Advertising spending

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1 Advertising spending Where is the ROI? Presented by: Anne- Marie Roerink 210 Analytics Kirk Clark Mitchell Grocery Neal Leonhardt Brookshire Grocery Tom O Reilly Aptaris 1

2 Advertising & Promotional Practices Consumers no longer have a singular path to purchase Customers are increasingly in control Consumers demand relevant content Ever-widening range of ad vehicles Study examines current and future advertising and promotional practices/strategies in food retail 69 respondents Visit booth 1410 for your free copy 2

3 Expert reactor panel Kirk Clark Director of Advertising, Marketing & Merchandising Mitchell Grocery Company Neal Leonhardt Executive VP Sales & Marketing Brookshire Grocery Co Tom O Reilly President & CEO Aptaris 3

4 Key insights Recalibrate ad dollars to ensure optimal 1promotional relevancy 4

5 Marketing ad dollars stable 77% of shoppers refer to 1+ vehicle pre/during trip Connect with shoppers pre-trip and in-store! 56% print circular at home 31% print circular in-store 26% electronic circular 19% in-store only deals 19% loyalty program deals 12% smartphone/app research 7% social media research Source: RFG 2016 Supermarket Experience Study Budgets mostly flat 1.26% 2016 ad budget 26% Increased budget 64% Stable budget 10% Decreased budget 5

6 Budget allocation across vehicles is shifting 90% of retailers have a printed circular 58% budget share allocated to print circular Expectations are lower share, but continued use 7% expect discontinuation of print circular in 2 years;; 10% in 5 years 67% lower share in 2 years;; 86% in 5 years 80% Print circular for all stores 10% Print circular for some stores 11% No print circular predominantly 1- store grocers 58% Print circular % of ad budget 6

7 Leveraging allocation shift to save and fine-tune Reduced $ allocation from 58% to 33% in 5 yrs Shift in delivery: all to some stores Reduction allows for reallocation, and some savings When reallocating $ 55% to digital/social/mobile only 40% to a mix of traditional and digital/social Receiving greater ad $ support: Direct mail Community donations/events Social, digital and mobile, including 46% Estimated print allocation in 2 yrs 33% Estimated print allocation in 5 yrs 49% Reallocate all savings 44% Reallocate some savings 7

8 Panel discussion Budget allocation Internal conversation for optimization? Budget savings Reinvest or reallocate? Budget shifts Increased allocation to digital, mobile, social, but also direct mail and community events 8

9 Key insights A new face for the 2print circular 9

10 While expected to be around, changes underway Print circular Distribution frequency 72% expect no changes;; 28% lower frequency Circulation size 67% smaller circulation;; 27% expect no changes Pages 4 and 6 page circulars most common 53% expect no changes to page count;; 45% fewer Item count and type 73% expect no changes to item count;; 24% expect fewer Higher allocation of items expected for perishables, private brands and fresh prepared Print circular 94% Weekly distribution frequency 8,785 Average circulation per store 43% Include coupons 22% Expect to use more coupons 10

11 Opportunity to drive greater strategy Vendor allowances and prior year issue have greater impact on circular than analytics Much greater importance among larger retailers Drivers for determining item selection for circular TPR/vendor allowances 47% Prior year's issue 41% Analytics Other 20% 35% 1- store: 0% >100 stores: 50% 11

12 Panel discussion Keeping the print circular relevant Experience with testing different layouts;; circulation;; frequencies, etc The role of analytics ROI for small grocers? How does the circular perform? Are you optimizing or cannibalizing? 12

13 Key insights The digital circular serves as an important first step to online 3engagement 13

14 Digital circular has become a must Available among all 51+ store operators Availability of an online/digital circular Yes, 86% No, but working on it, 8% No, 6% But great variance in level of sophistication 14

15 But level of sophistication greatly varies From online PDF to a tool that can drive online list making and ordering Digital circular capabilities Yes All Yes 1-10 Yes Yes >50 Searchable? 62% 48% 64% 82% Individual items clickable? 51% 29% 69% 73% Individual items linked to recipes 33% 24% 31% 54% Nutrition information for individual items? 16% 9% 23% 18% Items/discounts same as print issue? 89% 81% 92% 100% Items can be added to a cart or list? 58% 33% 61% 100% Sent out by ? 73% 71% 69% 82% 15

16 Right now our online circular is just a PDF of the paper copy. We need to build a more interactive circular that can actually drive sales rather than serve as a research mechanism only. We just added online ordering. Many add promotional items directly from the digital circular. 16

17 Panel discussion Digital circular Presence versus sophistication? Can digital circular serve as a way to drive sales versus mere research vehicle? Versioning for the ed digital circular? 17

18 Key insights Test and learn along 4with CPG 18

19 CPG and retail exploring digital, mobile and social 17% of total circular cost covered by vendor funds CPG vendor willingness to shift traditional TPR $ to digital/mobile Some, 47% A rare few, 16% Most, 14% None, 23% Availability of separate digital/mobile CPG $, in addition to traditional $ A rare few, 14% Some, 56% None, 21% Most, 10% Larger retailers find much greater success in approaching CPG for digital funding, at 43% 19

20 I think CPG is having these conversations with the big retailers to understand how well it is working in terms of translating into a sale. It s hard to have these conversations as a one- store operator, even if we are very sophisticated with our digital outreach. CPG companies are looking for the proof in the pudding. Which is completely understandable. But no one agrees on what is the best proof. We need to agree on some standards to facilitate tracking and promote digital funding. 20

21 Panel discussion Trade funds Your company s experience Having the conversation with CPG: Reduce audits Measure performance Fund effective promotions Develop deeper partnerships 21

