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FMOT

SHELF PROMOTION

In a Shift, Marketers Beef Up AdSpending Inside Stores

Funky Displays and Lighting, TV Spots in Wal-Mart;Unsettling Madison Avenue

By

EMILY NELSONand

SARAH ELLISONStaff Reporters of THE WALL STREET JOURNAL

Updated Sept. 21, 2005 11:59 p.m. ET

(See Corrections & Amplifications itembelow.)

Procter & GambleCo.PG +0.56%believes shoppers make up their mind about a

product in about the time it takes to read this paragraph.

This "first moment of truth," as P&G calls it, is the three to seven seconds when

someone notices an item on a store shelf. Despite spending billions on traditional

advertising, the consumer-products giant thinks this instant is one of its most important

marketing opportunities. It created a position 18 months ago, Director of First Moment

of Truth, or Director of FMOT, (pronounced "EFF-mott") to produce sharper, flashier in-store displays. There's a 15-person FMOT department at P&G headquarters in

Cincinnati as well as 50 FMOT leaders stationed around the world.

P&G's insight is helping to power a shift in the advertising business: the growth and

increasing sophistication of in-store marketing. Almost a century ago, P&G popularized

the concept of mass-market advertising. Now, in response to the fragmentation of

television and print ads, it wants to tout its brands directly to consumers where they're

most likely to be influenced: the store.

In part for this reason, the decades-old hierarchy that ruled the ad industry is under

assault. Previously, ad executives who designed TV commercials looked down on

those who worked on in-store promotions. Now, executives with retail expertise are

gaining clout as the world's biggest advertising firms build up departments to handle

an area in which they have little expertise. One marketing firm has even hired an

expert on the durability of corrugated cardboard.

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To fill a store's giant canvas with advertising messages, ad agencies are now charged

with designing everything from in-store TV commercials to special shelf displays and

packaging. The work is more elaborate than traditional in-store marketing, typically

signs posted at the end of supermarket aisles. For all the excitement, agencies face

huge challenges coordinating so many pieces. Some are stumbling over newproblems, such as how to measure and charge for these services.

WhenGilletteCo.G -1.16%introduced a new women's razor last spring, the Venus

Vibrance, its first TV ad ran on just one network -- the one inside Wal-Mart stores,

which has become a powerful advertising medium. To market Pampers diapers in the

United Kingdom, P&G persuaded retailers earlier this year to put fake doorknobs high

up on restroom doors, to remind parents how much babies need to stretch. Grey

Synchronized Partners, owned byWPP GroupWPPGY +0.21%PLC, created last year

a display for Absolut vodka that lit bottles with colored spotlights corresponding to their

flavor. The display's look matched the label's traditional print advertising.

Joe Celia, Grey Synchronized's chief executive, first started working on in-store

displays six years ago. Earlier in his career, "marketers would create the product and

the brand image and then throw it over to us to see what we could do inside the store,"

he says. "Now, we all start together from the beginning."

Veronis Suhler Stevenson Partners LLC, an investment bank that produces forecasts

for the communications industry, says companies in the U.S. are expected to spend

about $18.6 billion on in-store marketing and in-store ads this year, up from $17.6

billion last year. Overall, companies are slated to spend almost $200 billion onstandard types of advertising this year, including TV, print and the Internet, up from

$188 billion in 2004.

P&G, the maker of Tide, Crest and Pampers, won't say how much it spends on in-

store marketing. But it has cut its commitments to advertise on cable channels for the

current season by 25% and its broadcast-TV allotment is down about 5%. At the same

time, overall ad spending rose slightly.

One vehicle that's helping change this traditionally mundane advertising medium

isWal-Mart StoresInc.WMT +0.22%'s in-store TV network. It is seen by 130 million

shoppers a month, according to ratings data produced by Nielsen Media Research for

San Francisco-based PRN Corp., which runs the network. Through it, Wal-Mart has, in

effect, recreated the mass audience that marketers used to easily reach on network

TV.

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Wal-Mart even sells advertising like TV networks. Today, Wal-Mart is hosting

manufacturers in its hometown of Bentonville, Ark., to sell blocks of advertising time for

the coming year, a direct imitation of the annual ad-sales extravaganza, known as the

upfronts, put on by the networks. PRN, which is owned by Thomson Corp., says its

rates are comparable to those of cable TV.

