Andrew Lipsman, founder of Media, Ads + Commerce and Marlow Nickell, co-founder of Grocery TV, advocate for in-store media to be added to the media mix as a way to extend reach and increase mental and physical availability.

“I generally believe the majority of brand choice is made in a retail environment,” P&G President & CEO Jon Moeller said during a July 2023 investor call. “I think less brand choice is made sitting on a couch or even driving in a car on the way to a retail establishment. The same is true for online. So, we’re very carefully evaluating this opportunity.”

Despite this acknowledgment from the marketing giant, CPG brands have been remarkably slow to invest in digital in-store retail media. It’s not because they don’t (or won’t) believe in the medium’s potential – often it’s just not even on their radar.

You would struggle to find a single person at a CPG brand with a direct remit for driving its in-store retail media strategy. It slips through the cracks of organizations as media budgets often don’t plan for it. In-store often gets splintered off DOOH (digital out-of-home) budgets, or it’s the domain of shopper marketing teams that think of cardboard when they hear the term “in-store media.”

But with digital screens aggressively rolling out this year across major grocery retailers – including Walmart, Kroger, Tesco, Hy-Vee, and Shop-Rite– it’s time for CPGs to wake up to this significant opportunity to grow their brands.

Prof. Byron Sharp of the Ehrenberg-Bass Institute established the canonical marketing framework for CPG brands in his 2010 book “How Brands Grow.” In it, he argues for maximizing reach, mental availability, and physical availability as foundational precepts for brand growth. By meeting these criteria, in-store retail media will prove a critical part of the marketing mix and a key determinant of how CPG brands grow in the future.

Reach: In-store ads extend reach as linear TV declines

Prof. Sharp is a proponent of “always-on” reach, but ongoing declines in linear TV consumption make it increasingly difficult to reach target consumers in a cost-effective manner.

With viewing time cut in half across many key audience segments over the past decade, the fact that TV dollars haven’t found somewhere better to go has contributed to broadcast and cable TV CPMs effectively doubling during the same period. That’s an unsustainable trajectory, even for scarce high-quality inventory. Moreover, many CPGs are now seeing TV returns in their market mix models deteriorate – in some cases dipping into negative territory.

But this hasn’t diminished brands’ desire for mass reach. Marc Pritchard, chief brand officer of Procter & Gamble, has discussed his brands’ objective to achieve 90-100% within key audience targets. There’s no way to get close to that with linear TV alone.

Physical stores reach audiences comparable to even the top broadcast TV networks, with Ryan Mayward, SVP of Retail Media Sales at Walmart Connect, recently asserting that in-store “is a channel with broadcast-level scale.”

They’re also the same audiences – like 18- to 49-year-olds – that are now so difficult to reach on linear TV. Brands that want to achieve 90–100% reach within their targets should be looking at a medium that can help fill that hole.

Prof. Sharp – seemingly violating his own orthodoxy – has expressed skepticism of in-store marketing as a reach medium, asserting that it’s difficult for brands to stand out once the shopper has reached the aisle. “That’s theoretical reach,” he responded to a Linkedin post on the topic. “It’s like assuming that if my brand is on the shelf in Walmart it will be seen by every shopper.”

That’s precisely why it’s important to reach shoppers in prominent locations throughout the store that don’t directly compete amid the clutter. It’s also true that not everyone who enters a store will see every in-store ad, just like it’s true that not everyone who watches a TV broadcast network over the course of a month will see every TV ad. But popular areas of the store – much like popular TV programs – will produce meaningful reach in a relatively short period of time.

In addition, certain in-store ad experiences – particularly those at or near the entrance – actually exceed TV’s ‘opportunity to see’ standard since audiences must physically pass through the viewing threshold and the ads aren’t skippable.

Mental availability: In-store ads deliver salience and attentiveness

Reach is necessary but not sufficient for CPG brands to establish mental availability, another critical component of the how brands grow principles. Prof. Sharp defines a brand’s mental availability as “the probability that a buyer will notice, recognize and/or think of a brand in buying situations [which] depends on the quality and quantity of memory structures related to the brand.” TV ads have traditionally done the heavy lifting in building these memory structures.

Sharp, along with Ehrenberg-Bass Institute colleague Jenni Romaniuk, discuss the two types of memory structures: “From a human memory perspective, prominence can be apparent in two ways. The first is a ‘current’ prominence whereby the very recently retrieved brand is in working memory…The second is the longer-run average accessibility from long-term memory.”

Further, brand salience is derived from “memory salience” (i.e., how quickly the brand and its associated products come to mind) and “attention salience” (i.e., how well a brand captures the audience’s attention). The former occurs by reasons stated above. While eye-tracking studies aren’t available for in-store media yet, Grocery TV research indicates that in-store advertising is seen by consumers as a positive ad experience. When respondents were asked how likely or unlikely they are to pay attention to in-store advertising, it rated higher than outdoor, print and linear TV. 

Note: 1,090 individuals were surveyed to better understand their sentiment and attentiveness to different advertising formats. Survey respondent demographics were reflective of the U.S. population. Date: October 15, 2023

This could be due to several factors. In-store ads are more likely to produce a neutral to positive ad experience, likely because they’re less interruptive to content and are contextually relevant to the shopping trip. Shoppers are also less likely to be “second-screening”, as is so common today during TV commercial breaks.

Physical availability: In-store ads make brands easier to find

Prof. Sharp stipulates that a brand’s physical availability depends on the following factors:

  • Presence – “Are you where you should be?”
  • Prominence – “Are you easy to find?”
  • Relevance – “Are you buyable?”

In-store ads can be most effective at establishing prominence by directing shoppers to where they can find the product on the shelves.

Consider an advertisement at the grocery store entrance or front-of-store for a household product brand like Cascade or Dawn. Shoppers often enter the grocery store with the intention of buying food and not necessarily thinking about household products they need that can also be found in the store. In these instances, shoppers aren’t especially likely to traverse the household products aisle during their trip. In-store ads can serve as reminders for something the shopper needs, while directing them to the correct aisle to find that product.

Research from the Path to Purchase Institute indicates that, in fact, this is a key function that many shoppers want in-store ads to perform. While they want in-store ads to be interesting and eye-catching, they also want them to be informative – whether that’s to tell them about a promotion, remind them about a specific product they need, or directing them to a particular location of the store to find an item.

Future versions of in-store ads will further improve relevance using shelf-intelligent media that tailors advertising creative to product availability and/or the desire to stimulate sales of slow-moving inventory.

Making in-store ads the new “primetime”

With linear TV no longer able to do the heavy lifting for brand growth, it’s time for CPGs to get serious about where today’s “primetime” audiences can be reached: the physical store.

Here are three actions they can take over the next 12 months to embrace the opportunity:

  1. Focus organizational resources on in-store media. Brand managers need to assume more responsibility for in-store advertising, getting buy-in from national media teams and media agencies to incorporate in-store into the marketing mix. The C-suite should mandate that brand budgets get allocated to in-store, with the most forward-leaning brands committing 5% of their linear TV budgets to this channel by 2025.
  2. Get creative with in-store creative. Contextual relevance is one of the key driving forces of in-store ads, and the creative should reflect their unique context. Brands should resist simple repurposing of ads from other formats, and instead reflect the occasions and need-states driving purchase with their in-store creative.
  3. Push third-party measurement to step up to the challenge. Measurement companies need to accelerate their capabilities to support scalable in-store audience measurement, brand lift measurement, and sales lift measurement so national media teams have the information needed to invest confidently. A physical store version of the Nielsen TV ratings would facilitate the flow of budgets from linear TV to the next major media channel.