Wal-Mart Is Upgrading Its Vast In-Store Television Network
February 21, 2005
Wal-Mart Is Upgrading Its Vast In-Store Television Network
By CONSTANCE L. HAYS
EARLAND, Tex. - Here in the Houston suburbs, Banana-Vision has arrived. That's the industry nickname for the 42-inch high-definition L.C.D. monitor installed directly over a pyramid of bright yellow bananas in the produce section of the local Wal-Mart store.
This TV screen and others scattered through the store are part of the Wal-Mart TV Network, a Web network of in-store programming that the company started in 1998. These days it shows previews of soon-to-be-released movies, snippets of sports events and rock concerts, and corporate messages from the world of Wal-Mart, including some intended to improve its battered public image.
But the principal reason for Wal-Mart TV is to show a constant stream of consumer product ads purchased by companies like Kraft, Unilever, Hallmark and PepsiCo. And little wonder. According to Wal-Mart and to an agency that handles its ad sales, the TV operation captures some 130 million viewers every four weeks, making it the fifth-largest television network in the United States after NBC, CBS, ABC and Fox.
While other retailers have experimented with in-store television, Wal-Mart's network, which is available in almost all its 2,600 locations, is the most extensive. The company, eager to promote it, is upgrading its broadcasting plans and equipment.
"It's sort of a neat idea," said Beatrice White, a Houston resident who said she bought bananas every time she went to the store, but had just noticed the screen above them. "I just walked up here and I was looking at it. I think if you've got children with you, it would entertain them."
Armando Rivera, a Wal-Mart worker who was shopping after his shift, said the programs included sports from time to time, and "sometimes I'll stand and watch it for a while."
Late last year, the company hired Nielsen Media Research to evaluate its network (Nielsen does not regularly measure Wal-Mart TV viewers the way it does with the broadcast networks). The study found that shoppers watched Wal-Mart TV an average of seven minutes a store visit, 44 percent longer than in a similar study in 2002.
That growth has caught the eye of marketers that in the age of TiVo and proliferating cable channels are searching for other ways to send their messages to an increasingly hard-to-reach consumer.
According to Wal-Mart's rate card, advertisers pay $137,000 to $292,000 to show a single commercial for a four-week period, depending on the length of the ad and the number of stores where it is shown.
PepsiCo's Frito-Lay division has been bulking up on its ads in Wal-Mart for the last five years, said Haston Lewis, a vice president at Frito-Lay.
"From a marketing standpoint," Mr. Lewis said, "we want to be on the cutting edge of identifying and leveraging the most effective vehicles to capture consumers. The reality is unlike 40 or 50 years ago, more and more of your customers are shopping at Wal-Mart. So they have become a new medium to reach consumers."
As part of Wal-Mart's TV upgrade, some 600 of the 42-inch screens are to be installed by December and eventually every store will have them. The monitors they are replacing were one step removed from 1960's models, able to broadcast color but bolted high above shoppers' heads and easily overlooked.
And the company plans to tailor its broadcasts more specifically to areas of its stores - like electronics, produce or deli - and to individual stores, based on regional tastes and situations.
The placement of the wide, difficult-to-ignore screen at the store near Houston in the last few months represents one part of Wal-Mart's effort to capitalize on its captive audience. In the produce aisle, the TV screen gets shoppers' attention, thanks to its big size and lighted face, and from speakers installed on the ceiling, which create a kind of pathway of sound that can make even focused buyers turn toward its source.
Across the way in the delicatessen area is another screen, with different programming, and on the other side of the store, in electronics, is another.
The power of televised distraction is clear.
"A lot of them are picking up bananas and not even looking at them," said Dale Koehler, the store manager, referring to his customers. "They're looking at the TV."
While Wal-Mart wants to use Wal-Mart TV, which is controlled from company headquarters in Bentonville, Ark., to actively push consumers toward products advertised there, its media chief, Troy Steiner, insisted that there was no quid pro quo for manufacturers requiring them to buy air time on the network.
But he added that demand had been growing "double digit," in terms of advertisers and dollars spent, over the last several years.
"It's not like we strong-arm them or anything," Mr. Steiner said. "They see that this is a benefit. They see the decline in ratings" on other networks.
While many of the ads on the Wal-Mart network are just 10 seconds long - someone trying to shop in a hurry does not have a lot of time to spend watching television - Frito-Lay has developed longer ads as well, Mr. Lewis said.
"One ad we developed encourages moms to buy our multipacks to share during soccer games with their children," he said. Sometimes national ads appear on the network; others are created solely for Wal-Mart. Like other companies' ads on the network, Frito Lay's include directions to the aisle where the Tostitos, Doritos and other Frito-Lay products are stacked.
Unilever is also a longtime Wal-Mart advertiser, and has created a campaign for its Dove line using Wal-Mart workers as actors.
"Wal-Mart TV presented a unique opportunity for us to bring this to life in their stores," said Kathy O'Brien, who is overseeing the ads for Dove's Campaign for Real Beauty. "We've had a lot of success with other campaigns, and that's why we continue to invest in Wal-Mart TV."
