Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

In-store video ads a boon to retailers, a peril for traditional media

26.02.2009
Video advertising in stores is a moneymaker for retailers, but a growing threat to already cash-strapped print and broadcast media, according to a new study co-written by a University of Illinois business professor.

Yunchuan “Frank” Liu says in-store marketing has surged in the last decade, fueled by on-the-spot commercials that have proven persuasive with shoppers and lower advertising rates that are popular with manufacturers.

Retailers have a pricing edge over traditional media outlets because stores profit from both advertising revenue and sales increases sparked by the ads, according to the study, which will appear in Marketing Science, a peer-reviewed journal.

“Commercial media only gains from advertising, with no direct stake in how much product is sold,” Liu said. “Retailers have incentive to subsidize rates because the more manufacturers advertise, the more sales could increase.”

The study, based on economic models, is the first to examine the impact of in-store advertising on the product-distribution chain, said Liu, who co-wrote the study with University of Southern California economist Anthony J. Dukes.

Liu says the findings are another dark cloud for newspapers, magazines and broadcasters already wrestling with audience and revenue declines in a market spread thin by the growth of online, cable and other options.

“In the future, we see more advertising available in stores, and more advertising shifting from commercial media to in-store media,” said Liu, a professor of business administration.

He says print and broadcast media may have to adjust their sights, forgoing ads for food, cleaning supplies and other staple products and focusing instead on brand-awareness campaigns, services such as movies or health care and big-ticket items that consumers ponder before buying.

“Commercial media could become a high-quality platform for branding, long-range buying and services not available in stores,” Liu said. “But for impulse purchases – cereal, razor blades and those kinds of retail products – in-store advertising will be really important.”

The study says in-store advertising also provides social benefits, giving consumers product information as they shop – when they need it most.

“Retailers benefit, manufacturers benefit, and consumers benefit,” Liu said. “With lower advertising rates, manufacturers advertise more, giving consumers more information about products that satisfy their wants and needs.”

Up to 70 percent of consumers make brand decisions while they shop, and research shows that brand recall is 65 percent among Wal-Mart TV viewers compared with just 23 percent among in-home viewers, the study says.

Liu says Wal-Mart pioneered in-store advertising in 1999, launching 100,000 screens in more than 2,650 stores that reach 336 million shoppers every month. It has the fifth-largest reach of any network, trailing only ABC, CBS, NBC and Fox.

Other large retailers have since followed, including Best Buy, Costco, Macy’s and Borders. With the surge, Liu said, about a quarter of Americans now go to at least one retailer every week that uses in-store advertising.

“In-store media is more likely to be profitable for retailers who are large and powerful enough to share a significant portion of the revenue with manufacturers through lower rates,” he said. “It’s not as effective for smaller retailers because start-up costs are high.”

The study also found that retailers should discount advertising rates for manufacturers with large, well-known brands, while charging more for lesser-known brands that are still trying to carve a market niche.

“Well-known manufacturers know that customers will buy their product anyway, so they want a discount to advertise in stores,” Liu said. “Lesser-known brands have more to gain, so retailers should charge them more.”

He says in-store advertising will ultimately impact marketing strategy, providing another option that manufacturers can use to lure buyers.

“In-store media will likely focus on lower-cost brands that people buy frequently,” he said. “Commercial media could be a good platform for branding and bigger-ticket items. Some manufacturers might want to do both, branding their product through conventional media, then using in-store media to lure customers as they shop.”

Jan Dennis | EurekAlert!
Further information:
http://www.illinois.edu

More articles from Communications Media:

nachricht New Technologies for A/V Analysis and Search
13.04.2017 | Fraunhofer-Institut für Digitale Medientechnologie IDMT

nachricht On patrol in social networks
25.01.2017 | Fraunhofer-Institut für Arbeitswirtschaft und Organisation IAO

All articles from Communications Media >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Frictional Heat Powers Hydrothermal Activity on Enceladus

Computer simulation shows how the icy moon heats water in a porous rock core

Heat from the friction of rocks caused by tidal forces could be the “engine” for the hydrothermal activity on Saturn's moon Enceladus. This presupposes that...

Im Focus: Nanoparticles help with malaria diagnosis – new rapid test in development

The WHO reports an estimated 429,000 malaria deaths each year. The disease mostly affects tropical and subtropical regions and in particular the African continent. The Fraunhofer Institute for Silicate Research ISC teamed up with the Fraunhofer Institute for Molecular Biology and Applied Ecology IME and the Institute of Tropical Medicine at the University of Tübingen for a new test method to detect malaria parasites in blood. The idea of the research project “NanoFRET” is to develop a highly sensitive and reliable rapid diagnostic test so that patient treatment can begin as early as possible.

Malaria is caused by parasites transmitted by mosquito bite. The most dangerous form of malaria is malaria tropica. Left untreated, it is fatal in most cases....

Im Focus: A “cosmic snake” reveals the structure of remote galaxies

The formation of stars in distant galaxies is still largely unexplored. For the first time, astron-omers at the University of Geneva have now been able to closely observe a star system six billion light-years away. In doing so, they are confirming earlier simulations made by the University of Zurich. One special effect is made possible by the multiple reflections of images that run through the cosmos like a snake.

Today, astronomers have a pretty accurate idea of how stars were formed in the recent cosmic past. But do these laws also apply to older galaxies? For around a...

Im Focus: Visual intelligence is not the same as IQ

Just because someone is smart and well-motivated doesn't mean he or she can learn the visual skills needed to excel at tasks like matching fingerprints, interpreting medical X-rays, keeping track of aircraft on radar displays or forensic face matching.

That is the implication of a new study which shows for the first time that there is a broad range of differences in people's visual ability and that these...

Im Focus: Novel Nano-CT device creates high-resolution 3D-X-rays of tiny velvet worm legs

Computer Tomography (CT) is a standard procedure in hospitals, but so far, the technology has not been suitable for imaging extremely small objects. In PNAS, a team from the Technical University of Munich (TUM) describes a Nano-CT device that creates three-dimensional x-ray images at resolutions up to 100 nanometers. The first test application: Together with colleagues from the University of Kassel and Helmholtz-Zentrum Geesthacht the researchers analyzed the locomotory system of a velvet worm.

During a CT analysis, the object under investigation is x-rayed and a detector measures the respective amount of radiation absorbed from various angles....

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Ecology Across Borders: International conference brings together 1,500 ecologists

15.11.2017 | Event News

Road into laboratory: Users discuss biaxial fatigue-testing for car and truck wheel

15.11.2017 | Event News

#Berlin5GWeek: The right network for Industry 4.0

30.10.2017 | Event News

 
Latest News

Underwater acoustic localization of marine mammals and vehicles

23.11.2017 | Information Technology

Enhancing the quantum sensing capabilities of diamond

23.11.2017 | Physics and Astronomy

Meadows beat out shrubs when it comes to storing carbon

23.11.2017 | Life Sciences

VideoLinks
B2B-VideoLinks
More VideoLinks >>>