Innovate to accumulate

While companies are putting the financial squeeze on headline ad campaigns, lower-profile media such as PoP are benefiting, thanks to improved accountability and innovative in-store formats, says Nathalie Kilby

The point-of-purchase (PoP) industry is experiencing something of a renaissance. As the economic downturn rumbles on, brand owners, looking to trim their above-the-line budgets, are channelling their energies and funds into cheaper, more targeted advertising, and in turn PoP’s role is growing. But it’s not just the economic landscape that is spurring activity: technology is helping to breathe new life into the sector as agencies and brand owners look to various novel techniques to encourage consumers to part with their cash.

Advertising budgets are coming under increasing scrutiny as brand owners seek greater returns on less investment. Television and print advertising budgets have been slashed and industry observers say that brands are turning to PoP with greater enthusiasm than ever before. “There was a time when PoP was a mere afterthought; it was not used as a strategic tool. That is certainly not the case any more,” says Guy Vaughan, chairman of trade body Point of Purchase Advertising International (POPAI) UK & Ireland. But if the PoP industry is to increase its cut of the UK’s advertising spend from its current £765m a year, it must invest and move forward.

Throw out the wobbler?

PoP is synonymous with shelf stripping, gondola banners and the humble “wobbler”, traditional material that has been derided for demonstrating a lack of imagination and design innovation – but this is changing. The old methods are proven to work, but technology is driving the appearance of more ingenious forms of PoP, whether it be in stands or in the use of emerging digital media. Innovation in banner and stand design over the past few years has seen a greater use of colours, effects and eye-catching design. Three-dimensional displays and lenticular technology are helping creative departments to come up with new angles on traditional approaches – and to achieve all-important cut-through.

Simpson Group information and communication technology director Graeme Wilkie says that developments in software have helped his company to create 3D displays quickly and easily, to improve the quality of images used on material and to produce more complex designs in many colours and styles. He also says that such innovations have aided his company – which numbers Lunn Polly, Marks & Spencer and United Biscuits among its clients – in designing easier-to-install displays. Although costs inevitably rise with improved technologies and systems, Wilkie says that while capital expenditure may increase, operational costs are cut. “And in any case,” he says, “to cut costs in the long term you have to invest in technology.”

A high return on investment is any company’s core objective and cost is often a barrier to innovation for many agencies, but a firm advocate of investing in new techniques is Craig Duff, director of fledgling media owner Interad. His company offers brands the chance to advertise on digital screens located in shopping centres. The ad slots can last from ten to 30 seconds. The company’s in-house staff develop the ads from scratch or condense original TV campaigns and run them on the AdVantage system. Duff claims that this new form of PoP advertising offers “standout in an increasingly cluttered environment”.

“Brand owners with stores in the shopping centres can run two or three different ads, varying their output through the day. At lunchtime, for instance, clothing brands could advertise on screens situated by food courts, or food brands and fast-food outlets could advertise along walkways,” he says.

Duff claims that when KFC ran a campaign at the Arndale Centre in Manchester, sales increased by 35 per cent over a two-week period in February compared with the same period the previous year.

Beware the superstores

Fiona Gaiger, planning director at PoP agency Dynamo, believes that innovation is necessary for survival, but sounds a note of caution to agencies investing in in-store screen technology: “Retailers, chiefly the big four supermarkets, are eyeing up the medium, waiting for others to undertake the initial investment and trials before they step in and develop their own channels. They will impose restrictions, install their own screens and then sell space directly to brand owners, or they will screen campaigns for own-label products.”

She says that, while she and her clients aren’t ignoring the opportunities that technology offers, they are not about to abandon more conventional methods, whose effectiveness is proven.

Digital and plasma screens are viewed by some as a mere add-on to campaigns, but others see them emerging as a media channel in their own right and Gaiger is not alone in her fears that retailer power will increase as the medium develops. When Interad was set up in 2000, it approached supermarkets about installing the screens – with no start-up costs for the retailers. The supermarkets declined the offer and Duff believes that this is because they are waiting to develop the channel themselves. “After all, they have the infrastructure and money to invest,” he says. Indeed, Tesco has just announced a three-store trial of digital screens and the other grocery multiples are sure to follow suit. Duff does not believe his company is likely to be trumped in its own, shopping-centre environment, but feels that PoP agencies will lose out to retailer activity in the supermarket sector.

