-425-301

Hughes Network Systems GmbH

Ottostrasse 9, 64347 Griesheim,

Germany

Phone: +49 (0) 6155-844-0

Fax: +49 (0) 6155-844-280

Hughes Network Systems S.R.L.

Via Salaria, 222

00198 Rome, Italy

Phone: +39-06-84406-101

Fax: +39-06-84406-124

Visit us: www.hughes-retail-solutions.com

Hughes Network Systems LLC.

All information is subject to change.

Hughes is a registered trademark

of Hughes Network Systems, LLC.

HughesNet is a trademark of

Hughes Network Systems, LLC.

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