Last year, 122 new products were launched on Wal-Mart TV, says Charlie Nooney,

chief executive of PRN, including goods from P&G,UnileverULVR.LN +0.49%and

Gillette, which agreed to be acquired by P&G earlier this year. The TV sets, which

have sound, are located in parts of the store where people tend to gather, such as the

deli, and will soon be installed in checkout aisles.Pilot Program

Stewart Stockdale, chief marketing officer of mall operatorSimon Property

GroupSPG+0.46%

cites research it commissioned from Arbitron Inc., a media-researchfirm, showing that shoppers are more likely to recall an ad seen in a mall than one

seen at home. The company has a pilot program at the Roosevelt Field mall in Long

Island, N.Y., which airs TV commercials on giant digital screens. Advertisers include

restaurant chainWendy's International WEN +0.47%Inc. andCoca-Cola KO +0.55%Co.

Even as TV viewers scatter among a multitude of channels, the broadcast networks

remain unique in their ability to deliver a big audience, in a single shot, to advertisers.

The Super Bowl, TV's most-watched event, drew 86 million viewers last year and its

30-second commercials sold for $2.4 million, Nielsen says.

In addition, some TV executives say, in-store advertising isn't necessarily competitive.

Viewers are relaxed at home, notes Chris Carlisle, executive vice president of

marketing forNews Corp.'sNWS +0.53%Fox network. In the store, they're rushed,

"with people pushing their shopping carts, going down their lists," which makes for a

different selling environment. Indeed, Fox itself buys ads on in-store networks to pitch

DVDs.

At Procter & Gamble, Dina Howell, the director of FMOT, says she wants to take in-

store marketing, "from an art to a science." P&G has developed a series of tests to

measure the success of its packaging and in-store marketing efforts. P&G won't

divulge specific details. But broadly speaking, Ms. Howell says packaging should

"interrupt" shoppers on their shopping trip. P&G has developed a set of questions that

a package must answer: "Who am I? What am I? Why am I right for you?"

When ad agencies submit ideas, P&G invites them to two facilities it built several years

ago in Cincinnati and Geneva. These mock stores double as research centers where

P&G can rearrange shelves and see how its products look alongside those of the

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competition. The company also brings in focus-group participants to study how they

shop.

For the launch of Kandoo wipes -- flushable baby wipes for toilet-training toddlers -- in

the U.S., P&G convinced retailers to place the packages low on shelves, so they would

be at a toddler's eye-level. It also created display shelves in the shape of the product's

frog mascot to attract children's attention.

One of P&G's most prominent in-store promotions has been for a new line of Pampers.

In the U.S., P&G came up with what it calls "a shopper concept" -- a single promotional

theme that allows it to pitch products in a novel way. The theme for Pampers was:

"Babies First." In stores, the company handed out information on childhood

immunizations, car-seat safety and healthy diets while promoting its diapers and wipes

in other parts of the store. It was sponsored by P&G, Wal-Mart and the American

Academy of Pediatrics.

To market Pampers in England, P&G hiredPublicis GroupeSA 's Arc Worldwide, an

agency that specializes in store marketing. Late last year, Arc managers designed and

pitched P&G several approaches. They all dovetailed with the distinctive green color of

Pampers' packaging as well as the company's TV ads, which show the world from the

perspective of a baby.

For diapers, called nappies in Britain, Arc designed a clammy-feeling green gel cover

to wrap over the handle of a shopping cart. It read, "This is how it feels when your

nappy needs changing." It suggested putting mirrors in shopping baskets to showbabies looking at the world around them.

P&G rejected the handle, however, after focus groups said it reminded them of

something they didn't want to think about. The mirrors were also nixed after retailers

said the idea was impractical.

P&G did go for some of Arc's pitch. On the doors to restrooms with baby-changing

facilities, Arc added big fake doorknobs, unreachably high up, and the message:

"Babies have to stretch for things. That's why they like the extra stretchiness of

Pampers Active fit."

The consumer-products company printed huge footprints on the floor of the diaper

aisle. On shelves, it added pull-out cards with information about Pampers that read:

"do not pull," a play on the fact that babies like to do the opposite of what they're told.

