Beware the Simple CPM Equation
By Adrian Weidmann, RMC; Jeff Dickey, SeeSaw Networks; and Rocky Gunderson, SeeSaw Networks
With the advent of retail based in-store digital signage networks, the promise of 'free money' through advertising revenue sharing, became a seductive rationale made by hopeful network operators. The logic was simple–the network operator would write the retailer a check every month for an agreed percentage of revenues derived from advertising fees in return for unlimited access to the retailer's store–or more accurately, the shoppers in those stores. Some operators were, and continue to be, bold enough to get the retailer to purchase the requisite technology to build the network. From the network operator's perspective this arrangement makes perfect sense. They find a home for their technology and the promise of an endless flow of millions of advertising dollars as shown by that single cell in their spreadsheet, while the retailers perceive a flow of new revenue completely risk-free. This makes perfect sense, right? Wrong.
If this promise of cash were true, the top 200 retailers would already have extensive in-store digital signage networks. Frost & Sullivan's recent 2007 report completely reversed their assessment made in their 2005 report (North American Digital Signage Markets, F249-74) where they stated that third-party owned and operated in-store advertising networks would flourish. Their recent report notes that 60% of retailers with an in-store digital media network actually own the network and this trend will continue to grow. Despite what the spin doctors continue to propagate, common sense and the facts, lead to only conclusion: a retailer's 'brick-and-mortar' store is the physical manifestation of their brand. If 'brand' is defined as a promise kept, then the retailer's store, and all that it represents and conveys, is their promise kept and communicated to all that visit and experience. Those visitors are the retailer's most valuable assets, their customers.
Customers are the single most important natural resource the retailer has. They need to be respected and nurtured. They are not simply 'eyeballs' to be valued as 'points' and bartered away as transient currency for 'dollars per thousand'.
The perceived value of a retailer's 'brick-and-mortar' customer couldn't have been more clear than during an event hosted by a large advertising agency conglomerate in 2004. The one-day event was organized to present the emergence of the retail environment as a media channel. The event was for all the agencies under the parent company and was by invitation only. The program consisted of presentations for different digital media technologies, their capabilities and use as commercial vehicles for agencies and their clients. The presentations were predictable but the event was punctuated by a presentation made by the advertising department of a large consumer electronics retailer that had a storied history of using rich media in their retailing environments. As the host introduced the presenters, the presenter readied their laptop that served their PowerPoint presentation. The title slide glowed in appropriate bold black letters on a white field in the darkened auditorium. Simple and to the point, "Keep your @#$% hands off my store". The presentation that followed highlighted the retailer's keen insight and understanding of their store's role as 'the last frontier' and customer touch-point. They left no doubt that they would keep extremely tight control of their store environment and their brand. Their store would not become an uncontrolled canvas whose square footage would be rented to the highest bidder. There were very few questions at the end of their presentation and there was a polite applause at its conclusion.
All is not lost however. There are designs and methodologies that when properly identified and implemented can combine into a holistic, integrated in-store digital media based solutions and processes that are valued by customers, retailers and brand manufacturers alike. The most important of which is the consuming shopper. Customer insights and building solutions to address shortcomings will be paramount to developing in-store digital media solutions that will commercially rewarding for both retailers and their manufacturing vendor partners. Understanding your customer and formulating solutions that they would use will become invaluable to your vendor manufacturers.
The 20th century brought the introduction of mass media, including national daily newspapers, broadcast radio, cable and satellite television and, most recently, the Internet. This revolution of new technologies has driven the evolution of marketing communications. And, with this relentless progression, consumers now control "the remote" and decide when, where, how and in what form they receive communication. Technology has also given the marketer the ability to effectively communicate with consumers at locations ever closer to the point-of-sale. Having the means to do this brings on a host of important issues relative to the ways in which it can and should be done. And, of equal importance, is the question: how do the stakeholders measure the net effect of their efforts?
There are no lack of schools of though" surrounding the best metrics by which to determine the value of messaging in the digital out-of-home and in-store environment. They range from a more brand oriented metric, awareness, to a far more quantifiable metric, sales lift. What also needs to be considered is what metric best complements both the signage host and the customer. This drives home the fact that there are many stakeholders to be served in the deployment of a digital signage network and balance must be reached among them to have the most effective, efficient and valuable deployment.
It's About the Customer
At the end of the day, it's about the customer. Customers are in locations because they want to be there, viewing screens because they want to view them and buying products because they want to buy them. They are making the decision. Some transactions are based purely on need, some on desire and many on impulse. But need is a relative thing and if the customer perceives need they may just complete a transaction without moving along to another opportunity. It is our belief that the most effective signage deployments contribute in a very positive manner to the customer's experience, meet customer needs and deliver a corresponding comfort level that enables a far more positive and prolific shopping experience. This being said the customer experience and the perception of need may be the most valuable metric for every stakeholder.
Customer experience can be driven by many things ranging from the ambiance of the location, products available for purchase, and the efficiency and knowledge of the sales personnel. In addition, digital signage can be used to further enhance this customer experience through the establishment of a communications linkage to the customer, training and upgrading of personnel quality, promotion of specific products and value-added merchandising. The cohesive integration of these attributes is what eventually creates the underpinning of customer experience and associated metrics that include, but are not limited to:
- Real-time purchasing
- Size of purchase
- Frequency of shopping visits
- Aggregate annual revenues from shopper
- Profitability of shopper
- Word-of-mouth among shoppers
Retailers, your stores are the physical manifestation of your brand and the touchpoint with your customer. Beware of revenue generating promises that take advantage of your customers. Remember the adage "if it sounds too good to be true–it probably is". Being a retailer is about selling stuff, but in a world where the consumer is taking control of who, why, where, how, when brand communicate with them, a retailer must establish and nurture a trusting relationship with their customers. Using digital media in your store to engage and help your customer rather than find and sell them is the cornerstone upon which to build a valued digital media network.