Stores already impose many restrictions on the types of PoP material that can be used and where it can be placed in store. If displays are too technical or time-consuming to manage, then they won’t make it to the shop floor and money is inevitably lost. One agency consultant says companies can spend up to £850,000 on a two-week campaign, but £250,000 can be lost through poor installation and damaged materials. POPAI says that compliance levels in the grocery sector are just 54 per cent. Ensuring that PoP installations are properly managed and monitored is essential, and the need is greater as displays become more complex in their design and maintenance. Clearly, retailer co-operation is paramount to a campaign’s success.

POPAI says 75 per cent of buying decisions are made in store on impulse and, although research from Iris appears to refute this, POPAI is keen to impress that it is developing methods to produce clearer analysis of the medium’s effectiveness. Sales generated by PoP material are tracked in many ways. They can be measured individually at store level through EPOS (electronic point of sale) data and through daily auditor reports which monitor the increase in product sales per store. Footfall is monitored using in-store cameras, as is activity around PoP displays, and infrared technology is employed to seek out “hot-spots” in store. POPAI is also conducting research with retailers and brand owners such as Unilever Bestfoods into the effectiveness of their PoP campaigns. Vaughan says: “I think brands will invest more in PoP when they are able fully to quantify their investment. The new technologies are more flexible and enable store micro-marketing and quick, tailored solutions.”

With increasing campaign costs being borne by the advertisers, it is only natural that they will want greater proof that the medium actually works. But Digital View campaign director Sandy Westwater, formerly of Procter & Gamble, says that this is not a problem for PoP agencies. He says that new technology will mean better tracking and clearer analysis on the effectiveness of PoP: “Measurement must be both quantitative and qualitative. We need to ask: ‘Did it drive sales? Did it educate and entertain in a relevant and engaging way?’ Measurement will improve with the next generation of technology through direct links with EPOS and retailer loyalty screens, but that doesn’t preclude being innovative now and measuring later. There is enough information out there to back up the view that retail media has a high impact and has twice the unprompted recall of traditional advertising. It increases sales and engages customers.”

Kesslers International managing director Charles Kessler agrees: “Most purchasing decisions are made in store and PoP’s importance is growing as above-the-line suffers. There is much research to prove its effectiveness. It is effective at an individual store level and it helps brand owners to market locally in a global context. Brands are alert to new technologies and the opportunities they bring.”

As seen on TV

The developments in PoP appear to be blurring media boundaries and in-store campaigns are becoming important extensions of, if not replacements for, TV advertising. Ads and displays in stores are providing channels for consistent communications and Nestlé marketing director Andrew Harrison may not have been wide of the mark in describing supermarkets as “the new media” and saying that the retail environment is a better place to “meet” consumers than TV.

The PoP sector is one of the few areas seen to be benefiting in the current downturn, but advertisers need proof of its value. The challenge for the PoP industry is to achieve clearer and more solid measuring devices and to invest in innovation to prevent retailers from gaining the upper hand.

The In-Store Design & Marketing Show 2003

The importance of the in-store environment as a marketing medium is reaching an all-time high and the newly rebranded In-Store Design & Marketing Show 2003 showcases the latest creations and innovations in the industry. The new name reflects the show’s growth in size and scope – it now addresses design and branding for retail interiors in addition to its traditional remit. The venue, Earls Court 1, also provides a platform to deliver more of the latest industry news, from a wider in-store perspective. With 130 leading companies represented at the show, all the latest latest products and ideas will be on offer.

As well as a different venue, a new conference programme will run alongside the show, featuring a series of 90-minute master classes. Industry experts, from top brand marketers, retailers and in-store designers, will share the secrets of their success, with case studies from high-profile brands such as Boots, Lever Fabergé, Britvic, O’Neill, Orange and Asda.

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