The mystery of the magic lantern

When the marketing director of Nestlé Rowntree says that in-store is now a serious competitor to television advertising, it’s clear that point-of-purchase (PoP) has made huge strides from its former status as the poor relation in the marketing media family.

One major reason is that retailing has consolidated, while TV has fragmented into more than 200 commercial channels. Another factor has been the introduction of what the industry calls digital signage – TV monitors, plasma screens and interactive kiosks – to the in-store environment. So is this just another form of PoP, a completely new medium, or both? Certainly, there has been a lot of excitement about the income-generating opportunity provided by so-called retail media networks, but there is disagreement over whether advertising revenue is an added benefit or the main goal.

Dynamax Technologies managing director Frank Jones believes that the industry can’t make up its mind because there has been insufficient research into what digital signage can achieve. He says: “Initially, the approach was to put signage in first and work out how to use it later. But because suppliers have become frustrated at the slow take-up, they have been forced to consider different business models. Revenue from advertising helps to spread investment, so it’s a convenient panic button. However, it shouldn’t be the long-term goal.”

Martin Kingdon, general manager of industry association Point-of-Purchase Advertising International (POPAI) UK wants to provide his members with appropriate guidance, but is frustrated by the confusion over where digital signage fits into marketing strategies. He says: “The levels of investment involved are usually high, so naturally companies want to mitigate costs – but that is not the same as making it self-financing. People forget that retailers may have many other objectives as well.”

Kingdon believes that more research is needed, and POPAI is supporting a number of trials in the near future that should provide retailers and suppliers with better information. One problem is that many previous trials have been fundamentally flawed.

Jones says: “Lots of high street retailers have made the mistake of choosing their flagship store as the pilot site, even though it is in no way representative of their other stores.” He concedes that suppliers may be partly to blame: “As technologists, we have concentrated on the easy part – selling the technology. The hard part is proving that it puts something on the bottom line.”

Ravi Raveendran is head of the plasma display division at UK market leader NEC. He is, unsurprisingly, defensive about the potential of plasma screens. He doesn’t believe that they should be pigeonholed as either a PoP tool or as a new medium for advertisers: “The beauty of plasma is that it can be used in lots of ways. If anyone uses it purely for one purpose, they are not making the most of its potential.”

Ever-changing storescape

Selfridges has been one of the earliest adopters of digital signage. It uses plasma screens extensively in its Oxford Street branch. Bob Clarke, chief executive of Instrumental Media Group, the company behind the project, believes that digital signage plays a vital role for Selfridges that could not be met through any other medium: “Selfridges is constantly evolving, so it is virtually impossible for even the most dedicated customer to know everything that is available in the store.”

Clarke believes that the debate about hardware costs has missed the point, and claims that it is content, rather than technology, that adds value to the customer’s shopping experience. He says: “The cost of screens should not be a barrier to anyone who is serious about programming for customers. It is content that makes the difference. Increasingly, content will be far more than just advertising – it will be all about enhancing the retail experience.”

One easy solution is to use video clips, rather than ads. These can improve the store’s ambience, especially in busy, fashion-driven outlets, although industry observers believe that their value is limited.

Jones believes that the successful use of digital signage rests on a good understanding of what customers are doing when they see it. His main bugbear is that few retailers acknowledge that shoppers only stand still at certain points in the store. He cites a presentation made by David Pugh, managing director of Maiden Outdoor, who says that a moving audience can’t see a moving image; instead, customers need short, high-impact messages. Moving images only work for static audiences, so stores need to identify where people stop and also to ensure that they are stationary for long enough for a moving image to be effective. Jones says: “A queue has an associated ‘dwell time’, which provides a good opportunity to deliver a moving message. But first you need to conduct store research, identify where people are and provide them with a reason to watch the screen.”

Peak-time viewing

But even this is only the start. Recent developments in content-management software mean that retailers will soon be able to tailor messages to appeal to certain customers at different times of the day, or to promote short-term offers in a single store. The industry is excited about the potential, but retailers are still dragging their feet. Clarke says that the opportunities are vast: “At any point in the day or week, you will see different shoppers interested in different things and shopping in their own ways. In some environments, such as a shop in a railway station, you may encounter the same consumers in different moods, depending on whether it is the morning or the evening.” Clarke is convinced that this presents retailers with a great opportunity to modify their PoP material, in a way that can’t be done with traditional, print-based media.

Raveendran foresees other benefits to digital media: “If you have a number of screens, you can follow the traffic at an appropriate pace – for instance, as people travel along an escalator – by moving the content from one screen to another.”

Digital signage need not be restricted to conventional TV or plasma screens. Sainsbury’s is one of several retailers that has enjoyed great success with in-store interactive kiosks. These kiosks, situated close to store entrances, reach approximately 80 per cent of Sainsbury’s shoppers. Phil Evason, commercial director of InterAct, which manages the kiosks, believes they provide the best of all worlds: “A kiosk is both an information source and a personalised, interactive tool.”

Evason is convinced that the kiosks enhance shoppers’ experience, while increasing the range of their purchases. He says: “Footfall, in such as frozen foods, tends to be low. No matter how good your PoP material is, it is largely wasted if only 15 per cent of people walk down that aisle. Retailers want to give shoppers a compelling reason to visit particular areas or displays, and that is much easier to achieve with digital media. With conventional media, you have to choose a one-size-fits-all message, whereas with kiosks you can target individual shoppers.”

Everyone join in

A key part of the kiosk system is Sainsbury’s Reward card, which identifies individuals and their purchase history when they swipe their card at the kiosk. Clearly, the system is reliant on sufficient loyalty card holders swiping their cards. Sainsbury’s is coy about sharing this information, although Evason is convinced that it works. He claims that the kiosks have generated additional revenue of &£100m a year in the 300 stores using them, and cites a similar project in Boots’ stores where InterAct’s kiosks increased counter sales by nearly five per cent.

So is digital signage a viable alternative to printed PoP? Evason is positive: “There are undoubtedly places where digital signage will replace traditional media, because it is so much more flexible.”

Raveendran suspects that the two are probably complementary, while Jones is more circumspect: “You can’t cut traditional PoP suppliers out of the business, because at the end of the day they are the people with the credibility and contacts among clients.” He foresees a collaborative future where IT, marketing and PoP agencies work together with retailers.

Yet even Kingdon concedes that the high cost of new technology is a significant deterrent to traditional suppliers. If digital signage really is the future, suppliers face a conundrum: it is a market they can’t afford to miss, but first of all they have to be able to afford to join it.

The In-Store Marketing Show

The In-Store Marketing Show runs at London’s Olympia from May 14 to 16.

New media technology, research into advertising effectiveness and record retail sales have made the last year significant for the in-store marketing sector. The show demonstrates the latest innovations in the industry, with over 130 names including those specialising in PoP, visual merchandising, lighting, display systems, graphics, packaging, sales promotion and in-store media.

This year’s conference programme is delivered by leading brand marketers and retailers. The programme comprises a series of case studies on how to use high-impact tactics to raise the profile of PoP in the retail environment.

The show also includes all displays entered for the In-Store Marketing British PoP Awards 2002, in association with POPAI UK. Judging will take place during the show, when the entries in each category will be debated by a panel of industry experts.