Retail TouchPoints: Study Shows Circulars Still Most Impactful Ad Medium For Retail

Discussion
Feb 26, 2008

Through a special arrangement, what follows is an excerpt of a current article from the Retail TouchPoints website, presented here for discussion.

Despite the increased attention to digital marketing, recent research shows that traditional mediums such as inserts and circulars are among the most impactful advertising mediums for retailers.

According to the recently released Vertis Customer Focus 2008: Retail Study, 47 percent of Americans cited inserts and circulars as the most effective advertising methods that capture their attention, an increase of nine percent over a similar study conducted five years ago.

The study also found that consumers use inserts and circulars for more than price comparisons. More than 50 percent of the respondents indicated they said they read the printed advertising pieces for help in preparing shopping lists for future store trips, browsing for new products or styles and clipping coupons. Additionally, 45 percent of respondents use inserts to look for recipes, while 37 percent claimed they help steer shopping trips the same day they read the insert.

“This research proves advertising inserts and circulars are a valuable marketing tool, even in a day and age when consumers are constantly being bombarded by marketing messages,” said Scott Marden, director of marketing research for Vertis Communications. “The fact that inserts and circulars are more efficient at capturing consumers’ mind share than television, radio, display advertising and any other medium is clear indication that savvy marketers should take advantage of the shift to drive greater ROI.”

While new mediums are grabbing increased share of budgets, only nine percent of respondents selected the Internet as the most influential medium, and e-mail advertising was the least popular choice, selected by a mere one percent of respondents.

TV advertising continued to represent a dominant medium, with 43 percent of respondents indicating TV was their top influencer, that figure represented a 10 percent decline over the results from the same period five years prior. Newspaper advertising also declined as a top attention grabber, with only 38 percent selecting that medium, compared with 45 percent in 2003.

Discussion Questions: Do you think circulars and inserts are becoming a more or less effective tool for reaching retail customers? If more effective, what do you think has led to the improvement?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

23 Comments on "Retail TouchPoints: Study Shows Circulars Still Most Impactful Ad Medium For Retail"


Sort by:   newest | oldest | most voted
Jeff Weitzman
Guest
Jeff Weitzman
14 years 3 months ago

Another consideration is the extent to which the medium is driving incremental sales for the retailer. Is the tactic reaching new shoppers? Is it prompting additional store trips? Is it reaching a demographic with higher lifetime value prospects? These are some of the key attributes of internet advertising. The overall numbers for internet marketing may still be lower than print circulars, but the audience it reaches is in many cases more valuable when considering these desirable characteristics.

James Tenser
Guest
14 years 3 months ago

Excellent caveats above regarding self-reporting in surveys, segmentation of the respondent sample, and the sheer quality of contemporary circulars. Declaring circulars as “most effective” seems a bit of hyperbole to me, but I do consider them a very important element of the “message fog” in which we seek to envelop our shoppers.

Sure, in-store media are becoming a greater influence in the total mix. But as the media sage Marshall McLuhan famously stated, newer media do not replace older media–they merely displace them. In other words, older media shift in role as the total media environment becomes more complex and sophisticated. A further corollary states (paraphrasing again) that displaced media may evolve from a production-oriented mode into art forms. Could the increasing aesthetic appeal of newer circulars be a reflection of this effect?

Mark Plona
Guest
Mark Plona
14 years 3 months ago

Advertising inserts and circulars are indeed a valuable marketing tool and will likely remain so if Boomers have anything to say about it–and you can bet they will.

If there was an increase of 9% over the last 5 years, I’d be curious how much of that could be attributed to this segment’s growth. For this group, shopping preparation remains an almost mechanical task-driven event. So in the context of circulars, long as this group continues to dominate/influence marketing decisions, product development and ultimately purchases, circulars will not disappear at least not it the short term.

Not as long as there is return for the retailer.

The open end lies in whether or not “digital” marketing will ever appeal to this group.

Ryan Mathews
Guest
14 years 3 months ago

I want to join Anne and Jamie’s bandwagon. I would also like to see the data reported against a consumer segmentation model. Are circulars effective? Sure How effective? Anybody’s guess. How long will they remain effective? I’d say that while the jury is out, in the long run their day has come and gone.

Dan Soucy
Guest
Dan Soucy
14 years 3 months ago

I have noticed over the last couple of months an increasing number of customers coming into my store with flyers in hand, looking for advertised bargains and planning their trips by the sales flyers. Instead of just coming into town and shopping around looking for the best deals, they plan ahead more, and use the flyers as tools in making decisions.

With decreasing buying power and increasing costs, consumers are becoming more aware of the need to research product and style availability and prices to help contain their spending within their means.

