In a Shift, Marketers Beef Up Ad Spending Inside Stores Funky Displays and Lighting, TV Spots in Wal-Mart; Unsettling Madison Avenue By EMILY NELSON and NELSON and SARAH ELLISON Staff ELLISON Staff Reporters of THE WALL STREET JOURNAL Updated Sept. 21, 2005 11:59 p.m. ET
(See Corrections & Amplifications item below ) . )
Procter & Gamble Co. PG +0.56% believes shoppers make up their mind about a product in about the time it takes to read this paragraph. This "first moment of truth," as P&G calls it, is the three to seven seconds when someone notices an item on a store shelf. Despite spending billions on traditional advertising, the consumer-products giant thinks this instant is one of its most important marketing opportunities. It created a position 18 months ago, Director of First Moment of Truth, or Director of FMOT, (pronounced "EFF-mott") to produce sharper, flashier instore displays. There's a 15-person FMOT department at P&G headquarters in Cincinnati as well as 50 FMOT leaders stationed around the world. P&G's insight is helping to power a shift in the advertising business: the growth and increasing sophistication of in-store marketing. Almost a century ago, P&G popularized the concept of mass-market advertising. Now, in response to the fragmentation of television and print ads, it wants to tout its brands directly to consumers where they're most likely to be influenced: the store. In part for this reason, the decades-old hierarchy that ruled the ad industry is under assault. Previously, ad executives who designed TV commercials looked down on those who worked on in-store promotions. Now, executives with retail expertise are gaining clout as the world's biggest advertising firms build up departments to handle an area in which they have little expertise. One marketing firm has even hired an expert on the durability of corrugated cardboard.
To fill a store's giant canvas with advertising messages, ad agencies are now charged with designing everything from in-store TV commercials to special shelf displays and packaging. The work is more elaborate than traditional in-store marketing, typically signs posted at the end of supermarket aisles. For all the excitement, agencies face huge challenges coordinating so many pieces. Some are stumbling over new problems, such as how to measure and charge for these services. When Gillette Co. G -1.16% introduced a new women's razor last spring, the Venus Vibrance, its first TV ad ran on just one network -- the one inside Wal-Mart stores, which has become a powerful advertising medium. To market Pampers diapers in the United Kingdom, P&G persuaded retailers earlier this year to put fake doorknobs high up on restroom doors, to remind parents how much babies need to stretch. Grey Synchronized Partners, owned by WPP Group WPPGY +0.21% PLC, created last year a display for Absolut vodka that lit bottles with colored spotlights corresponding to their flavor. The display's look matched the label's traditional print advertising. Joe Celia, Grey Synchronized's chief executive, first started working on in-store displays six years ago. Earlier in his career, "marketers would create the product and the brand image and then throw it over to us to see what we could do inside the store," he says. "Now, we all start together from the beginning." Veronis Suhler Stevenson Partners LLC, an investment bank that produces forecasts for the communications industry, says companies in the U.S. are expected to spend about $18.6 billion on in-store marketing and in-store ads this year, up from $17.6 billion last year. Overall, companies are slated to spend almost $200 billion on standard types of advertising this year, including TV, print and the Internet, up from $188 billion in 2004. P&G, the maker of Tide, Crest and Pampers, won't say how much it spends on instore marketing. But it has cut its commitments to advertise on cable channels for the current season by 25% and its broadcast-TV allotment is down about 5%. At the same time, overall ad spending rose slightly. One vehicle that's helping change this traditionally mundane advertising medium is Wal-Mart Stores Inc. WMT +0.22% 's in-store TV network. It is seen by 130 million shoppers a month, according to ratings data produced by Nielsen Media Research for San Francisco-based PRN Corp., which runs the network. Through it, Wal-Mart has, in effect, recreated the mass audience that marketers used to easily reach on network TV.