Elements of the marketing plan appeared in several major chains, including Asda,

which is owned by Wal-Mart, andTesco PLC.

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The new emphasis on in-store marketing is forcing advertising agencies to add

unfamiliar services, such as shelf-design consulting. They're also hiring and promoting

managers with expertise in those areas. At Leo Burnett, which is owned by Publicis,

executives trained in direct marketing now sit with creative designers when they meet

clients and have an equal say. Clients are telling ad agencies, "if you can't provide it,we'll shop elsewhere," says Richard Pinder, president of Leo Burnett's operations in

Europe, the Middle East and Africa.

Nearly every client pitch done by rival Grey Global Group, a unit of WPP, now includes

retail strategy. The company last year appointed executive vice president Jonathan

Dodd to head its "First Moment of Truth Initiative" which works with P&G and other

companies.

Unusual Expertise

Andy Murray's marketing firm helps clients advertise inside Wal-Mart and other stores.

The agency even buys samples of Wal-Mart shelves to see exactly how products

would look in a store. A former P&G executive, he started his new firm nine years ago

with less than a dozen staff members. Since then, Mr. Murray's agency has grown to

about 300 people and was recently acquired by Publicis' Saatchi & Saatchi.

Now named Saatchi & Saatchi X, it has some unusual expertise for an advertising

agency. Mr. Murray hired a structural engineer to assess how long a corrugated

cardboard display will last. The agency uses pink shrink-wrap to prevent products from

getting lost in vast storage warehouses. It also developed software that can track aconsumer's eye movements.

The growth of in-store marketing has made ad agencies' lives more complicated. For

starters, ad agencies now have more than one master to please: the client and the

retailer. Even after a retailer agrees to a newfangled in-store display, it often falls to

individual store managers to install them or, in some chains, make sure the television

is on at the right time; they aren't always good at complying.

Some stores charge marketers a fee for in-store displays -- as if they were selling

space on a roadside billboard. Others don't have the clout or think they will be

compensated through the overall boost to sales. Those that charge face another

wrinkle: there's no standard system for measuring the audience for in-store ads and

therefore no easy way to charge for the space. The fees for each project are

negotiated on a case-by-case basis, a time-consuming task.

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There's also the matter of how ad agencies get paid. For years, agencies were paid a

percentage of the overall ad budget. P&G changed that model several years ago

because it worried agencies would naturally gravitate toward costly TV ads. It now ties

agency compensation to product-sales increases. Ad-agency executives say another

factor will soon be thrown into the mix: the cost of new services they're being asked toprovide, such as installing and monitoring in-store displays.

Write to Emily Nelson atemily.nelson@wsj.comand Sarah Ellison

atsarah.ellison@wsj.com

Corrections & Amplifications:

PRN Corp. is a unit of Thomson SA, which is based in Paris. This article incorrectly

stated that PRN is owned by Thomson Corp., a different company that is based in

Stamford, Conn.

Using in-store advertising to win the First Moment of Truth (FMOT)

Author: Bill Gerba on 2005-10-10 07:45:33

"Procter & Gamble Co. believes shoppers make up their mind about a product in about the time it

takes to read this [sentence]." So begins an article on the front page of the September 21stWall

Street Journal. P&G's most recent concept for (further) conquering the world of consumer

packaged goods (CPG) is the First Moment of Truth (FMOT, pronounced EFF-mot), the 3-7

seconds after a shopper first encounters a product on a store shelf. It is in these precious few

seconds, P&G contends, that marketers have the best chance of converting a browser into a buyer

by appealing to their senses, values and emotions.

Immediately after the paper came out that morning, blogs and websites from around the world were

filled with comments about this "new" form of marketing that existed entirely on store

premises. Direct marketing siteDMNewsimmediately zeroed in on P&G's commitment to using as

few words as possible in its messages (how many words can you read in 3-7 seconds?), and

started a thread discussingFMOT implicationsfor traditionally wordy direct marketing approaches

like mailers, bag stuffers and flyers. Reverieseditor Tim Mannersnotes,"This is serious stuff: P&G

has a 15-person FMOT department in its headquarters, 'as well as 50 FMOT leaders stationed

around the world,' led by a Director of First Moment of Truth...."

