Despite the rise of e-commerce, 80% of purchases still happen in stores. And retailers produce a lot of in-store marketing with big budgets to run campaigns and generate revenues. However, measuring the effectiveness of in-store marketing has always been challenging. And, with the rise of e-commerce alongside a thirst for attribution and an impending squeeze on brick-and-mortar retail, it’s never been more important to justify the ROI on in-store campaigns. So, how can you measure the effectiveness of in-store advertising?
Generally, the effectiveness of in-store advertising campaigns is measured by comparing POS data during campaign periods to non-campaign periods. This demonstrates the direct impact between marketing campaigns and in-store revenues. In addition, some retailers and brands run qualitative analyses with customers as they leave stores to test if they noticed the adverts.
While these measures provide a general indication of in-store advertising performance, they don’t tell the whole story. In addition, it’s difficult for marketers to use this information to make informed changes to the creative, placements and types of activations that will ensure they continue to perform well in future.
Brick-and-mortar retail stores remain a critical part of the marketing mix. However, as the cost of operating stores on the high street grows ever higher, retailers are under increasing pressure to maximise effectiveness and “sweat the assets” they have – in this case, stores. However, as you can only improve what you can measure, it questions how you measure your stores’ performance.
While online and e-commerce platforms make it easy to track and measure customer behaviour, the same cannot be said for brick-and-mortar retail. Marketers at all levels would prefer complete attribution like that which is provided via online and digital channels, but it cannot always be the case. Not only do more retail purchases happen in-store, but the role of stores is increasingly changing, and you have to consider their role in the Omni-channel mix as well. Approximately 30% of sales online are completed in stores, either through purchase or click-and-collect.
You are ultimately left with two options; either be comfortable in obscurity or explore methods of measuring the unmeasurable.
While it isn’t an exact science, we decided to explore the latter.
Firstly, we must consider the role of in-store advertising within the marketing mix.
In-store advertising aims to either generate sales or increase brand awareness. The in-store advertising could be part of a larger campaign with similar goals. In this situation, in-store advertising should remind customers of the campaign they have seen via other channels at the point of purchase to generate sales. The campaign may promote a specific product or special offer. Given the range of products that brands and retailers typically produce, an in-store campaign will rarely promote the whole brand.
Therefore, while in-store marketing does have a significant impact on brand awareness, it’s perhaps a conversation for another article. For now, we will focus on measuring the immediate return on investment of in-store marketing campaigns. Thus, we’ll focus on revenues generated by in-store advertising.
While advertising in brick-and-mortar stores is ever-present, it’s usually a myriad of overlapping campaigns. Depending on the size of the store and type of company, multiple campaigns could run simultaneously with different start and end points, promoting different products in each store. In addition, campaigns are rarely operated in isolation. Buyers could see an advert online, on TV or on the radio before seeking it out in the store. While in-store advertising may play a role in the product’s sale, it’s difficult to derive its impact from looking at the standard data sets.
Therefore, we cannot simply measure revenue generated by the product; we need to consider it against advertising campaign data.
A simple measure of campaign effectiveness is comparing campaign-related product sales during campaign periods to non-campaign periods.
This can be very effective for generating a rough estimate of in-store advertising effectiveness and one to demonstrate to senior management.
You simply need to know the following:
Then you can simply compare sales from your Point Of Sale (POS) system for products during campaign periods using data in your Campaign Management System. You may have to review contracts or budgetary information to gather your costs, but it’s reasonably straightforward to bring together.
Alternatively, you could use an in-store marketing platform like Colateral. Colateral manages in-store marketing campaigns from campaign planning through execution to analysis. It maintains full information about your campaigns, the products you’re promoting, the campaign dates, and even the cost of materials. And it presents everything in a report for you to share with your Head of Marketing (see below). So, you simply need to review product sales data during campaign periods.
While this approach will provide a rough estimate and generate insights into campaign effectiveness, it leaves some questions too.
For example, in-store marketing campaigns are notoriously inaccurate.
Our research on measuring display compliance (the percentage of materials executed as intended in-store) sits at between 40-60% for most retailers.
This means that measuring the effectiveness of your campaigns is like trying to measure how far a car can drive, but 50% of its fuel is leaking out while it’s travelling. The answer won’t be an accurate measure of how far the car can travel.
If you were making decisions on this data, you would draw inaccurate conclusions. You might double the fuel tank’s size or reduce the car’s weight. Both of these would make the car go farther, but they wouldn’t solve the root cause of the issue.
Instead, you need to focus on ensuring the fuel tank isn’t leaking and that you’re getting inaccurate data so you can make decisions to improve performance.
The same is true of your in-store marketing campaigns. If you identify that your campaigns aren’t having a significant impact on sales performance, consider if you know with certainty that displays are set up accurately in every store. If your campaign works well in your flagship store, where the execution is immaculate, why isn’t it having the same effect in other locations?
