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The Evolution of Circulars from Print to Digital Todd Hale SVP, Consumer & Shopper Insights December 1, 2011 Today’s presenter Todd Hale SVP, Consumer & Shopper Insights, Nielsen Todd Hale serves as Senior Vice President, Consumer & Shopper Insights for The Nielsen Company Appointed to this role in 1999, Todd is responsible for creating thought leadership content and delivering client and industry presentations A frequently soughtafter industry and client speaker, Todd shares his insights on consumer shopping, buying and media consumption behaviors and attitudes to provide manufacturers and retailers with strategic visions to facilitate brand, category and retail sales growth Hale is often quoted in the press and in numerous trade publications on consumer trends Todd has more than 33 years of experience in the consumer research industry, including 27 years with The Nielsen Company, where he held various marketing and sales management positions within advertising/product testing, advanced analytics and consumer panel practice areas Prior to joining Nielsen in 1984, Todd was an executive with MRCA, a U.S.-based consumer panel company Todd earned an MBA and a BA in Business from Wright State University The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary “There is a delicate balance in the shift from print to digital All customers will not migrate to the digital world at the same rate It will be important to test and learn to understand overall acceptance in order to protect sales and profitability.” - Erik Keptner AHOLD “What makes the online circular exciting to our business is less about rendering the existing circular on our website, but rather having the circular in a digital feed that can be published in different formats across multiple sites and devices.” - Kat Kozitza SUPERVALU The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Circulars help shoppers plan, but manufacturers & retailers recognize additional digital benefits Mfr & Paper •Critical as pre-planner •Slow, costly, & rigid •¾ decisions made prior to store •Will play a role for some time •50% use to make lists •Requires digital complements •Savings & eating link to brands Mfr & Digital •Item/price shopping easy Retail & Paper •Less relevant as young grow up Manufacturer & Retailer POV Retail & Digital •Far less costly •Complements paper •Multiple screens •Requires overarching message •Rethink promo cycle •Inspires menu planning •Dissects item / price •Planning > list > shopping •Data > Creative Source: Joe DePetrillo, Nestle; Donald Smith, Family Dollar; unidentified retailer The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Shoppers want paper deals now & in the future Touch point expansion requires multi-faceted marketing with consistent messaging The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary There is a better way to reach today’s diverse and time-starved shopper Digital allows shoppers to be selective! * SUNDAY MAY 15, 2011 Delivery Type Pages Full page ads & coupon booklets * 102 Ad inserts * 262 Stuff in plastic bag 54 Grand Total 418 (not counting car ads, local specialty stores, etc.) The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Online newspapers readership will likely match paper in next few years Source: Pew Research Center The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Digital is officially pervasive 82% 93% of Americans online of Americans with mobile phones 25 hrs Avg online time per month 19 Million iPads sold to date 155 million US Facebook users 130 Average Facebook friends Source: Online usage from Nielsen NetView panel - 5/2011; Mobile phone usage The Evolution of Circulars from Nielsen, 5/2011; iPad ownership from Apple 1Q financial report; Facebook data from InsideFacebook.com Copyright © 2011 The Nielsen Company Confidential and proprietary What Shoppers are Telling Us How, why, when, & where about print and digital Prefer paper, but digital is reaching many Q: How often you look at information about the products & sales available at a store from ? Digital Print % Ever % Weekly % Ever Source: Nielsen Homescan % Weekly 10 The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Don’t assume that if you build it, they will come 45 The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Online advertising critical to build shopper reach for online assets What we’ve learned: Online display ads drive offline sales ROI is generally > traditional media Every campaign doesn’t work Success driven by new shoppers, not > spending among existing Unexposed to ad Exposed to ad 46 Source: Nielsen Consumer Direct & NetEffect The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Don’t assume best offline segments are most responsive to online ads 47 Source: Blinded custom Nielsen NetEffect analysis for retailer client - Q2 2010 The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Target intersecting consumers as they search and as they share Made it easy to share Target bought sponsored link ad on this circular item 48 Source: Target The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Ongoing optimization secret to digital success Post campaign ROI analysis Post campaign demo & segment ROI analysis Innovate digital circular distribution Ensure desired audience is in sight Ongoing Optimization Refine promoted items Creative pre-testing 49 The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Digital mandates Key Points & Other Principles Consumers make more decisions prior to entering store Majority of digital circulars mirror print Few shoppers engaged with digital efforts Strong offline segments not always strong online Digital marketing in its infancy Retailers must be part of pre-purchase consideration Calls to Action Retailers must innovate digitally, particularly circular Use digital ads to drive shoppers to digital assets Invest in analytics of online shopper segments Continuous optimization key to success 50 The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Looking around the corner 51 The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary What to expect Paper Paper remains in mix Online Retailers have no choice but to keep pace with digital migration Print leaner & more precise Digital complexity cost of doing business Item / price exposure remains important Item price exposure still key, but not enough Expanded value proposition Retailers must build their own & partner with deal aggregators Sustainable differentiation possible via digital engagement (customer history a real plus) Growth trajectory continues 52 The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Digital personalizes coupon and circular, integrating value added content – centered on the shopper It’s all about me 53 Source: Safeway The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Commuter shopping takes new platform, literally! June 2011—A visual experiment in mobile supermarket shopping has done very well for Tesco in South Korea The number of new registered members rose by 76%, and online sales increased 130% October 2011—P&G has set up virtual stores in four of the busiest subway stations in Prague (available until end of 2011); P&G products have 90% shelf share in first month 54 Source: P&G Corporate Newsroom The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary “marching beyond the walls of tech into retailing, advertising, publishing, movies, TV, communications, and even finance” “Bezos, Jobs, Zuckerberg, and Page look at the business world and justifiably imagine all of it funneling through their servers.” Source: Fast Company 55 The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary How will these companies enhance or disrupt the future of your retail space? 56 Source: Fast Company The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Battle ensues – Walmart makes advances; will a new line be drawn in online space? “Walmart's store managers and employees will get credit for online sales from their territory, just like sales in the store That will give them more reason to promote Walmart.com, the new iPad app, My Local Walmart Facebook app, and … refurbished iPhone app to the 140 million weekly in-store shoppers.” 57 Source: Jack Neff, Ad Age & James Steinberg (photo) The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Once you’re back at your office… Customer Readiness Organizational Readiness • Know your customer • Digital goals • What they want from…? • Resource support • Printed circulars • Executive support • Online • Continuous improvement support 58 The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary Q&A Thank you for attending • If you have follow-up questions or want more information, please contact your Nielsen Professional Services Representative • If you are not a current Nielsen client, please contact us by phone or email: Phone: 800-553-3727 email: CPGSolutions@nielsen.com OR if you have any questions regarding the content of this webinar, you can also contact: Todd Hale, email: todd.hale@nielsen.com 59 The Evolution of Circulars Copyright © 2011 The Nielsen Company Confidential and proprietary