Point-of-Purchase interaction finally kills the TV ad

In 1941 Bulova became the first to advertise on TV, to a tiny audience of a few hundred New Yorkers. As last night’s episode of “Desperate HouseHusbands” ended in tears, a commercial was flighted for Bulova Watches. CBS has confirmed that this will be the final ad flighted on their commercial channels.

Bulova paid US$ 9 for their ad in 1941 and, through a special arrangement with CBS, they paid the same last night. They likely overpaid in both cases.

“It’s not just that viewers have the technology to strip out all adverts,” says Harold Fredericks of Publicis, a global advertising company, “advertisers have learned that adverts placed at the point of purchase in the store are ten times more likely to result in a sale.”

Every one of the 40 million shoppers that pass through Wal-Mart stores each day already see targeted advertising directly on retail shelves. Carrefour and Tesco are also implementing wireless technology from Wal-Barrows, originally a JV between Wal-Mart and Barrows, to tailor these marketing messages directly to individual consumer preferences using the cell-phone technology and direct kick-backs for participating consumers.

It is estimated that only about 300 people actually saw Bulova’s television advert last night. Everyone else used their embedded TiVo-like technology to skip it.

ANALYSIS >> SYNTHESIS: How this scenario came to be


People don’t like being forced to watch adverts for things they don’t want to buy. Adverts, though, are an important component in reducing the cost of the use of a wide range of services to the end-user. The internet could not be free to use without advertising support. Television could not be free to watch without numerous adverts.

Yet, people spend a great deal of time avoiding them. That said, adverts which are carefully placed so that they correspond to the interests of the consumer at the point of making a choice are noted and useful.

The type of advertising that may be likened to ‘spray and pray’ is becoming increasingly rare and threatened. Placement closer to the ‘Point of Purchase’ is the future.

The Point of Purchase is the marketer’s final point of contact with the consumer as she makes her purchasing decision. Offline marketers know that 70% of consumer purchase decisions are made ‘at the shelf’. That marketers are no longer limited to humdrum merchandising displays and signage that goes for the hard sell could change the way offline advertisers choose to market their products.

In many ways, online ads for e-commerce companies can attract attention, incite a click, and lead consumers to a shopping page in less time than it takes to find the car keys.

For companies that sell products in brick-and-mortar stores, however, using online advertising to secure offline sales has always been a challenge. Now, by combining new consumer technologies, with mobile marketing and on-shelf dynamic advertising makes the feat a whole lot more attainable.

These new options will seriously threaten the funding of today’s television channels as ad revenues move to other alternatives. Also, television channels may not have the skills or the know-how to master and dominate the new approaches. Here there may well be successful new players with radical new skills in innovation, wireless and consumer technologies – all the characteristics displayed by many new internet-based e-businesses.

1950s: The dawn of television advertising
By the end of the 1951, the number of household TVs has grown to 20 million sets, up 33% from the previous year and advertisers spend a record US$ 288 million on television ad-space. For the first time, television is the leading medium for US national advertising.

1990s: Niche television and the Internet
Television becomes about ratings and eyeballs. The more people watching, the higher the fees that can be billed for advertising. The David Letterman Show, for instance, is able to attract US$ 60,000 per 30 seconds of ad-space in 1993.

Specialized advertising deals allow for a wide range of niche networks to be created. Some include: Ted Turner’s Cable News Network (CNN), Reliance Capital’s Spanish language Telemundo group, Music television (MTV) and the Home Shopping Network.

In the late 90s the dot com boom begins based almost exclusively on advertising placement. The capacity of computer programs to learn about the personal preferences of browsers means that advertising can become much more customized.

In 1999 Mike Ramsay and Jim Barton ship the first TiVo personal video recording devices. Their intention is to create a service that will allow individuals to control their own entertainment. “Build your entertainment around your life, not the other way around,” says Ramsay.

An unexpected consequence of this is that subscribers use their TiVos to skip adverts.