Wal-Mart even sells advertising like TV networks. Today, Wal-Mart is hosting manufacturers in its hometown of Bentonville, Ark., to sell blocks of advertising time for the coming year, a direct imitation of the annual ad-sales extravaganza, known as the upfronts, put on by the networks. PRN, which is owned by Thomson Corp., says its rates are comparable to those of cable TV. Last year, 122 new products were launched on Wal-Mart TV, says Charlie Nooney, chief executive of PRN, including goods from P&G, Unilever ULVR.LN +0.49% and Gillette, which agreed to be acquired by P&G earlier this year. The TV sets, which have sound, are located in parts of the store where people tend to gather, such as the deli, and will soon be installed in checkout aisles. Pilot Program
Stewart Stockdale, chief marketing officer of mall operator Simon Property GroupSPG +0.46% cites research it commissioned from Arbitron Inc., a media-research firm, showing that shoppers are more likely to recall an ad seen in a mall than one seen at home. The company has a pilot program at the Roosevelt Field mall in Long Island, N.Y., which airs TV commercials on giant digital screens. Advertisers include restaurant chainWendy's International WEN +0.47% Inc. and Coca-Cola KO +0.55% Co. Even as TV viewers scatter among a multitude of channels, the broadcast networks remain unique in their ability to deliver a big audience, in a single shot, to advertisers. The Super Bowl, TV's most-watched event, drew 86 million viewers last year and its 30-second commercials sold for $2.4 million, Nielsen says. In addition, some TV executives say, in-store advertising isn't necessarily competitive. Viewers are relaxed at home, notes Chris Carlisle, executive vice president of marketing for News Corp.'s NWS +0.53% Fox network. In the store, they're rushed, "with people pushing their shopping carts, going down their lists," which makes for a different selling environment. Indeed, Fox itself buys ads on in-store networks to pitch DVDs. At Procter & Gamble, Dina Howell, the director of FMOT, says she wants to take instore marketing, "from an art to a science." P&G has developed a series of tests to measure the success of its packaging and in-store marketing efforts. P&G won't divulge specific details. But broadly speaking, Ms. Howell says packaging should "interrupt" shoppers on their shopping trip. P&G has developed a set of questions that a package must answer: "Who am I? What am I? Why am I right for you?" When ad agencies submit ideas, P&G invites them to two facilities it built several years ago in Cincinnati and Geneva. These mock stores double as research centers where P&G can rearrange shelves and see how its products look alongside those of the
competition. The company also brings in focus-group participants to study how they shop. For the launch of Kandoo wipes -- flushable baby wipes for toilet-training toddlers -- in the U.S., P&G convinced retailers to place the packages low on shelves, so they would be at a toddler's eye-level. It also created display shelves in the shape of the product's frog mascot to attract children's attention. One of P&G's most prominent in-store promotions has been for a new line of Pampers. In the U.S., P&G came up with what it calls "a shopper concept" -- a single promotional theme that allows it to pitch products in a novel way. The theme for Pampers was: "Babies First." In stores, the company handed out information on childhood immunizations, car-seat safety and healthy diets while promoting its diapers and wipes in other parts of the store. It was sponsored by P&G, Wal-Mart and the American Academy of Pediatrics. To market Pampers in England, P&G hired Publicis Groupe SA 's Arc Worldwide, an agency that specializes in store marketing. Late last year, Arc managers designed and pitched P&G several approaches. They all dovetailed with the distinctive green color of Pampers' packaging as well as the company's TV ads, which show the world from the perspective of a baby. For diapers, called nappies in Britain, Arc designed a clammy-feeling green gel cover to wrap over the handle of a shopping cart. It read, "This is how it feels when your nappy needs changing." It suggested putting mirrors in shopping baskets to show babies looking at the world around them. P&G rejected the handle, however, after focus groups said it reminded them of something they didn't want to think about. The mirrors were also nixed after retailers said the idea was impractical. P&G did go for some of Arc's pitch. On the doors to restrooms with baby-changing facilities, Arc added big fake doorknobs, unreachably high up, and the message: "Babies have to stretch for things. That's why they like the extra stretchiness of Pampers Active fit." The consumer-products company printed huge footprints on the floor of the diaper aisle. On shelves, it added pull-out cards with information about Pampers that read: "do not pull," a play on the fact that babies like to do the opposite of what they're told. Elements of the marketing plan appeared in several major chains, including Asda, which is owned by Wal-Mart, and Tesco PLC.
