Think you get enough TV at home? The retailers don’t think so. From specialty shops like Best Buy to mainline stores including Target, Albertsons and Wal-Mart, all have discovered the benefits of “narrowcasting”, which are typically closed circuit in-store TV networks that provide advertising to boost sales-but not just at the register.

Steve Sechrist
Senior Analyst and Editor
of Projection Monthly &
Microdisplay Report

According to Info Trends, a Massachusetts based digital communications consulting firm, in 2005 US retailers generated slightly more than $200M in ad revenue from in-store television networks-and that number is growing. The dirty little secret in the industry is that retail stores can command from $1K to $10K per day from advertisers–to touch the eyeballs of unwitting customers, and in case you haven’t noticed, that’s you and me.

Wal-Mart is considered the master of this media-advertising model, racking up monthly charges from premiere advertisers of up to $300K according to Premier Retail Networks of San Francisco. But the revenue doesn’t come cheap. Initial investment for most in-house systems range from $30 to $60K per store for network build-out and hardware, depending on the size and number of displays. Those costs don’t include satellite delivery and content development, which is constantly changing to keep pace with weekly specials and monthly promotions. On top of that, revenue is no guarantee.

But the bigger issue hinges on customer perception and the question of ultimate acceptance versus annoyance. The drive to improve bottom line revenue through narrowcasting could have the opposite effect of driving out the customer in a wave of frustration over noise pollution and information overload-the Las Vegas casino effect.

Network owners like to emphasize the positive results of information broadcasting at the point of sale. A Wal-Mart study that included 5K shoppers for example, saw a significant increase in “positive feelings” about advertised goods that translated into an 11% increase in “likely to buy” responses on the day of ad viewing.

Best Buy, which saw their in-store network evolve from a way to block competing advertising messages from showing up on its displays in the late 1990’s-noted a recent survey of their in-store HDTV programming found 87% of respondents felt the network was good, 77% found it informative and nearly 70% believed it had relevant advertising.

And perhaps “relevant advertising” is the key to avoiding alienation and ultimate consumer backlash. “If they are not done with the shopper in mind, it becomes an invasion of the shopper’s space and an insult,” said Bill Collins, a principal at WBC Narrowcasting Group, a Cincinnati-based digital media marketing firm

It makes sense for example, to offer up infomercials, advertising and tutorials on HDTV in the TV section of the store. Customers will likely find value in this kind of targeted messaging. But not everyone gets this concept.

Long-term there is little doubt in-store advertising will dominate retail in a brave new shopping world of electronic messages enticing viewers with proximity sensing displays tailored to individual preferences-cued up as shoppers walk by. Until then, the trick is not to over engineer the process or push low-value ads that loose sight of customer needs for short-term revenue gains. -SS