2006: The anti-TiVo
By 2006 the widespread use of the Internet, pay-per-view, personal video recorders and video games has the mainstream media firms scared. Some of the companies don’t even understand the new technologies, let alone use them.

Phillips Electronics invents a new integrated device that will prevent viewers from switching channels during adverts or from erasing them from recordings. Far from being a victory for mainstream media it becomes a touch point for disaster. Consumer action groups in Europe and America declare it a terrible obstruction of consumer rights.

The European Court of Justice declares that, since the technology exists to ensure the playing of adverts, the technology must exist to turn them off.

Google sees its share price skyrocket as it starts to dominate online advertising. It is able to mine the habits of its millions of users through their email, online chat, voice-over-internet and search habits. They offer a continuously updating stream of adverts targeted at the interests of users as they interact.

Microsoft unveils its new strategy to compete but loses US$ 30 billion in share value overnight – this despite posting a profit of US$ 2.98 billion for 2006. Investors clearly aren’t convinced that Microsoft can compete outside of its domain of a near monopoly on desktop software.

Massive online role-playing games reach their 50 millionth subscriber. World of Warcraft introduces in-game advertising with a deal from Coca Cola. Players can recover health by purchasing Coca Cola at pubs in virtual towns. Coca Cola spends US$ 20 million for the rights.

2007: Point of Purchase advertising booms
The US Supreme Court, following the European Court of Justice, rules that all recording and viewing devices must allow adverts to be obstructed in the same way that software is available to block Internet adverts.

Several large advertising firms that are entirely reliant on old media close – amongst them Chiat Day, creators of some of the most successful television campaigns. In June 2007 the director of TBWA resigns following the release of video footage of him sitting at home and using a personal digital recorder to skip some of his company’s own adverts as he watches a film.

In December 2007 Wal-Mart and Barrows form an alliance, Wal-Barrows (popular culture suggests that this was a play on ‘wheelbarrows’ – an alternative shopping cart fitted out with advertising video displays), which is destined to become the de facto alternative to traditional television and magazine advertising. Tiny in-store shelf video screens display relevant ads right at the point of purchase. They are connected via wireless networks that constantly monitor consumer behavior and preferences. Since consumers are already in the mood to shop, the final decision is about what to buy, not whether.

2008: Wal-Barrows dominates the new ad world
Wal-Barrows, with the largest point-of-sale display space in the world, also becomes the largest seller of advertising space and the biggest smart-caster of advertising ever seen.

Distancing itself slightly from the Wal-Mart retail business, Wal-Barrows becomes the leading supplier of in-store advertising, product and behavioral-tracking systems to Tesco, Carrefour and some of the new retail chains on the Indian sub-continent and China. New media firms emerge developing new-age in-store merchandising clips.

Setting a new record for product placement Nike trumps Reebok by spending US$ 25 million for the sports shoe rights to a Brad Pitt movie in which he stars as a marathon runner.

2009: Advertising budgets on the decline
Proctor & Gamble are just one typical example of the new norm in the consumer-goods industry. P & G have cut their commitments to advertise on television for the current season by 60%, after 20% and 40% cuts in the previous two years.
It is believed that at least 70% of this will move to Point of Purchase advertising.
P & G claim to have cut their advertising budgets each year and still delivered more bang for their advertising buck.

2012: The last TV advert
Traditional television advertising continues to decline. A total of US$ 50 billion will be spent on product placements in television shows. The highest rated shows sell virtually every item used in the show to the highest bidder as an opportunity for product placement. Clothing, accessories, furniture, cars … everything is planned and paid for.

In-game advertising for the various online virtual-reality worlds tops US$ 800 million. Some of the products – like specialized digital magic swords – have no real world equivalent.

The remainder of advertising has now moved to the point of purchase in stores, malls and convenience outlets. The technology becomes extremely cheap and pervasive and is tied into all mobile communication networks.

The ability to reach consumers has never been better and hardly anyone is there to witness Bulova’s final television advert.

Warning: Hazardous thinking at work

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