Digital Ads Change Based on Shopper

Discussion
Aug 22, 2008

By George Anderson

Marketers are looking to tailor in-store ads to consumers based on what they purchase. In the future, according to The Wall Street Journal, those messages flashed on digital screens in stores may also change based on a person’s appearance.

Dunkin’ Donuts is among the first in the U.S. looking to see if purchase-based messaging will help drive incremental volume. In two of the chain’s stores in Buffalo, NY, consumers ordering coffee in the morning will be greeted with ads at the pick-up counter that invite them back later for a lunch menu item or for another coffee.

Procter & Gamble is working with Metro in Germany to generate messages that are based on actual shopper purchases. Radio frequency identification tags on products signal when a consumer has taken a product and that in turn determines what ad will appear on eye-level digital screens throughout the store.

Sophisticated in-store media programs are in the infancy stage as the Dunkin’ Donuts and P&G/Metro tests demonstrate. Still, the investment that companies are making suggest that many have concluded that developing in-store media is essential in a world where it has become increasingly difficult to break through the clutter in traditional media.

Andy Murray, chief executive of Saatchi & Saatchi X, called himself “a skeptic on technology in the shopping environment.” According to Mr. Murray, large numbers of screens positioned around stores doing nothing other than pitching products is a surefire way to lose shoppers’ interest. Having large numbers of screens in stores has become more doable of late as the price of screens has come way down.

While there is clearly a learning curve, digital media firms are experimenting with new technologies to communicate more effectively with shoppers. One development is the use of facial-recognition technology. Cameras near signs in stores use a variety of algorithms to analyze an individual’s features and place them in certain demographic groups. Using this information, digital screens will then run messages intended for that demographic. YCD Multimedia, the company working with Dunkin’ Donuts in Buffalo, is in the process of deploying facial recognition programs.

Companies are also looking at the potential for in-store digital media to help improve inventory management. According to The Journal article, Aroma Espresso Bar can automatically change the ads people see at the checkout. Store managers, for example, can run ads that push pastries that will go stale if they aren’t sold on a given day.

Discussion Questions: What do you think of the potential for in-store digital media connected with RFID, facial recognition and other technologies to drive unplanned purchases? What do you think about the use of digital media in-stores to improve inventory management?

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23 Comments on "Digital Ads Change Based on Shopper"


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Anne Howe
Guest
13 years 9 months ago

Before this next step happens, the digital in-store medium needs to gain some traction as being directly correlated to brand purchase patterns at retail. The medium has great promise, but many marketers haven’t yet solved what kind of creative works best, how much equity messaging vs. incentive messaging is needed, and if different messages are best in different locations. Not to mention the shopper’s tolerance for a highly increased “noise level” directed at them as they try to shop. Technology makes things possible, and I am all for experimentation and the test and learn method. But just because we can doesn’t mean we should….

Phil Rubin
Guest
Phil Rubin
13 years 9 months ago

Dunkin’s move to test is smart and a better way to deliver what Starbucks is trying to do with their “Treat Receipt.”

Beyond general selling messages like Dunkin’s, getting more granular requires both good data and, assuming the messages are focused on specific customers, some amount of customer opt-in. As those who work with data will attest, getting clean data that is then actionable is much easier in theory than in practice.

There are initiatives under way to create bona fide in-store media networks and some major industry players are involved. This is going to happen, with or without ad agencies.

Michael L. Howatt
Guest
Michael L. Howatt
13 years 9 months ago

Wow, I hope Dunkin’ Donuts and P&G reps are watching this discussion. They could save themselves a lot of time and money based on my colleagues comments. If the industry really wants to use RFID tags to create incremental purchases, they could put an LCD display on the cart, let consumers know if they “scan” their products as they put them in (this could also be tied into checkouts) and will receive a benefit (sales off related product, some sort of deal) then consumers won’t mind so much. It’s better than getting a facial scan and then an ad pops up somewhere for pimple cream.

Adrian Weidmann
Guest
13 years 9 months ago

In-store digital media (digital signage) was invented by technocrats who needed a sales proposition to sell their ‘widgets’. After a digital signage demonstration given in 1999, I remember a retail executive telling me that, “it was a compelling tactical implementation in desperate search of a strategy.”

Over the past 10 years we’re still letting technology illuminate the way to an accepted strategy. Let’s put the focus on the shopper. If we can truly help them, they will dictate the strategy and we can then implement the required technologies to enable that help.

All too often, we are exposed to technology and the first reaction is, “How can we use this to….” Let’s keep the priority on the shopper and their reality. From this perspective, we can use all these wonderful technologies to enable a viable solution.

David Biernbaum
Guest
13 years 9 months ago

Big Brother is watching you and suggesting that you buy more donuts. Not to worry, when you get over to the HBC aisle, Big Brother will suggest some diet pills.

