Retailer advertising expenditures remained relatively flat in 2013 compared to the previous year. But promotional activity posted healthy increases with Walmart and Target among the top retailers with major growth.
Free Standing Insert (FSI) Coupon Promotion Pages, Digital Coupon Events and Feature Ad Pages all registered double digit increases last year, according to data released by Marx, a Kantar Media solution.
Digital coupons distributed on retailer websites led the growth with a 39.5% increase, followed by a 25.6% increase in retailer participation in FSI coupon promotion pages, and a 12.6% increase in total retailer feature ad pages distributed. Although total retailer advertising remained flat in 2013 versus 2012, advertising expenditures significantly increased at leading retailers such as Walmart, Kroger, and Target.
“Traditional advertising influences shoppers throughout their paths to purchase by reaching them in the home, in, the car, at the office or anywhere that the shopper may be,” said Dan Kitrell, Vice President of Marx Account Solutions at Kantar Media. “FSI coupons effectively engage shoppers in their homes where shoppers opt-in to the advertising and purchase incentives while writing their shopping lists and planning their shopping trips. Digital coupons on retailer websites influence purchase decisions by delivering an incentive at what is often the last step prior to entering a specific retailer’s store. Retail feature ads are unique in that they reach shoppers both in their homes and as they enter the store, influencing specific brand choices and total shopping basket purchases during each individual store visit.”
Kitrell explained that for both retailers and manufacturers, it is essential to reach shoppers with a relevant message or purchase incentive where and when shoppers are making purchase decisions.
“These trends indicate that marketing dollars are increasingly being directed toward programs that communicate specific and easy-to-understand value to the shopper when the shopper is actively making purchase decisions,” he said. “Although retailer TV, Radio, Internet, and other advertising may include specific price promotion information, it may not reach shoppers when they are seeking or receptive to this information. However, an FSI coupon promotion showing a retailer’s featured price combined with potential coupon savings or a retailer feature ad that mentions a digital coupon available on the retailer’s website are easy to understand and are likely being read by a shopper when they are writing their shopping list for the week,” said Kitrell.
Significant shifts in advertising and promotion activity were observed among leading retailers across the food, mass, drug, and other retail sales channels. For example, Walmart had the greatest levels of actual advertising expenditures and the highest level of participation in retailer FSI promotion pages in 2013, increasing their activity in these areas 32.9% and 30.8% respectively. Walmart further benefitted from a 25.2% increase in digital coupon activity on their Walmart.com website and a 43.7% increase in retail feature ad pages distributed in 2013. Meanwhile, Target kept pace with Walmart by also driving double digit increases across all four of these tactics in 2013.
Interestingly, each of the three leading retailers in the drug channel decreased their advertising activity in 2013. CVS had the greatest decrease in retailer advertising among the three leading drug retailers with a 32.2% decrease. CVS also decreased retailer FSI coupon participation by 37.3% and retail feature ad activity by 9.3%, with digital coupon support on CVS.com receiving the only increase among these tactics, up 10.2% in 2013.
“Aggregated annual retailer advertising and promotion trends may not tell the whole story,” said Kitrell. “Retailers compete to win shoppers and trips on a weekly basis. Manufacturers may be able to gain a competitive advantage by aligning their program timing with weeks in which retailers have greater advertising and promotion activity. Higher levels of weekly retailer advertising and promotion may translate into increased retailer share of voice with the shoppers, increased shopper traffic into the stores, and increased dollar sales across departments, categories and brands.”
Kitrell said manufacturers need to understand which departments and categories are being featured in their retailers’ weekly advertising and promotion activity since this will influence where within the store the shopper is more likely to shop.
“This may uncover opportunities for improved promotion effectiveness with in-store merchandising that intercepts the shopper as they navigate the total store,” he said. “By identifying key weeks and key categories at key retailers, manufacturers can improve their results during key selling seasons, new product introductions, and other retail sales initiatives throughout the year.”
Kitrell also said retailers should consider how best to leverage the brand advertising and promotion support that is offered by manufacturers to create purchase intent for the category and their brands.
“In some cases, retailer activity aligns with a manufacturer’s advertising and promotion support to increase the chances that the shopper will buy the manufacturer’s brand at the retailer’s store,” he said. “In other cases, a retailer may take advantage of the manufacturer’s advertising and promotion support to drive shoppers into their stores and in front of specific categories, but the retailer may compete for the final purchase decision by promoting a store brand alternative to the manufacturer’s brand. How retailer and manufacturer activity aligns or competes will have an impact on purchase decisions, retail sales, and promotion effectiveness.”