Therefore, ensuring accurate display compliance is a critical first step to analysing in-store advertising effectiveness.
Read this article for our 6-step process to ensure your in-store campaigns are 100% accurate.
Additionally, your product is not in isolation within a campaign. A retail store is a hive of activity, and shopper psychology is a complex beast.
You may analyse the performance of your product promotions and see sales spike, but how does that affect the overall basket?
These are all important considerations, particularly if you are a retailer. While the individual promotion might get traction and boost revenues for that product during campaign periods, if it drives down overall takings and items in the basket, it’s arguably not worth promoting this product.
Therefore, when analysing campaign performance, consider overall revenues in the category and the store compared to the previous period or previous year.
If you are a brand promoting your product in-store, maybe you don’t mind this. However, be aware that retailers will consider this. If the overall revenues they take are lower, they might not be willing to promote your product at the same time again.
Another important consideration is the other parts of your marketing campaign.
It’s rare that you will run an in-store promotion in isolation. Usually, it will be in tandem with social media, TV, or radio advertising. Whichever other channels you are using, these will have an impact on your in-store advertising effectiveness.
This isn’t new information, it’s been known for years that campaign performance will increase significantly by distributing the message through more channels.
However, when you are analysing in-store marketing performance, you may notice one campaign is not delivering as great results as previous campaigns. It’s important to look beyond the in-store marketing itself and consider the other channels you are running as well.
This is where measuring omnichannel is critical. How many people saw a social media post, viewed a product online and then purchased it in-store?
Answering this question is extremely difficult and, quite frankly, a bit pointless.
If you have a loyalty card scheme, you can somewhat measure this. However, for the most part, the important thing isn’t the attribution to the right channel; it’s measuring an impact on results.
If you run the campaign without social media and just in-store, does it yield the same results? If the answer is no, you don’t necessarily have to measure who exactly it was, you just need to know that it had a positive effect.
The biggest difference between online and in-store marketing is the advanced level of targeting involved.
No matter how hard you try, in-store advertising will be sophisticated mass marketing. You cannot personalise an in-store advert to directly appeal to those walking past it, but you can localise it.
I’ll take a moment to acknowledge that some digital signs promise they can scan someone’s face and serve up an advert based on their age, race or gender. It’s a very sophisticated technology that will likely play a role in the future. Unfortunately, you cannot place digital signs along the aisle next to your product. Retailers don’t have the space, and hiring the space will be more expensive than it’s worth.
However, you can identify common buying segments in different stores and tailor campaigns based on the store’s location.
For example, you may have two convenience stores in the United States. One is based in a predominantly Spanish-speaking community in California, while another is in Seattle. While you could distribute the same message to both, your campaign would likely be more effective if you run it in multiple languages.
You could drill into your customer insights further and identify different buyer profiles in each store. You might find that city centre stores tend to sell more discount products in your category, while sub-urban megastores sell more premium products.
These buying preferences will impact the effectiveness of your in-store marketing. So, when you see that your campaign works well in one store and not others, it may be time to consider different messaging in each store.
You can learn more about implementing localised in-store marketing at scale.
Now you understand how to measure campaign effectiveness; you will need to understand how to improve it.
Several factors affect your in-store advertising effectiveness. In addition to the considerations above, it relies on the same principles as other forms of advertising: your targeting, messaging, brand salience, timing and placement.
Unquestionably, the biggest factor is the creative execution of your campaign. It contributes to almost 50% of advertising effectiveness; the same is true with in-store campaigns. This article explains it in more detail: which is more important to in-store advertising: messaging or placement?
Therefore, if your campaign isn’t performing as well or as consistently as you would like (and you know it’s implemented accurately), the first consideration should be your creative.
Conduct a deep dive analysis and find correlation stores where the campaign performed well. You may identify that these stores have something in common that made shoppers resonate with your message more. Additionally, look for a correlation between stores when they didn’t perform so well.
In this case, you may need to adapt your message in other stores.
In reality, gathering and interrogating this data significantly is incredibly challenging. Especially with hundreds of stores across multiple regions and tiers of management.
Let alone running tests to drive improvements.
Fortunately, Colateral makes running in-store marketing campaigns simple. We help you plan campaigns in hours, not weeks and give you vital insights into their performance in real time.
In addition, our store profiling system makes it easy to group stores based on shared features. So you can tailor campaigns to specific stores based on their location, store type or customer profile.
Then, it automatically allocates the right materials in your campaign to each location, so you know the right materials go to the right stores. And you receive real-time campaign performance analysis against each store and campaign.
Our approach frees marketers from managing spreadsheets to give them more time to improve campaign performance.
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