Monday, February 21, 2005

Way beyond the blue light, Wal-Mart TV

Wal-Mart operates the nation's fifth-largest TV network, reaching a captive audience of 130 million viewers every four weeks, according to a terrific article in the New York Times.

WM-TV features sports snippets, music shorts, movie clips and company propaganda for five minutes of every hour. But, mostly, it runs advertising -- "millions" worth of it, says the NYT -- from the likes of Kraft, Univeler, Hallmark and Pepsico.

In an effort to approximate a "friendly corner grocer" gemutlichkeit, Dove's "Real Beauty" campaign features Wal-Mart employees. Frito-Lay goes for the hard sell, giving step-by-step directions to the chip aisle and reminding soccer moms to grab a snack pack on the way to the game.

Advertisers pay between $137k and $292k to run a spot for four weeks on WM-TV, depending on the length of the commercial and the number of stores targeted in the campaign. With CPMs ranging from $1 to $2.25, advertisers not only reach lots of eyeballs for not much cost but presumably earn brownie points with Wal-Mart's notoriously hard-nosed buyers.

Research purchased from Nielsen by WM-TV found that the average shopper watches the channel seven minutes per store visit, an increase of 44% from a similar study in 2002. Wal-Mart plans to get more in shoppers' faces in the future by replacing its relatively small existing TVs with 600 new 42-inch plasma screens.

Wal-Mart's apparent success is an excellent example of why merchants are migrating away from the mass media. Let us count the ways:

1. Wal-Mart boosts sales and saves on advertising by pitching directly to its customers while they are in the store and ready to buy.

2. Wal-Mart and its advertisers can track ad effectiveness and shopping patterns on a granular basis, the better to fine-tune future marketing programs. In the fullness of time, Wal-Mart could move to premium-priced, pay-for-performance advertising, even dumping advertisers whose spots don't pull.

3. Wal-Mart turns advertising, historically a significant cost item, into a profit center.

We've come a long way, baby, from the blue-light special.


Blogger Tom said...

What's scary is that they could actually say "okay, ad 'x' ran at 2pm - within one hour of ad 'x' running, how many people bought product 'x'?" and it would probably be reasonably true to form. At least as marketers go =)

12:32 PM  

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