While in-store marketing certainly isn't new to anybody involved with digital merchandising initiativesliketouchscreen kiosksanddigital retail signs,the advertising world at large traditionally hasn't paid

a lot of attention to it, instead choosing to focus on mass-media like TV, print and radio. But if

P&G's current spending is any kind of indicator of where the rest of the industry is headed, all that

may be about to change. As the WSJ article notes, "it has cut its commitments to advertise on

cable channels for the current season by 25% and its broadcast-TV allotment is down about 5%. At

the same time, overall ad spending rose slightly." So where is the rest of that money going? Well,

at least some of it must be in the hands of the aforementioned 50 FMOT leaders around the world,

but the lion's share is going intoPOP displays,in-store TV advertising(such as on theWal-Mart TV

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network), and experimental in-store promotional tactics.

News of P&G's predictions about ad spending and performance was also no surprise to readers

ofDairy Foods Magazine(what? you don't read it?), as Donna Berry wrotean extremely similar

article about FMOTfor that publication way back in March 2005. Her takeaway after hearing a

keynote speech by P&G's FMOT director Dina Howell: there are actually two moments of truth. The

first is when a browser first encounters a product in the store (they win if the customer decides to

purchase). The second moment of truth happens each time a customer uses the product. So for

P&G, each time somebody washes a load of laundry with Tide, feeds their dog Iams, or brushes

their teeth with Crest is another marketing opportunity. Or, as they say in their2002 Chairman's

Address,"The second moment of truth occurs two billion times a day when consumers use P&G

brands. Every usage experience is our chance to delight consumers."

According to investment bank Veronis Suhler Stevenson Partners LLC, U.S. companies will spend

around $18.6 billion on in-store marketing advertising this year, up from $17.6 billion last year (a

healthy 5.7% growth rate). Overall, companies are slated to spend almost $200 billion on standard

types of advertising this year, including TV, print and the Internet, up from $188 billion in 2004 (an

even healthier 6.4% growth rate). As additional funds become available for use in-store, more self-service, interactive andnarrowcastingprojects will get the green light from advertisers and retailers

looking for the greatest sales lift per ad dollar.

While digital merchandising programs can have a significant upfront cost, they make up for it with

longer usable lifecycles, fewer installation and operational challenges over time (bysome estimates,

store managers fail to deploy static POP displays up to 50% of the time), and of course, the ability

to change the promotional material without having to make physical visits or ship additional

equipment. But the real ace up our sleeves will likely be reliable accountability for advertising

playback. Since I started with a WSJ quote, I'll end with one as well:

"For years, agencies were paid a percentage of the overall ad budget. P&G changed that model

several years ago because it worried agencies would naturally gravitate toward costly TV ads. It

now ties agency compensation to product-sales increases. Ad-agency executives say another

factor will soon be thrown into the mix: the cost of new services they're being asked to provide, such

as installing and monitoring in-store displays."

Examples of the First Moment of Truth (FMOT) in Digital Signage

Author: Bill Gerba on 2012-05-24 08:47:29

I remember reading Procter & Gamble's announcement about their research into the "First Momentof Truth" like it was yesterday. This makes me feel quite old, as it in fact happened back in 2005. Atthe time, WireSpring was highly focused on using digital signage for shopper marketing, so the ideathat a really important part of a brand connection happened right at the point-of-purchase made alot of sense to us. In fact,we blogged about the First Moment of Truthjust a few days after P&G'sarticle first appeared in the Wall Street Journal. Having had nearly 7 years to fully digest whatFMOT means, we now know that it moments of truth can be found in any environment, not just retailstores. And understanding how they work inside of your environment -- whether it's a call centerfloor, an office break room, or a retail store -- can make the messages that appear on your digitalsigns much more effective.

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What is the First Moment of Truth?