22 Key insights One size fits no one: Consumer demand for 5relevant content 22

23 Opportunity in optimizing relevancy of message Print: one-third of retailers use targeting/segmentation 67% of grocers with stores;; 71% of >100 stores Targeted/segmented/ personalized outreach in print pieces No, 64% Yes, 36% Years until targeted print outreach will be done <1 year 21% 1-2 years 21% 3-5 years 18% 6 or more years 9% Never 30% 23

24 Most of our segmentation is based on income. It appears to be the biggest driver. Geography is important for us. Some of our stores are in urban areas, others in suburban or even small towns. We push more of our deli/fresh prepared in urban areas, including lunch specials. We try to data mine past purchases and recommend items based on the types of products or meals a customer tends to purchase. 24

25 In print, demographics top segmentation tool Demographics edge out past purchase history as top segmentation tool Factors used in targeted/segmented print media Demographics (age, gender, income, ethnicity, etc) Behavioral variables (past purchase history) Psychographics (interests, attitudes, lifestyle, etc) 55.6% 50.5% 61.1% Other 5.0% 25

26 Panel discussion Targeted outreach Your company s experience in customer segmentation and shopper behavior Relevance for core shopper vs. leaving money on the table Dunnhumby experience Cannibalization, Halo effect and rewarding loyal shoppers The speed of change: revolution vs. evolution 26

27 Key insights Opportunity (or need) to drive continued 6integration of technology 27

28 Retailers eye continuous integration of technology Retailers looking to build online engagement with shoppers through a multitude of tools Larger retailers early movers on technology integration Current usage Have Working on it Online recipes 77% 6% Mobile- friendly website 66% 20% Online list building 51% 16% Digital coupons 49% 25% Digital- only promotions (not matched in print) 37% 16% Blogs 37% 6% App 31% 27% Original video content 28% 12% Online ordering with pick- up 23% 35% Online ordering with delivery 12% 26% 28

29 Opportunity in optimizing relevancy of message Digital: four in 10 retailers use targeting/segmentation 53% of grocers with stores;; 91% of >100 stores Targeted/segmented/ outreach in digital No, 61% Yes, 39% Years until targeted print outreach will be done <1 year 17% 1-2 years 28% 3-5 years 28% 6 or more years 7% Never 21% 29

30 Greater outreach and list building seen as key Investments in the digital space led by: 1) greater social outreach 2) greater mobile outreach 3) building digital lists for text, , etc The question is, how? 30

31 Making honest and beneficial product choices for our consumer creates that trust. We have sign up campaigns where the cashiers ask customers to sign up with unique discounts. Tying in with digital discounts that aren't matched elsewhere seems to work the best. Just starting but trying to remind shoppers each time they are in the store. In- store events and contests/sweepstakes. Through our loyalty program and social media events. 31

32 Through our loyalty program and social media events. Our plan is to build our digital list by adding a loyalty program, which we do not have now. Loyalty card data, Facebook and targeted s. Just starting but trying to remind shoppers each time they are in the store. In store events and contests/sweepstakes. 32

33 As owner, we personally friend request everyone in our market area through neighborhood pages and then immediately invite them to our business page. This has been our most successful building technique. In my opinion people like to know the owner of a local business and are more willing to follow their page if its personal rather than a contest submission. It also gives it a personal touch which is in line with our overall service mission. 33

34 Panel discussion Consumer facing integration of technology Company experience with: Apps Online list building/ordering Digital coupons Blogging/videos Backend integration of technology Seeking cost savings through technology New way to connect with shoppers 34

35 Key insights Opportunity gap exists in social media to grow 7shopper engagement 35

36 While greater presence, room to build following 96% Vs. 87% Vs. 25% Of supermarkets are present on 1+ social media platforms Of supermarket shoppers who regularly follow 1+ social media sites Of shoppers who are friends with/ connected to primary grocery store Opportunity gap! 36

37 Facebook and Twitter dominate retailer platforms Retailer presence 100% 33% 58% 36% 40% 18% 8% Supermarket shopper usage 89% 53% 30% 29% 28% N/A 16% 96% Of food retailers use social media 78% Handled by in- house staff 30% Post 1+ time a day 51% Post a few times per week 37

38 Tracking engagement key to success 80% of retailers monitor the engagement with their posts Larger retailers and those with higher posting frequencies more likely to track Measuring effectiveness of social media Likes and shares 84% Click through rates 64% Sales lift Conversion rates None 16% 23% 22% 38

39 Panel discussion Social media gap Company experience with social media Translation into trips and sales Relevance over posting frequency 39

40 Key insights Loyalty cards can be an important gateway to 8shopper engagement 40

41 Loyalty programs driven by larger retailers 17% of one-store operators have some kind of loyalty program vs. 84% of retailers with >100 stores Availability of a loyalty program Of companies Of stores 63% 38% 42% 19% 21% 16% Have Working on one Don't have and no plans 41

42 Fuel and basket-level discounts prevalent Loyalty programs 79% fuel discounts 73% basket-level discounts 47% item-level discounts Loyalty card retailers Higher-than-average transaction size Lower budget allocation to circular Greater dollars to direct mail, mobile, digital and social More likely to continue to push print, digital and social More likely to measure effectiveness Leverage loyalty card to build online engagement 42

43 We recently launched our loyalty program. We felt it was an important step to move away from the print circular and build online engagement Our loyalty program has definitely been successful in driving sales and new item trial. 43

44 Panel discussion Loyalty program Company experience Is it a necessary step in the move from print to digital? 44

45 Final thoughts and questions Continuously reevaluate budgets and allocation based on your unique shopper audience Work on narrowing social media and digital gap One size fits no one: relevancy in print and digital Plan, execute, evaluate and adapt 45

46 Receive your free copy now! To obtain a copy: Stop by Aptaris booth Rich Keiser at For questions or additional information Anne-Marie at 46

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