A Little Bit Louder Now

U.S. marketers spent $19.35 billion on retail marketing in 2005, up 4.8% from 2004, per PROMO estimates.

Retail marketing — which includes P-O-P, retail merchandising and in-store services — grows as CPGs make “shopper marketing” central to brand strategy.

The biggest portion of retail spending, P-O-P, rose 5% to $17.4 billion, per PROMO estimates based on In-Store Marketing Institute data. That number will rise if current efforts to measure P-O-P “viewership” prove displays beat traditional media. About 12% of brands rank P-O-P among their top three tactics, per PROMO’s Industry Trends survey.

Retail merchandising rose about 3% to $1.03 billion, mostly via retailtainment and demos.

In-store services hit $922 million, up 8%, as retailers expand in-store TV and brands elbow for attention on-shelf. Over 7% of marketers ranked in-store services among their top three tactics, per PROMO’s survey.

That segment could shift as Valassis Communications’ $1.5 billion lawsuit against rival News America Marketing unfolds. The January 2006 suit alleges that News America forced marketers to sign long-term exclusive FSI contracts or face higher fees (up $1 million or more) on in-store services like ShelfTalker coupon boxes. News America also allegedly sold CPGs long-term deals on in-store services, promising category exclusivity that shut out competitors even when contracted CPGs weren’t using the services.

In-store TV gained ground, garnering a reported $200 million in ad revenues for retailers. Wal-Mart expanded its network and launched SoundCheck (in February 2006) with exclusive Friday-night concerts and interviews in 3,000 stores’ Electronics departments, and songs for download at Walmart.com. Last month Wal-Mart tapped African-American network TV One for custom programming, via Wal-Mart TV handler Premier Retail Networks. (Premier’s Checkout Network, meanwhile, rolls into 3,000 supermarkets by yearend.) Target Stores launched Channel Red, airing movie trailers and promos for CDs and DVDs in electronics departments in its 1,400 stores. Observers expect Channel Red to migrate to other departments.

P.O.P. Broadcasting Co. brings ads on-shelf with motion-sensitive ShelfAds that play ads, track traffic and sales. P.O.P. Broadcasting enters 50 Fiesta Marts this month, aiming for 30,000 stores by 2011.

Watch Reactix Systems’ “responsive P-O-P” catch on in 2006: Video projections respond to viewers’ movements. Centers for Disease Control’s fourth-quarter “Verb” push hit malls and theatres; Sam Goody touted DVDs in malls. AMC Theatres sets displays for advertisers in 12 markets.

Watch Walgreens’ RFID pilot, too, as 5,000 stores track P-O-P execution and performance via RFID tags on displays. So far, 15 CPGs are in; tags track when and where displays are set up, then match store-level sales data with daily updates on P-O-P placement to show each display’s effect on sales. Goliath Solutions handles.

Next year Wal-Mart expands RFID tagging to 1,000 stores and 600 suppliers; it has cut out-of-stocks by 16% and cut restock lag time by 66%. (Still no marketing applications, though.)

Watch co-marketing rise modestly this year: 40% of Industry Trends respondents say joint promos with retailers will increase, but 51% say they’ll stay the same. (Five percent predict a decrease.)

Supervalu will triple to 2,656 stores when it closes its $17.4 billion purchase of Albertsons. CVS picks up 700 stand-alone Osco and Sav-on stores for $2.93 billion, growing to 6,100 stores. Both give CPGs’ marketing more volume.

SNAPSHOT 2005

Spending rose 4.8% to $19.35 billion

Valassis sued NewsAmerica for $1.5 billion

Walgreens’ RFID tags track P-O-P results

Retailers turn up in-store TV