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Super marketing : TV’s retail magic – A snapshot…

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The word magic. It evokes a sense of fairytale, the notion of mythology, the epic, something that is larger than life. On the surface, it doesn’t appear synonymous with either TV or retail, both common fixtures of the modern-day life. But let’s just think about that. TV, for instance, is there a more epic medium? A channel that brings brands to life, evokes a sense of grandeur and makes the attaining of products more tangible. Think about a John Lewis Christmas ad and how it enthrals adults and children alike, that aspirational Chanel advertising or that new Mercedes… aspirations have a little bit of magic right?

A few weeks ago, I attended a Thinkbox event, with a retail client, to listen to experts in their field talk about the retail market; the recent highs and the lows, the importance of brand, the scepticism of ‘short-termism ‘and the impact of media – notably TV.

A key speaker at the event was Ben Perkins, a retail specialist from Deloitte who discussed the retail market in 2017 and what we could expect in 2018 and the following 2-3 years. I have included a couple of key insights below:

2017

  • Consumers are under pressure – retail spend is prioritised on essentials
  • The uncertainty of the pound/inflation/business rates/living wage and apprentice levy are all contributing factors
  • We saw a continued growth of online – example Amazon which saw 25% growth of non-food goods whilst the market only seen a growth of 3%
  • Discounters gained share with Aldi, Lidl and Mountain Warehouse cited
  • The industry response was to reduce costs via stores and people focusing investment in tech and automation
  • There was (and will continue to be) a consolidation of large retail space i.e. Tesco and Next/ Co-Op and Nisa
  • 5.5K store closures in 2017

2018

  • Inflation expected to reduce thus easing pressure on the market
  • Growth in wages/disposable income anticipated – consumers will be willing to spend again
  • Blockchain platform @ 1% direct to consumer – an additional challenge in an already fractious market
  • Value GDPR – offers an opportunity to re-engage the consumer
  • 27K store closures anticipated between 2018-2020 – these are still uncertain times

Ben’s insight was not new news; we have in the last 12 months seen many retail and retail associated clients feel the burden of its noisy neighbour (online) and the wider economy.

One argument that an unsettled market evokes, is the age-old sales activation vs. brand debate; this was discussed by Peter Field via his study ‘The drivers of effectiveness and dangers of short-termism in retail’. In such unsettled times Peter advocates that a smarter approach to driving growth is needed:

  • Penetration is key! – Retailers should aim to grow their base opposed to basket size i.e. acquisition of new customers rather than focusing on loyalty/retention
    • *retail the last home of the loyalty strategy
  • Brand building: Retailers must improve brand metrics to improve pricing power – Aldi and Lidl used as key case studies
  • Investment in share of voice (SOV) is imperative – you need to stand out from your competitors
  • Balance brand building and sales activation – 60:40 law applies to many sectors however retail is more akin to 70:30
  • ROI builds short-termism but not profit growth
    • *penetration correlates negatively with ROI (high hanging fruit)
    • **Broad reach for long-term success – penetration over loyalty
    • ***Mass media key to growth but balance with online/offline
    • ****Beware of using ROI alone for decision making

 

All Response Media viewpoint

Working with many advertisers in the retail space we have, at times across 2017/18, felt the pressure! The retail landscape is a fluid one, the growth of online retailers is not going anywhere, and the bricks and mortar casualties are set to increase, Toys R Us and Maplin being the most recent. As per Ben Perkins’ appraisal, whilst we are expecting an upturn in 2018 we still have tumultuous times ahead; it is more important than ever for advertisers to solidify their offering and stand out within the marketplace.

Peter Field’s view on the retail marketplace is an interesting one, whilst he is no doubt revered in his field, and rightly so, at All Response Media we work with clients on both sides of the fence – direct response TV (DRTV) and brand focused – and would argue that, from a DRTV point of view, short-termism serves in building brands. I am not talking short-termism here in the sense of a continual ‘on sale’ message but that of short bursts of campaign-led DRTV advertising, as opposed to brand focused and emotive creative. We have a number of longstanding clients across the agency that have built their brand on this tactic.

It is also important to consider the importance of ‘response’ as a brand metric – aptly coined ‘brand response’.

I will use an example of a client who has been advertising on TV for near almost 40 years. Following recent econometric analysis of each individual media channel and their impact on each other, it was realised that peak (or brand) advertising was a key contributor in driving audience response and of course brand search. Great, right? All we needed to do was upweight our peak spends, and box ticked. Whilst we did (and do) continue to up-weight our peak spends we are continually focused on that audience response, what is driving it and how can we optimise to ensure we are getting more? Well, optimising is exactly what we do – we understand what programmes index well against our target audience, on what day of the week they are more responsive, we still include short-term offers on brand advertising…. the list goes on.

For us here at All Response Media, response is king, it’s in our name! It doesn’t matter if you are a startup or an established brand at your core, you are a business and response matters whether that be a lead, a call, a quote or a sale. It is important to ensure that alongside that little bit of magic there are a lot of certainties.