Ken Wyker
Guest
14 years 3 months ago
The incredible growth of Wal-Mart has had an interesting effect on the importance of circulars to competing retailers. Five years ago, conventional wisdom said that the best way to combat Wal-Mart was to lower everyday prices and adopt a more EDLP strategy with less focus on weekly specials. Retailers have learned that Wal-Mart still wins the price battle, so they’ve turned back to focusing more on effective promotional advertising. Many of the weekly circulars you see today have more motivating deals and are better designed than they were 5 years ago. I think the poor performance of the Internet and Email in the study has more to do with the content that is presented than the mediums themselves. Most of the offers delivered via email are not terribly motivating, particularly if spam is included. If emails contained significant savings or Buy 1, Get 1 FREE offers like the weekly circulars do, they’d prove to be far more effective. I am in the business of delivering the most motivating content from the weekly circulars via email… Read more »
Li McClelland
Guest
Li McClelland
14 years 3 months ago
Newspaper inserts have been the traditional way to deliver retail circulars and sale ads. But, as mentioned, newspaper circulation is way down. For many people, newspapers in the Internet age have lost their relevance, timeliness and/or their journalistic integrity. This does not mean, though, that circulars have to die along with the printed newspaper. It does not mean that the sales circular concept has lost ITS relevance. It does not mean that fewer customers are interested in price comparisons, especially for groceries and household items. It just means that sales circulars need a variety of creative, modern new distribution channels in order to reach their customers. Trader Joe’s uses the US postal service to deliver its monthly circular to targeted homes. Butera, Meijers and many others have PDF versions of their circulars available to view on their websites and will email you a copy of it in advance each week if you ask. Countless homemaking blogs and websites specialize in scouring the ads for deals at Walgreens and CVS and send their readers off to… Read more »
Raymond D. Jones
Guest
Raymond D. Jones
14 years 3 months ago

There is often a huge difference between what consumers say in a survey and what actually occurs in the context of a store purchase. While circulars may help shoppers identify the types of products they want, studies show they most often make their final choice at the shelf in the store. The closer the medium is to the final purchase, the greater the influence on the final choice.

Michael Tesler
Guest
Michael Tesler
14 years 3 months ago

Missing is commentary regarding to what kind of retailers are circulars relevant? Supermarkets not only rely on them, but their suppliers also rely on them and in many cases their buying and merchandising strategies are built around them.

The attitude is the “this is not broke’ no need to fix it or even to look at the world beyond. In that world beyond, stores actually grow yearly instead of merely trying to keep heads above water with tired tactics. Stores and categories actually increase market share. Stores offer new products, they are not corrupted by slotting fees and they are not dependent solely on price to move merchandise.

Supermarkets like Stew Leonard’s and Wegmans who dare to break the mold and try real 2008 related marketing strategies are winners and are moving forward while their circular dependent competitors shrink.

Susan Rider
Guest
Susan Rider
14 years 3 months ago

Circulars have improved greatly. They are more graphically appealing and colorful. Therefore, it’s like sitting down with a miniature magazine and perusing for the latest bargain. Circulars allow the consumer to read at their leisure.

I agree they have increased in popularity but effectiveness is the measure? If I finally get around to sitting in my leisure chair and looking at the circular two weeks after the sale, it’s good exposure but no $$$$!

Anne Howe
Guest
14 years 3 months ago

I would be interested in seeing that data reported against some sort of consumer segmentation model.

For many years, we have used consumer reported survey data from BIGresearch to look at the effectiveness of various tactics on purchase behavior. Their system allows us to pull data by various consumer and even shopper segments.

The point is this–the percentages of consumers who report that circulars impact trip and shopping behavior are drastically different when segmentation is used. Generalized data reported against a set of “consumers overall” is not really all that useful to sophisticated marketers who may, for instance, be focused on GenX moms with kids who are shopping for healthy family meal options at Safeway. That is the data I look at every day when helping clients decide how to spend their marketing dollars at retail.

Max Goldberg
Guest
14 years 3 months ago

Circulars are part of an effective media mix. They serve a role that cannot be filled by television or the Internet. They give a retailer the chance to present a number of products, in an attractive format, available for consumers to read when they want, for as long as they want.

David Biernbaum
Guest
14 years 3 months ago

Some studies have indicated that weekend newspapers are subscribed to in large part because of the circulars, FSI’s, and other ads. Circulars are profit centers for many retailers. Circulars are still a powerful tool for retailers although participation is very expensive for smaller and medium size manufacturers, and therefore the ads are somewhat limited to mostly the larger commodity brands.

This means that most retailers, in any given channel, are competing with running feature prices for the same brands, and the same items, at the same time.

Retailers need to have points of differentiation, and make it more exciting to entice new shoppers, and to do so, in part, they need to make it more affordable for smaller niche brands, and more unique brands, to be included in the circular.

Dick Seesel
Guest
14 years 3 months ago

I agree with Stephen that the decline in newspaper circulation (whether fast or slow; it’s declining) can’t be good news long-term for the efficacy of newspaper inserts. Most newspaper publishers are building up their website content and advertising as fast as possible to offset their circulation declines (and the accompanying declines in advertising revenue).

Traditional advertisers in circulars would be wise to consider how to link the type of information in these ads (typically very promotional and item-specific) to newspaper websites, if they’re not already there.

