reveries - chris hoyt - retail media solutions

Over the past 10 years, a handful of companies have quietly been testing their way into the viability of using retail as an effective medium for building equity -- in addition to profitable sales.

Chris Hoyt These companies include P&G, Kraft Foods, Coke, Pepsi, Frito-Lay, Unilever, Campbell's Soup and Clorox in addition to smaller companies like Diamond Walnuts, Bic, and -- get this -- Hero Water. None of these companies views retail as a substitute for traditional direct-to-consumer (DTC) media, but all do see its potential as an additional, cost effective means of getting their core brand message across to target consumers.

What do these companies know at this point that you don't know?

They know what works and doesn't work in specific retailers for their brands and categories -- i.e., which specific vehicles are most effective, CPMs for each vehicle and ROI by brand, by retailer and by vehicle. They also know that advertising overlays through most participating retailers can enhance normal feature and display activity by an average of 43 percent and generate ROIs that consistently exceed the ROIs generated by the same brands using traditional Direct-To-Consumer (DTC) media -- for some companies, by as much as two or three times.

Most important is that these companies have this information and have been building this database for as long as they have been tinkering with the concept. This gives these companies a unique and peremptory competitive lead as retailers continue to "grow" into the role of communications channels as well as conduits for selling product. The "new news" is that almost nobody doubts that this will inevitably happen: Ninety-seven percent of respondents to a recent Reveries Magazine survey on Co-Marketing say they believe that Co-Marketing will become either "very important" or "extremely important" over the next five years.

Well, if these results are so great and the prospects so enormous, why isn't everybody jumping on the bandwagon such as the industry did with Category Management and -- er -- ECR?

It is to answer this question that Hoyt & Company and Reveries Magazine joined forces to develop the industry's first benchmarking study, "Building Brands at Retail: Best Practices in Co-Marketing," which is currently available at http://www.cafeshops.com/coolnews.9474602

Objectives of the study:

		Define what Co-Marketing is and is not
		Determine the breadth and depth of current practice -- for both manufacturers and retailers
		Assess the opportunity for Co-Marketing over the next five years
		Detail the results of recent Co-Marketing initiatives -- to the extent the data are available
		Identify and clarify Co-Marketing best practices -- the common elements and processes that differentiate the "winners" from all others

For the purpose of this study, Co-Marketing is defined as "any jointly-planned manufacturer-retailer advertising or promotion activity whose primary purpose is to build equity and awareness for both the participating brands and the retailer's stores." In practice, virtually all Co-Marketing programs that we identified during the course of this study were done in conjunction with normal "Feature and Display" activity, thereby enabling participants not only to build equity but use the occasion of the event to boost profitable sales.

Approximately 50 companies contributed in one way or another to the content of this study -- 25 manufacturers, 10 promotion agencies and 15 consulting and service organizations.

Summary of Key Findings:

		Current breadth and depth of participation in Co-Marketing activities: There appears to be a relatively small number of manufacturers and retailers who are presently and consistently actively engaged in Co-Marketing activities -- about 30 manufacturers and between 10 and 25 retailers. Interestingly, it is the retailer -- not the manufacturer – who has been the most aggressive about initiating requests for Co-Marketing programs.
		The Co-Marketing Opportunity: While there may be only a handful of companies actively involved in Co-Marketing at present, there is overwhelming agreement that Co-Marketing will become either "very important" or "extremely important" over the next five years. Underpinning this is a solid majority within the manufacturing community who believes that it is "extremely important" for manufacturers and retailers to work together to develop retail as a medium for marketing brands, especially as retailers become more proficient in targeting their own heavy user segments.
		Barriers to the Success of Co-Marketing: The most important barriers to the success of Co-Marketing at present are: a) a traditional entrenched view by the people who control the purse strings that retail is primarily a distribution channel and not a marketing medium; b) manufacturer attempts to use Co-Marketing as a tactic to make trade promotion funds more efficient rather than as a strategy to grow both their own and the retailer's business long term, and c) lack of understanding of the process required to make Co-Marketing "work."
		Results: Because most -- if not all -- of the study participants regard Co-Marketing as a unique and proprietary strategy, most do not publish or even talk about specific data-based results. For example one respondent noted that: "This is highly confidential and is one of the ways in which our company chooses to differentiate itself from the competition." However, the indications are that when planned and executed properly, Co-Marketing program results far exceed either the lift or ROI generated by either normal "Feature and Display" activity or DTC media.
		Best Practices: The report identifies ten key common factors that characterize the practices of those companies who have been the most successful with Co-Marketing -- factors that cover subjects like approach, staffing, organization, budgeting, program types, measurement and execution. Where necessary, each of these elements is explained, mainly to clarify those subjects on which there is general confusion – and to provide readers with a roadmap for making the necessary adjustments in their own Co-Marketing programs so that they do, in fact, ultimately "work".

Conclusions:

		Co-Marketing does indeed have a life of its own separate from trade promotion. Those companies that approach it as a strategy to help build equity -- as opposed to a tactic designed to make trade promotion spending more efficient --are those companies having the most success with Co-Marketing and, not coincidentally, are the same companies that retailers rank as the best in the business in meeting retailer needs, according to Cannondale's 2003 annual PowerRanking Survey.
		While progress has been slow since Co-Marketing was introduced in 1993, it is just now gathering momentum that, according to virtually all industry experts, will continue to accelerate as retailers broaden and deepen household penetration and become better marketers in their own right.
		Co-Marketing is the best kept secret in the business -- principally because those who have developed expertise in Co-Marketing view it as a proprietary strategy that will eventually give them a lock on using retail as media for their brands and categories. In addition, because Co-Marketing results do vary by brand, category, retailer and vehicle within retailer, there are virtually no transferable industry benchmarks to serve as a guide for other companies who want to assess its potential.
		There is no question that more companies would ramp-up for Co-Marketing if the organizational requirements, basic job responsibilities and planning and execution processes were qualified and spelled-out. One of the purposes of the Reveries 2004 Co-Marketing Benchmarking Study is to fill this gap.
		Co-Marketing is not just for Mega Brands and Mega Retailers. There are many permutations of Co-Marketing that offer smaller companies the opportunity to participate on a variety of different levels -- as the examples in the 2004 Co-Marketing Benchmarking Study amply illustrate. Co-Marketing with a portfolio of brands -- rather than a single brand -- is an obvious alternative.
		At this point, being first mover is crucially important. The principle is that the sooner one starts, the sooner one knows what works and doesn't work for one's particular brands and retail partners. In addition, the flip side of the fact that the present Co-Marketing universe is so relatively small is that the opportunity to jump in now is so relatively large.

Final Thought: The only way to find out what will and will not work for your company and your brands is "Just do it!" -- but, to be sure, read the report and do it right.

Christopher W. Hoyt is President of Hoyt & Company LLC, a packaged goods training and consulting organization based in Scottsdale, AZ. Chris may be reached via his web site at www.hoytnet.com