The new emphasis on in-store marketing is forcing advertising agencies to add unfamiliar services, such as shelf-design consulting. They're also hiring and promoting managers with expertise in those areas. At Leo Burnett, which is owned by Publicis, executives trained in direct marketing now sit with creative designers when they meet clients and have an equal say. Clients are telling ad agencies, "if you can't provide it, we'll shop elsewhere," says Richard Pinder, president of Leo Burnett's operations in Europe, the Middle East and Africa. Nearly every client pitch done by rival Grey Global Group, a unit of WPP, now includes retail strategy. The company last year appointed executive vice president Jonathan Dodd to head its "First Moment of Truth Initiative" which works with P&G and other companies. Unusual Expertise
Andy Murray's marketing firm helps clients advertise inside Wal-Mart and other stores. The agency even buys samples of Wal-Mart shelves to see exactly how products would look in a store. A former P&G executive, he started his new firm nine years ago with less than a dozen staff members. Since then, Mr. Murray's agency has grown to about 300 people and was recently acquired by Publicis' Saatchi & Saatchi. Now named Saatchi & Saatchi X, it has some unusual expertise for an advertising agency. Mr. Murray hired a structural engineer to assess how long a corrugated cardboard display will last. The agency uses pink shrink-wrap to prevent products from getting lost in vast storage warehouses. It also developed software that can track a consumer's eye movements. The growth of in-store marketing has made ad agencies' lives more complicated. For starters, ad agencies now have more than one master to please: the client and the retailer. Even after a retailer agrees to a newfangled in-store display, it often falls to individual store managers to install them or, in some chains, make sure the television is on at the right time; they aren't always good at complying. Some stores charge marketers a fee for in-store displays -- as if they were selling space on a roadside billboard. Others don't have the clout or think they will be compensated through the overall boost to sales. Those that charge face another wrinkle: there's no standard system for measuring the audience for in-store ads and therefore no easy way to charge for the space. The fees for each project are negotiated on a case-by-case basis, a time-consuming task.
There's also the matter of how ad agencies get paid. For years, agencies were paid a percentage of the overall ad budget. P&G changed that model several years ago because it worried agencies would naturally gravitate toward costly TV ads. It now ties agency compensation to product-sales increases. Ad-agency executives say another factor will soon be thrown into the mix: the cost of new services they're being asked to provide, such as installing and monitoring in-store displays. Write to Emily Nelson at [email protected]
and Sarah Ellison
Corrections & Amplifications:
PRN Corp. is a unit of Thomson SA, which is based in Paris. This article incorrectly stated that PRN is owned by Thomson Corp., a different company that is based in Stamford, Conn.
