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Madonna was right; we ARE living in a material world

July 25th, 2018   ||    by Rick Howe   ||    No Comments

Recently, Sara Fischer reported for AXIOS, that retailers like Walmart and Target are joining Amazon in the media space – both for subscription entertainment video services, and as an advertising platform for the products on their shelves.

The traditional model of “co-op” support for retailers – manufacturers who reimburse retailers for featuring their products in local advertising – is still alive, because when you tally up product purchases at the end of the day, the vast majority of revenue comes from people loading up their shopping carts at a local retailer.

That’s why Amazon, with their purchase of Whole Foods, wants to be more like Walmart.

Conversely, the growth in the business comes from capturing consumers for on-line shopping, possibly with the “hands-on” evaluation and local pick-up. But finding and engaging those on-line shoppers is harder than it looks; that’s the real value that subscription video brings to Amazon – new Amazon Prime members attracted by video entertainment.

Which is why Walmart, with their newly-announced subscription video service, wants to be more like Amazon.

Instacart, the independent shopping service takes a different approach, with apps on Google Play and iTunes, giving the shopper multiple grocery stores and locations. A personal shopper buys, packs and delivers your groceries. Instacart is in the unenviable position of taking on Amazon Fresh directly. But with 200 retail partners and over 70 million potential homes served, Instacart has worked hard to earn their $4.2 billion market valuation.

And poor-old Best Buy, who was on the rapid downward “Circuit City” slope, may have found the survival mechanism (or, at least until Amazon makes “Whole Foods” style offer for them) with their price-match guarantee. That, coupled with better training for sales-floor personnel, and a “showcase and ship” strategy (products are shipped from local stores, rather than central warehouses) appears to be working.

Why? Because we’re living in a material world. It’s about STUFF. People need STUFF. People look for STUFF. People buy STUFF.

Make that an easy process for consumers, and you are likely to win. Kroger and other supermarket organizations have been introducing home delivery, and while the numbers aren’t setting the industry on fire, home delivery does generate a degree of loyalty for one segment of their consumers.

Local grocery stores in the US are expected to spend $203 billion on advertising in 2018, according to Statista. Walmart is expected to spend only 1.5% of that amount ($3.1 billion) in 2018.

What? Wait? HUH????

Let that sink in. Local grocery ad spend in 2018 will be $203 billion. Walmart ad spend in 2018 will be $3.1 billion.

When local grocery stores spend on television, they spend on local broadcast television. When their corporate parents (Kroger et al) make those ad buys, they need to move quickly, efficiently and inexpensively. Minimum fuss and Maximum ROI.

Do they use fax machines and tear sheets to make their ad buys? Not anymore. They use platforms such as Videa, who automate the time-consuming parts of the sales process and makes transparent ad pricing a reality.

Get on board. Advertising is moving fast, and the cash volume is enormous!

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