Stacey Lynn Koerner, a vice president at Initiative, a media research company, said there was a limit to the kinds of advertising that Wal-Mart TV could poach from other media.
"You wouldn't advertise a car there," she said. "But for certain advertising categories, it's the right place. It's the right thing for advertisers to explore, too." While some large advertisers are spending some of their dollars in Wal-Mart, she said, "you can't build mass reach in a retail outlet alone."
How much money does Wal-Mart TV make? The company refused to say, but others say it takes in millions of dollars a year.
"It's a lot of money and for a retailer, that's usually a below-the-line profit center so it goes right to the bottom line," said Phil Lempert, editor of Xtreme Retail 23, an industry newsletter, and food editor on the "Today" program on NBC.
The network's profit is not siphoned off to support the rest of the chain, Mr. Steiner said, but is used to finance upgrades and other projects. Ads are handled by Premier Retail Networks, which works with a variety of retailers.
"Up to 70 percent of brand decisions are made right inside the store," said Mark C. Mitchell, executive vice president for ad sales at Premier, "and the idea that you can deliver the power of television as a marketing message inside a store has made it attractive to those marketers."
Mr. Lempert argues that the current setup does not do enough for customers. "They should have a 60-inch monitor that's triggered by consumers, and prints out coupons and recipes," he said. "That's what people want."
He added: "You might be able to say it's the fifth-largest network based on the number of people who walk by it, but it doesn't mean they are paying attention to it and that it's empowering them to buy those products."
The in-store network serves another important function: it is Wal-Mart's private tool for defending itself against increasingly vocal critics, including labor unions and local governing bodies, that have questioned the company's rapid expansion, employment practices and competitive behavior.
About five minutes of every hour on the network is set aside for Wal-Mart to make its case, typically showing national or local ads championing the company's community service efforts or the kinds of jobs found there.
"That's one of the big assets we have with our network," Mr. Steiner said. "We can reinforce those messages in our stores."
The network has also been used by Wal-Mart executives who want to rally the employees, and from time to time its programming is replaced by widely televised news events like coverage of military activity in Afghanistan early in 2003. The broadcasts cannot be switched off by store managers, only by someone in the control room at company headquarters.
And if it does not sell customers on Wal-Mart's public image, or induce them to buy more chips, lotion and fruit, it may help sell more flat-panel TV's.
"One of these days, I'll buy one of them for my house," Mr. Rivera, the Wal-Mart worker, said.
http://www.nytimes.com/2005/02/21/business/media/21mart.html?th=&adxnnl=1&adxnnlx=1108980483-DcMQyEiZudQKKaE9wDK67Q
Wal-Mart Is Upgrading Its Vast In-Store Television Network
By CONSTANCE L. HAYS
EARLAND, Tex. - Here in the Houston suburbs, Banana-Vision has arrived. That's the industry nickname for the 42-inch high-definition L.C.D. monitor installed directly over a pyramid of bright yellow bananas in the produce section of the local Wal-Mart store.
This TV screen and others scattered through the store are part of the Wal-Mart TV Network, a Web network of in-store programming that the company started in 1998. These days it shows previews of soon-to-be-released movies, snippets of sports events and rock concerts, and corporate messages from the world of Wal-Mart, including some intended to improve its battered public image.
But the principal reason for Wal-Mart TV is to show a constant stream of consumer product ads purchased by companies like Kraft, Unilever, Hallmark and PepsiCo. And little wonder. According to Wal-Mart and to an agency that handles its ad sales, the TV operation captures some 130 million viewers every four weeks, making it the fifth-largest television network in the United States after NBC, CBS, ABC and Fox.
While other retailers have experimented with in-store television, Wal-Mart's network, which is available in almost all its 2,600 locations, is the most extensive. The company, eager to promote it, is upgrading its broadcasting plans and equipment.
"It's sort of a neat idea," said Beatrice White, a Houston resident who said she bought bananas every time she went to the store, but had just noticed the screen above them. "I just walked up here and I was looking at it. I think if you've got children with you, it would entertain them."
Armando Rivera, a Wal-Mart worker who was shopping after his shift, said the programs included sports from time to time, and "sometimes I'll stand and watch it for a while."
Late last year, the company hired Nielsen Media Research to evaluate its network (Nielsen does not regularly measure Wal-Mart TV viewers the way it does with the broadcast networks). The study found that shoppers watched Wal-Mart TV an average of seven minutes a store visit, 44 percent longer than in a similar study in 2002.
That growth has caught the eye of marketers that in the age of TiVo and proliferating cable channels are searching for other ways to send their messages to an increasingly hard-to-reach consumer.
According to Wal-Mart's rate card, advertisers pay $137,000 to $292,000 to show a single commercial for a four-week period, depending on the length of the ad and the number of stores where it is shown.
PepsiCo's Frito-Lay division has been bulking up on its ads in Wal-Mart for the last five years, said Haston Lewis, a vice president at Frito-Lay.
"From a marketing standpoint," Mr. Lewis said, "we want to be on the cutting edge of identifying and leveraging the most effective vehicles to capture consumers. The reality is unlike 40 or 50 years ago, more and more of your customers are shopping at Wal-Mart. So they have become a new medium to reach consumers."
