P.R.I.S.M. pilot redefines in-store potential

NATIONWIDE RT REPORT—Consumer packaged goods companies who already spend vast sums on trade marketing may soon find themselves shifting additional dollars to the in-store environment thanks to the emergence of a new audience measurement metric.

At least that’s the thinking of George Wishart, who alluded to that possibility recently during a presentation of an initiative called Pioneering Research for an In-Store Metric or P.R.I.S.M.

“We believe we are on the threshold of the golden age of in-store marketing,” said Wishart, global managing director of Nielsen In-Store. The precedent for that belief exists by looking at what happened with other media such as radio, television, cable and online as each emerged. As audience measurement techniques were developed, their usage exploded as marketers were better able to understand the size of the audience being reached and the effectiveness of the advertising investment. “We are in the same place with in-store. It has been around for a long time, but it has never been measured and we are now doing it.”

Sort of. The P.R.I.S.M. project recently entered a second phase after beginning last year when a handful of major retailers and suppliers began working with Nielsen and the In-Store Marketing Institute under the auspices of the In-Store Marketing Consortium. The group created a pilot project that involved 10 stores across four formats in two markets. The retailers involved included Wal-Mart, Albert-sons, Kroger and Walgreens stores in Atlanta and Portland, Ore., and categories examined included those that contained items from participating suppliers such as Procter & Gamble, Kellogg’s, Coca-Cola, Miller, 3M and The Walt Disney Co.

The project was intended to examine the correlation between sales of a category, department and store with the audience for the category, department and store. Directional sensors were used in aisles, at the entrances to departments and the store to examine overall traffic and category-specific traffic by day and hour in 64 categories.

“What they were able to prove was that there was a correlation between the sales of a category, department and a store with the audience associated with that category, department and store,” Wishart said.

The need for retailers to demonstrate that correlation has become increasingly important in recent years as spending against the audience they deliver has grown. Major retailers recognized the untapped value of the audiences that are in their stores, which in the case of a company like Wal-Mart, has approximately 127 million customers in its stores each week. It allows suppliers to reach those customers by advertising on in-store radio and television networks it controls. Other major retailers such as Target, Meijer, Costco and Best Buy have in-store networks but little hard data to support the fees charged to suppliers. Retailers know how many people are in their stores, but they don’t know with any degree of objectivity where customers are going and how long they remain there. Understanding this piece of the puzzle is where P.R.I.S.M. comes in because if marketers can get to the point where reach and consumer impressions can be measured and compared to other media, then fact-based decisions can be made, which could either curtail or unlock in-store spending.

Nielsen is betting it is the latter, and through its participation on the In-Store Marketing Consortium has established itself as a leader in the in-store measurement space. However, more robust research will be needed which is why a second phase of the P.R.I.S.M. project was initiated May 1. The group of retailers involved was expanded to include Kroger, A&P, Meijer, Rite Aid, Safe-way and Winn-Dixie, and new suppliers were added such as Unilever, ConAgra Foods, Kraft, Clorox, Mattel, Nintendo and General Mills.

Data will be collected from a sample of 200 stores and virtually every category in those stores will be examined during a 26-week test that concludes this October. The correlation formula used to evaluate sales and audience size will also be enhanced to factor in data related to a specific store’s geographical area, competitive circumstances and promotional activity.

“In every store we are measuring, we will know every single piece of marketing activity within that store,” Wishart said. “We will know every shelf talker, every display, every feature and every temporary price reduction, so we can actually understand who is in the store as well as what is in the store.”

The other factor at work here is the expectation for the in-store space to become even more important to marketers, especially as an evolving marketplace challenges the ability of traditional media outlets to deliver an audience to advertisers. Consumers can’t avoid ads in the store the way they can with radio or television by switching channels or using a DVR device like TiVo. Already, Wishart contends that roughly $550 billion is invested in trade spending by consumer packaged goods companies, and that figure represents about 55% of the marketing dollars they spend.

“More than half of their dollars go to trade spending and it is growing, the trouble is it is not measured,” Wishart said.

That is expected to change in 2008 when Nielsen In-Store begins offering a syndicated reporting system.