And there is certainly a generational shift from newspapers to “new media” that needs to be considered, even if this research doesn’t reflect it.

Warren Thayer
Guest
14 years 3 months ago

If in fact people are reading circulars 9% more than 5 years ago, it’s at least partly because rising costs of gasoline, health care, etc. have robbed them of disposable income, and they are researching purchases more carefully, and looking for deals wherever they can find them.

Dr. Stephen Needel
Guest
14 years 3 months ago

Let’s keep in mind that this is consumer self-report data, not medium-effectiveness data. Encouraging news for circulars as long as newspaper subscriptions don’t erode drastically (as opposed to their current slow decline).

Kai Clarke
Guest
14 years 3 months ago

Circulars are not becoming more effective. With the decrease in readership of newspapers, combined with the increased costs of mailings, circulars are being distributed in lower quantities. However, their readership is essentially flat.

The problem here is measuring purchasing decisions by isolating just one form of media advertising. This is near impossible, so the key here is maximizing their current impact in the market. Combining the reach of circulars with other media (including internet advertising) is certainly the best way to impact the market.

Either way, circulars reached their peak when newspaper pass-around rates were still high, as were their circulations.

Ted Hurlbut
Guest
Ted Hurlbut
14 years 3 months ago

If you’re competing on price, you know that the price customers out there are looking for your circular. Every week. Cherry picking you.

My clients tend to be small to mid-sized retailers, seeking to carve out a niche for themselves on the basis of distinctive, high quality products, state-of-the-art customer service and a compelling retail experience. For my clients with corporate competitors who carry similar items or categories, weekly circulars from those larger competitors only help them differentiate themselves with their target customers.

Mark Lilien
Guest
14 years 3 months ago

Although paid newspaper circulation is declining, free newspapers seem to be thriving. And how much business is driven by circulars picked up at the store entrance, as opposed to circulars examined at home? And how many retailers would stop or reduce advertising if they could get their co-op allowances paid as net price discounts instead of having to present paid advertising bills?

jack flanagan
Guest
14 years 3 months ago

The devil truly is in the details.

I’ll grant that some retailers’ circulars are anxiously awaited, some of those are anxiously perused and some of those perusals represent real calls to action (i.e. the cash register ultimately ‘rings’). That’s far different from the spin of this particular research.

At least some of the anxious awaiting is due to Hi/Lo promotions and the desire by some consumers to not make a bad buy from a price perspective.

Finally, our friends at COSTCO just keep churning out the sales and profits w/ no circular other than the ‘passport’ books which typically showcase 8 items for 2 week periods throughout the quarter out of, say, 4,500 items.

Makes you wonder if there aren’t other, more compelling calls to action.

Mike Romano
Guest
Mike Romano
14 years 3 months ago
I think the issue to focus on is not whether circulars have value, which they do, but more importantly on how do CMOs allocate their budget dollars to properly align with all the channels in which their customers live? Yes, traditionally they (mom & dad)lived in print and direct mail dollars. However, consumers today are increasingly fragmenting and multi-fragmenting to other mediums like social networking, WOM, web and mobile. These on-the-go individuals & households have economic pressures, decreasing attention spans, increasing service expectations and are easily irritated with irrelevant messages delivered incessantly under uninvited circumstances. How many retailers actually measure lifetime customer value and instead put LCV at risk in return for short term dollars? I guess that’s OK if the average tenure in marketing is 18 months, and they hope the next person repairs their damage, assuming the next person doesn’t fall prey to the same systemic issues they did. So, circulars are good, but only 40% of Americans read newspapers and that is declining 2% year, therefore, the need to solve the media… Read more »
George Whalin
Guest
George Whalin
14 years 3 months ago

I am admittedly something of a skeptic so I view research that is sponsored by a company that has a vested interest in the results with some trepidation. In this case, Vertis Communications (the research sponsor) is in the business of selling retailers on using newspaper circulars as part of their advertising mix.

While newspapers are not dead yet, they are certainly in significant decline. If the goal is to reach older (50 plus) consumers newspapers continue to be viable. The troubling fact of this medium is circulation is decreasing while the costs continue to increase.

If the goal is to reach any other group of consumers, newspaper circulars are certainly not the best, most effective method. What is surprising is how many retailers continue to rely on newspapers and other traditional media while failing to invest even a few dollars in new media.

geoffrey webb
Guest
geoffrey webb
14 years 3 months ago

I have to agree with George Whalin; Vertis is the sponsor of this research, the former ‘Treasure Chest’ still owns many printing plants that depend on printing circulars for survival.

With that being said, circulars, are effective…they allow the consumer to prepare for the trip to the mall, and in this economic state that we are currently in, many consumers take advantage of circular shopping before venturing out from their homes.

Cherry picking should not be a concern, if your retail shop is ready to greet customers with other, high margin, attractive goods once the shopper arrives.

I still would like to see statistics from a more neutral source.

wpDiscuz

Take Our Instant Poll

Do you think circulars and inserts are becoming a more or less effective tool for reaching retail customers?

View Results

Loading ... Loading ...