Using in-store advertising to win the First Moment of Truth (FMOT) Author: Bill Gerba on 2005-10-10 07:45:33
"Procter & Gamble Co. believes shoppers make up their mind about a product in about the time it takes to read this [sentence]." So begins an article on the front page of the September 21st Wall Street Journal. P&G's most recent concept for (further) conquering the world of consumer packaged goods (CPG) is the First Moment of Truth (FMOT, pronounced EFF-mot), the 3-7 seconds after a shopper first encounters a product on a store shelf. It is in these precious few seconds, P&G contends, that marketers have the best chance of converting a browser into a buyer by appealing to their senses, values and emotions. Immediately after the paper came out that morning, blogs and websites from around the world were filled with comments about this "new" form of marketing that existed entirely on store premises. Direct marketing site DMNews immediately zeroed in on P&G's commitment to using as few words as possible in its messages (how many words can you read in 3-7 seconds?), and started a thread discussingFMOT implications for traditionally wordy direct marketing approaches like mailers, bag stuffers and flyers. Reveries editor Tim Manners notes, "This is serious stuff: P&G has a 15-person FMOT department in its headquarters, 'as well as 50 FMOT leaders stationed around the world,' led by a Director of First Moment of Truth...." While in-store marketing certainly isn't new to anybody involved with digital merchandising initiatives liketouchscreen kiosks and digital retail signs, the advertising world at large traditionally hasn't paid a lot of attention to it, instead choosing to focus on mass-media like TV, print and radio. But if P&G's current spending is any kind of indicator of where the rest of the industry is headed, all that may be about to change. As the WSJ article notes, "it has cut its commitments to advertise on cable channels for the current season by 25% and its broadcast-TV allotment is down about 5%. At the same time, overall ad spending rose slightly." So where is the rest of that money going? Well, at least some of it must be in the hands of the aforementioned 50 FMOT leaders around the world, but the lion's share is going intoPOP displays, in-store TV advertising (such as on the Wal-Mart TV
network), and experimental in-store promotional tactics. News of P&G's predictions about ad spending and performance was also no surprise to readers of Dairy Foods Magazine (what? you don't read it?), as Donna Berry wrote an extremely similar article about FMOT for that publication way back in March 2005. Her takeaway after hearing a keynote speech by P&G's FMOT director Dina Howell: there are actually two moments of truth. The first is when a browser first encounters a product in the store (they win if the customer decides to purchase). The second moment of truth happens each time a customer uses the product. So for P&G, each time somebody washes a load of laundry with Tide, feeds their dog Iams, or brushes their teeth with Crest is another marketing opportunity. Or, as they say in their 2002 Chairman's Address, "The second moment of truth occurs two billion times a day when consumers use P&G brands. Every usage experience is our chance to delight consumers." According to investment bank Veronis Suhler Stevenson Partners LLC, U.S. companies will spend around $18.6 billion on in-store marketing advertising this year, up from $17.6 billion last year (a healthy 5.7% growth rate). Overall, companies are slated to spend almost $200 billion on standard types of advertising this year, including TV, print and the Internet, up from $188 billion in 2004 (an even healthier 6.4% growth rate). As additional funds become available for use in-store, more selfservice, interactive and narrowcasting projects will get the green light from advertisers and retailers looking for the greatest sales lift per ad dollar. While digital merchandising programs can have a significant upfront cost, they make up for it with longer usable lifecycles, fewer installation and operational challenges over time (by some estimates, store managers fail to deploy static POP displays up to 50% of the time), and of course, the ability to change the promotional material without having to make physical visits or ship additional equipment. But the real ace up our sleeves will likely be reliable accountability for advertising playback. Since I started with a WSJ quote, I'll end with one as well: "For years, agencies were paid a percentage of the overall ad budget. P&G changed that model several years ago because it worried agencies would naturally gravitate toward costly TV ads. It now ties agency compensation to product-sales increases. Ad-agency executives say another factor will soon be thrown into the mix: the cost of new services they're being asked to provide, such as installing and monitoring in-store displays."
Examples of the First Moment of Truth (FMOT) in Digital Signage Author: Bill Gerba on 2012-05-24 08:47:29
I remember reading Procter & Gamble's announcement about their research into the "First Moment of Truth" like it was yesterday. This makes me feel quite old, as it in fact happened back in 2005. At the time, WireSpring was highly focused on using digital signage for shopper marketing, so the idea that a really important part of a brand connection happened right at the point-of-purchase made a lot of sense to us. In fact, we blogged about the First Moment of Truth just a few days after P&G's article first appeared in the Wall Street Journal. Having had nearly 7 years to fully digest what FMOT means, we now know that it moments of truth can be found in any environment, not just retail stores. And understanding how they work inside of your environment -- whether it's a call center floor, an office break room, or a retail store -- can make the messages that appear on your digital signs much more effective.