Laura Davis-Taylor
Guest
Laura Davis-Taylor
13 years 9 months ago

This has huge potential if done RIGHT. But, that’s the challenge. Like all other digital media, there’s no one answer to the “what works” debate either. Every technology, every installation, every network needs to be uniquely tailored to the shopper and business needs of the retailer. The content needs to be contextually relevant and truly make a difference in the overall store experience (note that I did not say that it needs to push advertising!) We also do indeed need to tie these efforts to measurement from both the shopper engagement and sales perspective–but that’s coming.

The big question in relation to the article is if consumers will tolerate being personally profiled (and via what forms) to enable some of these more sophisticated digital media models. Once again, this is going to depend on whether we do it responsibly or invasively.

Nikki Baird
Guest
Nikki Baird
13 years 9 months ago
Hello? Has not the retail industry been talking about this for four years? This article takes us back to the stone age in terms of the sophistication of what retail media networks can do. And I am not surprised at all to hear an ad guy talk down about it, because they don’t get it at all. Anyone who has been dealing with retail media networks will tell you that we’ve already figured out that you can’t plaster a store with screens pitching ads, and that targeted ads are what are really needed to deliver value. The problem has been the content–retail media networks, given their ability to target, are voraciously hungry for content–which ad agencies have completely neglected because out of home advertising is just not as sexy as TV or even online. Yes, consumers will tell you they don’t like it–but who really LIKES any kind of advertising? But if you do it with respect to consumers and employees alike, it can deliver real benefits. And guess what? It’s ultimately going to be… Read more »
Liz Crawford
Guest
13 years 9 months ago

This seems like a stepping stone to the next killer app. Opt-in, biometric ID on each customer with benefits tailored to each person. How? By sensing the chip in the scannable wallet, currently known as the cellphone.

How individual will the messages and benefits be? By language, preferred personality, age and income demographics, food preferences, diet restrictions, even health inputs (fat, calorie, carb intake per day). The networked economy runs on the currency of attention. One unit of attention must equal a parity in value to each consumer. That is the key.

Steve Bramhall
Guest
Steve Bramhall
13 years 9 months ago

Of course the target should be to get closer to the customer, understand his/her buying habits and up sell, build loyalty, reward, enhance the customer experience and market at an individual or smaller group segment level.

I think it is great that the RFID technology is developing. However, like all technology deployments–ERP, WMS for example–they are a business support, not an end in themselves.

There will be failures along the way to a tried, tested and cost effective solution. For me, subtlety is key, especially where promotion and pricing are concerned.

Charles P. Walsh
Guest
Charles P. Walsh
13 years 9 months ago

I can’t remember the last time that I shopped in a retail store and found myself to be the only person walking past an in-store media display. Which of the dozen people walking past the digital media device does it choose, how long does it display the message?

Seems to me that this makes sense in a few controlled environments such as checkouts and drive-throughs. Beyond that, it would seem to me a monumental waste of money.

James Tenser
Guest
13 years 9 months ago

Sounds technically brilliant to me. Wire up the store with sensing gear and use automated digital analysis to detect shopper traits and behaviors. Divide into target-able segments, then deliver messages in real time that match up.

This is already at least partly feasible, I’m told, but there is a crucial missing element that must be addressed by retailers, advertisers and digital signage vendors: Shoppers’ hearts and minds.

We simply have no clue about how this kind of surveillance and messaging will be perceived by shoppers. Some may love it and buy like crazy. Others may be indifferent. Others may perceive it as a nuisance, or worse yet, an assault on privacy and the senses.

We’ve got a ton of homework to do before we can say with confidence that these kinds of in-store messaging schemes are a positive addition to the shopping experience. Retailers should be especially skeptical. Despite the tempting up-front cash offered for access to their in-store audiences, it’s their shopper relationships that are on the line.

Gene Detroyer
Guest
13 years 9 months ago
WOW! So many nay-sayers!!! In the late ’80s and early ’90s I was involved in an in-store, in aisle video system that ran ads customized to the individual store. The short story is that it was merged into NBC OnSite and NBC eventually shut it down because it was too capital intensive (averaged over $50,000 per store). The longer story is that the system was well researched and generated considerable incremental business on most of the 50 or so brands that were tested. The real hurdle on getting the advertisers on board was to build the system to critical mass, therefore delivery hundreds of stores and hundreds of thousands of shoppers. The simple story is that if a kid ran up and down the aisle yelling “Heinz Ketchup,” that store would sell more ketchup. I can’t comment on the value specific technology as described in the article, but there is no doubt that if shoppers are prompted during the shopping experience that they will act. And, if one of these technologies are not right, then… Read more »
Mary Baum
Guest
Mary Baum
13 years 9 months ago
I think a more useful approach would be if the technology could manage to be of actual service to the customer, maybe by picking up on behavior cues that show the customer might need some service. For instance, how many times have we all gone up and down an aisle two or three times in a row, or more, in search of some item we just don’t see? If that’s a typical behavior that means ‘customer can’t find…and the kiosk can say, “I notice you’ve passed this point three times. May I locate an item for you?” Then, after showing her where the item is, if it’s in stock, or, if not, letting her check a box that tells the management she wanted the item and they were out, and only then, the kiosk can offer her a coupon for something she might be interested in. Or suggest a new kind of whatever it is she was looking for. Another possibility might be to have the kiosk check for a shopping app on a customer’s… Read more »
Bernice Hurst
Guest
13 years 9 months ago

Right, so some customers will buy practically anything that you try to sell them if it seems to be tailor-made for them. Flattery can sometimes get you anywhere. But some customers will buy absolutely nothing if they are targeted in this way and may leave the store forevermore. Is anybody going to measure which group is larger?

