Using POS Marketing to Get More Done In Less Time For Less Money

OnTrak Software Wishes You a Fast Start to a Happy New Year!

Regardless of your pleas for more and more time, Time Takes Time!

And since there is a limited supply of time, time is not on our side regarding marketing, advertising and trade promotions. So we need get a fast start in 2016.

The Cost of Broadcast Marketing vs. POS Marketing

Let’s start out with some data points from MediaDailyNews (2014):   The cost-per-thousand (CPM) to reach 1,000 adults (specifically women age 18-49) via “broadcast” TV (ABC, NBC, CBS and Fox) is $44.11. Digging deeper and with some work it is possible to achieve a total overall cost to reach 1,000 “non-specific viewers” for less than $8.00.

I’ll use the above data-points as the basis for comparison with another type of advertising — point-of-sale or point-of-purchase (POS or POP) advertising.

The range of costs to reach “1,000 viewers” using a POS-placed temporary or permanent sign or display, like the costs associated with TV advertising varies. What we do know is that POS marketing typically costs from 3 cents to 40 cents. So there’s no comparison when you match the highest CPM for POS (40 cents) to the lowest CPM for TV (about $8.00).

This means that the cost to reach 1,000 potential customers using POS advertising is 95% less than the cost using TV spots.

Many studies of TV advertising practices and results have been undertaken over several decades. Using this study data it is possible to create a list of strengths that can be attributed to broadcast, cable and satellite TV advertising.

The best strength for TV seems to be TV’s virtually unrivaled reach — That is, the potential for an advertiser via a TV spot to be seen by some 120 million US households. When looked at that way, today nothing even comes close to TV if the sheer number of viewers is your goal. From another perspective, however, POS has its own set of compelling strengths — especially for marketing consumer packaged goods (CPGs).

The Power, Efficiency and Effectiveness of POS Marketing

Yet a longer term analysis of TV advertising demonstrates some “weaknesses in the force”, in addition to high costs relative to POS advertising. For example: A viewer’s difficulty in recalling a TV advertisement when making a decision at the point-of-sale. Add to that the rapid adoption of DVR’s that has not only shifts program viewing, but has also enables viewers to “skip over” unwanted content — usually commercials.

Another weakness is the difficulty if not outright impossibility of measuring anything other than the CPM of given TV marketing campaigns. Additionally, channel fractionalization, meaning we’ve gone from three network-TV channels to over five hundred cable and satellite outlets, continues to change the supplier’s ability to afford to market to the desired target for their products.

Finally, the number of products and product categories appears to know no ceiling and each product shouts out for advertising as if its very life depended upon it — and it does, actually.

Where Does All the Above Leave Us As We Kick Off 2016?

We’ve reached a point-of-inflection with respect to the array of brands and products typically classified CPGs — where the best time and place to influence a sale is at the point-of-sale. This statement is further bolstered by the fact that the spending of CPG manufacturers, wholesalers and retailers on POS marketing continues to increase year after year; and, that those marketers who can track, measure and manage promotional investments at the point-of-sale will retain and gain competitive advantage. 

9,999-Bottles of Beer on the Wall

Due to the increase in the absolute numbers of beverage alcohol brands over the past decade — just to name one huge CPG category — POS marketing is far more important to beer suppliers (breweries and their distributors) in 2016 than it was just five short years ago. And, although it is impossible to actually measure the impact of TV advertising (beyond CPM), distributors, employing digital tools, can quickly correlate local POS advertising initiatives with retail sales data to evaluate the impact of their POS marketing investment, thus providing valuable and actionable information to suppliers and even specific retailers in addition to their own analytical purposes.

Recognition of the Importance of POS is a Great First Step

CPG marketers and beverage alcohol marketers in particular must pay ever greater attention to tracking, measuring and managing their POS programs — perhaps focusing on the impact and ROI (the correlation of sales to POS costs) of these increasingly important initiatives.

Based on published research and interviews with our customers, we’re finding that more and more beverage alcohol distributors recognize their importance as marketers and are increasing their utilization of and spending on POS. Overall, the year-to-year growth in POS spending averages at least 5%. Some suppliers and distributors have told us of plans to raise their POS budgets much more significantly in response to the proliferation of beverage alcohol brands they now supply. What these suppliers and wholesalers now recognize is the growing importance of POS as a key driver of growth.

What they are also recognizing is they need Digital Tools — such as those developed and offered by OnTrak — to track, measure and manage their POS marketing efforts.