The First Moment of Truth (FMOT, pronounced EFF-mot), is the 3-7 seconds after a shopper firstencounters a product on a store shelf. It is in these precious few seconds, P&G contends, thatmarketers have the best chance of converting a browser into a buyer by appealing to their senses,

values and emotions. And in fact, as P&G's original FMOT director Dina Howell (now the CEO ofshopper marketing mega agency Saatchi & Saatchi X) noted, there are actually twomoments oftruth: when a browser first encounters a product in the store, and each time a customer uses theproduct. As they best said way back in their 2002 Chairman's Address, "The second moment oftruth occurs two billion times a day when consumers use P&G brands. Every usage experience isour chance to delight consumers."

Image credit:numb3r on Flickr

If you're a retail marketer, none of this should be news to you. However, the FMOT school of

thought can (and should) easily be applied to just about any other venue where digital signs are

used to communicate with an audience.

Example 1: FMOT for a Hotel Lobby

This one's easy. The lobby area is the very first place a guest encounters when he arrives. It musttypically be crossed each time that guest enters or exits the hotel. And it frequently adjoins or

contains a meeting or break area, and possibly an eating area.

Since the success of most hotels hinges on repeat business (and word of mouth referrals), instantly

making a guest feel secure and comfortable is essential, and most hotel designers have learned a

thing or two about making lobby areas that will accomplish this.Adding digital messaging to the

hotel lobby mixcan enhance things further, though.

Show off the best features of the hotel, whether they're amenities (e.g. a nice outdoor pool or well-

stocked exercise room) or local attractions. Or highlight some spectacular deals, offers, or things

that other guests have said were great about the hotel or the location. Or if you really want to get

fancy, have the screen personally welcome guests by detecting the RFID chip embedded in theirloyalty cards as they walk in.

The content should be gorgeous (get some pro photography and follow ourbest practices for digital

signage content), and each 3-7 second clip should sell one idea or concept. Ideally, the digital

screens should be integrated into the lobby itself so as to not come off as an afterthought.

Example 2: FMOT for a Small Restaurant

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Much like a guest staying at a hotel, a restaurant patron needs a certain level of comfort and trust to

have a great dining experience. More than that though, they have to want to eat your food. A

common saying is that you eat with your eyes before you eat with your mouth, so fortunately it's

fairly straightforward touse digital media to sell your food(before you actually sell your food).

As before, high-end product shots reign supreme, so you don't need to overthink the content too

much. Another popular approach is to show patrons enjoying the food (this can get tricky if you

don't have an eye for photography/videography, though). And if you know you have some kind of

quirky appeal, go ahead and exploit it. For example, I once knew of a restaurant that asked

anybody who finished their 6 lb. mega-steak to sit for a short video interview that was then played in

a loop in the waiting area. (I think those lucky patrons also got a free gallon-sized vat of Lipitor and

an ambulance ride to the hospital, but I digress.) It was a little bit silly, but that played right into the

restaurant's well-known angle, so it worked for them.

As for sign placement, many small eateries have a queue or waiting area. And even reallysmall

places have a wall behind a counter. Any of these locations is OK as long as the sign doesn't look

like an afterthought. Nothing gets ignored quicker than a dinky screen showing cut-rate content, soprime placement and attention to detail are key.

More examples

For an employee to really contribute at their job, they have to be happily employed. And that means

that employers must prepare for a fresh FMOT every single day of the workweek. So employee

FMOT messaging might focus on little-known company benefits, exciting upcoming events and

news (and I mean actually exciting to the employees), and a reminder of the mission statement and

why the work is important (easy for a company making dialysis filters, harder for an ERP software

firm).

A church's first moment must help affirm that it is the right place for worshippers to worship at --

that's the big reason behind so much of that fancy church architecture, after all. So FMOT

messaging should focus on the uplifting impact of the important work it does. Calendar events need

to be more than just words in a box. They should include pictures (or at least explanations) of who

is going to be positively affected by the event, why, and how.

The list goes on and on. Doctor's offices and other healthcare facilities have an obligation to engage

patients with a positive FMOT. So do vets, for that matter. And government institutions would do

well to explain to their constituents exactly what good they are doing for the community.

So the next time you're asked to work on a digital signage project, or if you're in the business of

selling these systems, take a moment to think about what the First Moment of Truth means for thevenues installing the systems and the people who will ultimately see them. Framing a digital sign's

purpose in terms of FMOT can help solidify its value and set a course for content production -- and

both of those things are critical if your project is to be a success.

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