And by the way, I loved Marc’s “Hey fatso” suggestion. I will spare you all yet another repeat of my rant on invasion of privacy but will murmur that the opportunities for offense are rife.

Michael Murphy, Ph.D.
Guest
Michael Murphy, Ph.D.
13 years 9 months ago

This sounds amazingly invasive and almost creepy.

Marc Gordon
Guest
Marc Gordon
13 years 9 months ago

This is the most ludicrous thing I have read in a very long time. Once again media companies have found a new form of marketing for shoppers to ignore. But I do like the concept of the custom ads in Dunkin’ Donuts. Maybe the little screen could deliver a message that says “Hey fatso, why not make it an even dozen?”

Max Goldberg
Guest
13 years 9 months ago

Marketers will always look for ways to connect with consumers as they are in-store. New technologies offer a wide variety of possibilities. As with any marketing, manufacturers must engage the consumer in a dialogue, otherwise consumers view the advertising is just noise and clutter. Over the next 5 years we will continue to see in-store marketing refined and tested. I look forward to seeing which techniques prove to be the most successful.

Dr. Stephen Needel
Guest
13 years 9 months ago

Anne is being nice–this sounds like a waste of both time and a considerable amount of money. Just consider how much in incremental sales would be required to justify the costs, both initial and ongoing.

Dan Nelson
Guest
Dan Nelson
13 years 9 months ago

This is a very similar discussion to RFID technology and its benefits vs. risks from the consumer’s viewpoint. I believe that using RFID to help improve turns and in stocks is terrific and hope to see it continue to evolve and become more mainstream.

I am a proponent of digital technology and in store media to improve connecting with shoppers as they consider their purchase decisions. I do not support using in store technology to specifically identify individual shoppers and message exclusively to them as I view this as an invasion of privacy, unless those shoppers have approved this marketing messaging. Consumers should feel protected that their purchases and their decisions are being managed with the discretion that they want and deserve.

Al McClain
Guest
Al McClain
13 years 9 months ago

While it seems like a fine idea to cross-sell and up-sell consumers based on purchases, this needs to be used with discretion.

The REALLY poor idea is offerings based on what consumers look like. Looks can be deceiving, as we all know, and shoppers will figure out what’s going on before too long, and many of them will REALLY not like it.

Herb Sorensen, Ph.D.
Guest
13 years 9 months ago
The driving principle behind all of these developments is what we call “active retailing,” as contrasted with the passive form that developed 100 years ago with mass movement to self-service, where the shopper does all the real “retailing,” with the retailer passively standing by while the shopper does their stuff. The availability of a variety of technology is giving retailers the opportunity to return to the practice of participating WITH the shopper in the purchase process. Do they know how to do that? NO. Consequently a lot of the efforts in the early days will be stupid and ham-handed. How many years did it take for Walmart to recognize publicly that screens high above the sales floor are a total waste of money? But that doesn’t mean that screens are a waste. Active retailing is where we are going in the future, get over it. But ignorance of how shoppers actually shop in the store will become increasingly costly to laggard retailers. Which doesn’t mean that early adopters of this technology are well ahead of… Read more »
Bill Gerba
Guest
Bill Gerba
13 years 8 months ago

Interestingly, the kind of local and hyperlocal advertising that works best in Dunkin’ Donuts and similar stores won’t benefit much from being able to further segment the population by age, race, etc, (assuming that the technology works correctly in the first place, which it certainly doesn’t right now).

Our experience working with these firms has been that location is the #1 source of relevance for ads, and everything else falls by the wayside very quickly.

Mark Lilien
Guest
13 years 8 months ago

Digital ads customized for each shopper: worth trying. Digital ads linked to RFID: how is this better than a link to bar code scans? Digital ads invasive: depends on the IQ of the retail management. Shoppers getting annoyed: yes they’ll get annoyed but they might not have much choice if the technology is widely adopted.

Any technology, like any superhero, can be a tool for good or evil. Facial recognition can be used to ID persons wanted by the law or it can be used to stereotype people and insult them. In-store video can be a great selling tool or it can be a blaring, repetitious distraction device, “full of sound and fury, signifying nothing.” (Isn’t Macbeth a great retailing story?)

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