As part of Wal-Mart's TV upgrade, some 600 of the 42-inch screens are to be installed by December and eventually every store will have them. The monitors they are replacing were one step removed from 1960's models, able to broadcast color but bolted high above shoppers' heads and easily overlooked.
And the company plans to tailor its broadcasts more specifically to areas of its stores - like electronics, produce or deli - and to individual stores, based on regional tastes and situations.
The placement of the wide, difficult-to-ignore screen at the store near Houston in the last few months represents one part of Wal-Mart's effort to capitalize on its captive audience. In the produce aisle, the TV screen gets shoppers' attention, thanks to its big size and lighted face, and from speakers installed on the ceiling, which create a kind of pathway of sound that can make even focused buyers turn toward its source.
Across the way in the delicatessen area is another screen, with different programming, and on the other side of the store, in electronics, is another.
The power of televised distraction is clear.
"A lot of them are picking up bananas and not even looking at them," said Dale Koehler, the store manager, referring to his customers. "They're looking at the TV."
While Wal-Mart wants to use Wal-Mart TV, which is controlled from company headquarters in Bentonville, Ark., to actively push consumers toward products advertised there, its media chief, Troy Steiner, insisted that there was no quid pro quo for manufacturers requiring them to buy air time on the network.
But he added that demand had been growing "double digit," in terms of advertisers and dollars spent, over the last several years.
"It's not like we strong-arm them or anything," Mr. Steiner said. "They see that this is a benefit. They see the decline in ratings" on other networks.
While many of the ads on the Wal-Mart network are just 10 seconds long - someone trying to shop in a hurry does not have a lot of time to spend watching television - Frito-Lay has developed longer ads as well, Mr. Lewis said.
"One ad we developed encourages moms to buy our multipacks to share during soccer games with their children," he said. Sometimes national ads appear on the network; others are created solely for Wal-Mart. Like other companies' ads on the network, Frito Lay's include directions to the aisle where the Tostitos, Doritos and other Frito-Lay products are stacked.
Unilever is also a longtime Wal-Mart advertiser, and has created a campaign for its Dove line using Wal-Mart workers as actors.
"Wal-Mart TV presented a unique opportunity for us to bring this to life in their stores," said Kathy O'Brien, who is overseeing the ads for Dove's Campaign for Real Beauty. "We've had a lot of success with other campaigns, and that's why we continue to invest in Wal-Mart TV."
Stacey Lynn Koerner, a vice president at Initiative, a media research company, said there was a limit to the kinds of advertising that Wal-Mart TV could poach from other media.
"You wouldn't advertise a car there," she said. "But for certain advertising categories, it's the right place. It's the right thing for advertisers to explore, too." While some large advertisers are spending some of their dollars in Wal-Mart, she said, "you can't build mass reach in a retail outlet alone."
How much money does Wal-Mart TV make? The company refused to say, but others say it takes in millions of dollars a year.
"It's a lot of money and for a retailer, that's usually a below-the-line profit center so it goes right to the bottom line," said Phil Lempert, editor of Xtreme Retail 23, an industry newsletter, and food editor on the "Today" program on NBC.
The network's profit is not siphoned off to support the rest of the chain, Mr. Steiner said, but is used to finance upgrades and other projects. Ads are handled by Premier Retail Networks, which works with a variety of retailers.
"Up to 70 percent of brand decisions are made right inside the store," said Mark C. Mitchell, executive vice president for ad sales at Premier, "and the idea that you can deliver the power of television as a marketing message inside a store has made it attractive to those marketers."
Mr. Lempert argues that the current setup does not do enough for customers. "They should have a 60-inch monitor that's triggered by consumers, and prints out coupons and recipes," he said. "That's what people want."
He added: "You might be able to say it's the fifth-largest network based on the number of people who walk by it, but it doesn't mean they are paying attention to it and that it's empowering them to buy those products."
The in-store network serves another important function: it is Wal-Mart's private tool for defending itself against increasingly vocal critics, including labor unions and local governing bodies, that have questioned the company's rapid expansion, employment practices and competitive behavior.
About five minutes of every hour on the network is set aside for Wal-Mart to make its case, typically showing national or local ads championing the company's community service efforts or the kinds of jobs found there.
"That's one of the big assets we have with our network," Mr. Steiner said. "We can reinforce those messages in our stores."
The network has also been used by Wal-Mart executives who want to rally the employees, and from time to time its programming is replaced by widely televised news events like coverage of military activity in Afghanistan early in 2003. The broadcasts cannot be switched off by store managers, only by someone in the control room at company headquarters.
And if it does not sell customers on Wal-Mart's public image, or induce them to buy more chips, lotion and fruit, it may help sell more flat-panel TV's.
"One of these days, I'll buy one of them for my house," Mr. Rivera, the Wal-Mart worker, said.
http://www.nytimes.com/2005/02/21/business/media/21mart.html?th=&adxnnl=1&adxnnlx=1108980483-DcMQyEiZudQKKaE9wDK67Q
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