MHB WEEKLY: By the students, for the world

The Sign Language of Marketing | February 16, 2011

The various strategies of point-of-purchase (POP) advertising, long viewed as one of the most potent — if hardest to effectively realize — means of marketing, are often as physically obvious as they are psychologically subtle. Take, for instance, the various tricks and traps in a typical grocery store. To encourage the purchase of certain products as consumers shop, major corporations pay top dollar for eye-level placement in food aisles. Then, once consumers hit the checkout line, the stores themselves stock candy and magazines that are frequently bought simply out of the boredom of waiting. The mechanisms that motivate consumer behavior in these situations are the same that underlie the giant highway billboards that advertise restaurants and gift shops at the NEXT EXIT: if consumers are close to a product, the ease of access might be enough encouragement to buy.

It’s no surprise, then, that we might be on the eve of a revolution in location-based marketing, the ad strategy that aims to place LCD television screens in “venues consumers frequent most.” Certainly you’ve seen tiny TVs in the backs of cabs, but Adcentricity — a leader in digital out-of-home signage — has a much longer list of potential locales: restaurants, bars, pharmacies, even elevators. It has good reason too: according to Nielsen, video ads in public reach 70 percent of Americans per month, compared with the 43 percent reached by internet video; meanwhile, according to ABI Research, location-based marketing will be a $1.8 billion business by 2015. And that still says nothing of the myriad case studies. In one example, a beer company, after running LCD ads in casual restaurants and bars, saw a 72 percent increase in product sales in those locations.

Location-based advertising, however, is not as popular as those numbers might suggest. In the retail industry, which includes shopping centers and grocery stores, the number of digital screens has grown by 28 percent since 2007 — but only an estimated ten percent of retailers actually use them. Of those retailers, who average three screens per store, 40 percent report that the digital ads result in increased purchasing behavior. Furthermore, nearly one fourth of the retailers without LCD ads in place expect to adopt them within the next calendar year; according to POPAI UK, who provided these statistics, the Summer Olympics of 2012 — scheduled to take place in London — will represent a sort of industry exhibition for digital signage in interesting places. Ads can be expected at ATMs, in casinos and at the information kiosks where tourists will gather for assistance.

The last piece of the puzzle in location-based advertising is the need for companies to get creative, mostly so consumers continue to appreciate the uniqueness of LCD ads instead of finding them annoying as their use multiplies. In Canada, two major marketing companies have teamed together in an attempt to address this issue: late last week, iSIGN Media Solutions and BroadSign International formed a merger that allows LCD ads to interact with cell phones at the point of purchase. BroadSign, who owns several hundred digital screens across North America, will endow each screen with iSIGN technology — which communicates via text message (on an opt-in basis) with nearby customers to offer them promotional deals and coupons related to the products featured in the digital ads. Beyond simply encouraging purchases, iSIGN also provides a clear quantitative way to track the power of ads: the more coupons redeemed, the more effective an LCD screen. And given the haughty claims of location-based experts — who say with consistency that digital point-of-purchase ads make a double-digit difference in product sales — such statistical support could be key for the industry.

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    Established in 2009 at USC, the Master's of Science in Human Behavior is designed to equip students with knowledge of consumer psychology, social media and market analysis skills. This is our blog. Subscribe

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