What is the First Moment of Truth? The First Moment of Truth (FMOT, pronounced EFF-mot), is the 3-7 seconds after a shopper first encounters a product on a store shelf. It is in these precious few seconds, P&G contends, that marketers have the best chance of converting a browser into a buyer by appealing to their senses, values and emotions. And in fact, as P&G's original FMOT director Dina Howell (now the CEO of shopper marketing mega agency Saatchi & Saatchi X) noted, there are actually two moments of truth: when a browser first encounters a product in the store, and each time a customer uses the product. As they best said way back in their 2002 Chairman's Address, "The second moment of truth occurs two billion times a day when consumers use P&G brands. Every usage experience is our chance to delight consumers."
Image credit: numb3r on Flickr
If you're a retail marketer, none of this should be news to you. However, the FMOT school of thought can (and should) easily be applied to just about any other venue where digital signs are used to communicate with an audience.
Example 1: FMOT for a Hotel Lobby This one's easy. The lobby area is the very first place a guest encounters when he arrives. It must typically be crossed each time that guest enters or exits the hotel. And it frequently adjoins or contains a meeting or break area, and possibly an eating area. Since the success of most hotels hinges on repeat business (and word of mouth referrals), instantly making a guest feel secure and comfortable is essential, and most hotel designers have learned a thing or two about making lobby areas that will accomplish this. Adding digital messaging to the hotel lobby mix can enhance things further, though. Show off the best features of the hotel, whether they're amenities (e.g. a nice outdoor pool or wellstocked exercise room) or local attractions. Or highlight some spectacular deals, offers, or things that other guests have said were great about the hotel or the location. Or if you really want to get fancy, have the screen personally welcome guests by detecting the RFID chip embedded in their loyalty cards as they walk in. The content should be gorgeous (get some pro photography and follow our best practices for digital signage content), and each 3-7 second clip should sell one idea or concept. Ideally, the digital screens should be integrated into the lobby itself so as to not come off as an afterthought.
Example 2: FMOT for a Small Restaurant
Much like a guest staying at a hotel, a restaurant patron needs a certain level of comfort and trust to have a great dining experience. More than that though, they have to want to eat your food . A common saying is that you eat with your eyes before you eat with your mouth, so fortunately it's fairly straightforward to use digital media to sell your food (before you actually sell your food). As before, high-end product shots reign suprem e, so you don't need to overthink the content too much. Another popular approach is to show patrons enjoying the food (this can get tricky if you don't have an eye for photography/videography, though). And if you know you have some kind of quirky appeal, go ahead and exploit it. For example, I once knew of a restaurant that asked anybody who finished their 6 lb. mega-steak to sit for a short video interview that was then played in a loop in the waiting area. (I think those lucky patrons also got a free gallon-sized vat of Lipitor and an ambulance ride to the hospital, but I digress.) It was a little bit silly, but that played right into the restaurant's well-known angle, so it worked for them. As for sign placement, many small eateries have a queue or waiting area. And even really small places have a wall behind a counter. Any of these locations is OK as long as the sign doesn't look like an afterthought. Nothing gets ignored quicker than a dinky screen showing cut-rate content, so prime placement and attention to detail are key.
More examples For an employee to really contribute at their job, they have to be happily employed. And that means that employers must prepare for a fresh FMOT every single day of the workweek. So employee FMOT messaging might focus on little-known company benefits, exciting upcoming events and news (and I mean actually exciting to the employees), and a reminder of the mission statement and why the work is important (easy for a company making dialysis filters, harder for an ERP software firm). A church's first moment must help affirm that it is the right place for worshippers to worship at -that's the big reason behind so much of that fancy church architecture, after all. So FMOT messaging should focus on the uplifting impact of the important work it does. Calendar events need to be more than just words in a box. They should include pictures (or at least explanations) of who is going to be positively affected by the event, why, and how. The list goes on and on. Doctor's offices and other healthcare facilities have an obligation to engage patients with a positive FMOT. So do vets, for that matter. And government institutions would do well to explain to their constituents exactly what good they are doing for the community. So the next time you're asked to work on a digital signage project, or if you're in the business of selling these systems, take a moment to think about what the First Moment of Truth means for the venues installing the systems and the people who will ultimately see them. Framing a digital sign's purpose in terms of FMOT can help solidify its value and set a course for content production -- and both of those things are critical if your project is to be a success.