In-store ads change in response to shoppers behaviour & even features

Thanks EMILY STEEL at WSJ online for this update on some exciting new developments in in-store digital August 21, 2008; Page B7

Digital Screens Could Adjust Messages Based on Features

Ad targeting is coming to a store near you.

In the latest effort to tailor ads to specific consumers, marketers are starting to personalize in-store promotions based on products the consumer recently picked off a shelf or purchased -- and in the near future, based on what the shopper looks like.

Dunkin' Donuts is among the first marketers in the U.S. to begin testing the technologies, at two locations in Buffalo, N.Y. People ordering a coffee in the morning can see ads at the cash register promoting the chain's hash browns or breakfast sandwiches. At the pick-up counter, customers see ads prompting them to return for a coffee break in the afternoon and try an oven-toasted pizza.

YCD Multimedia

Dunkin' Donuts is among the retailers tailoring ads to consumers on in-store digital screens based on items that the customers have purchased.

In a separate test, Procter & Gamble is placing radio-frequency identification tags on products at a Metro Extra retail store in Germany so that when a customer pulls the product off the shelf, a digital screen at eye level changes its message. When a consumer picks out a shampoo for a particular type of hair, for instance, the screen recommends the most appropriate conditioner or other hair products, says John Paulson, president of G2 Interactive, a digital-marketing arm of WPP Group's G2 Network.

This comes as advertisers are spending more of their ad dollars on in-store marketing. Audience fragmentation and the waning power of television ads are forcing marketers to make their pitches and tout their brands when and where consumers are closer to making a purchase: in the store.

Most of the experimentation by marketers is being done with the new digital screens that are appearing next to cash registers and in store aisles. Because cameras are embedded in many of these digital screens displaying the ads, marketers are hoping to serve up ads based on the consumer's appearance.

Many of the in-store targeted-advertising efforts are still in the early stages of development. Marketing executives say that much research still needs to be done to evaluate the best types of ads to display and the way consumers respond to messages. Some fear that the proliferation of screens makes it more likely that they will be ignored.

"I'm a skeptic on technology in the shopping environment," says Andy Murray, chief executive of Saatchi & Saatchi X, the Publicis Groupe agency that focuses on in-store marketing. Screens need to be useful to get people to pay attention, and if stores are just using them to sell products, shoppers won't be receptive, he says.

The company powering the screens for Dunkin', YCD Multimedia, is in the midst of deploying facial-recognition technologies that can classify people into certain demographic groups by identifying their approximate age and their sex.

Companies in the securities industries have been experimenting with facial-recognition technologies for some time. The technology often works by capturing an image of a person and using sophisticated algorithms to analyze features like the size and shape of the nose, eyes, cheekbones and jaw line -- against databases of face information. At the 2001 Super Bowl in Tampa Bay, Fla., for instance, security officials used facial-recognition technologies to scan for terrorists and known criminals.

Only recently has the price for digital screens dropped enough that retailers could afford to put the screens in stores. Even now, the digital signs operate on a delay in some places, so that marketers have to program their commercials days in advance -- which rules out changing the ads on the fly, based on the characteristics of a given the shopper.

At the 1,400 eight- and nine-foot-tall plasma screens in 105 malls across the U.S. operated by Adspace Networks, there is roughly a two-hour delay between the time an ad is downloaded and its appearance on the screens. In some cases, these ads have achieved their mission of spurring sales too well. When inventories of the advertised products have become depleted, the ads haven't changed to reflect that reality. "One of the issues we have is that we run out of stock," says Adspace Chief Executive Dominick Porco.

New technologies are helping some marketers address that problem. Aroma Espresso Bar, an Israeli café chain that also operates stores in New York and Canada, is testing YCD systems that automatically change the ads people see at the cash register as a way of managing inventory better. If there is a large amount of pastries that will go stale that night, for instance, a manager will switch ads on the screen to promote them, says Gali Goldwaser, marketing manager for Aroma.

Technology firms hope to ward off any potential privacy issues by not capturing and storing any personally identifiable information about consumers.