The Economist Media Convergence Forum

The Moment of Truth: Consumers, Technology and Commerce
The Altman Building, New York City, October 20-21, 2009

By Lionel Tepper

NEW YORK, NY—October 26, 2009— The Economist Media Convergence Forum was a 2-day event that brought together thought leaders, technology experts, and marketing professionals to address the new realities facing marketers today.

New technologies have emerged that have changed the way consumers interact with brands, and advertisers now have more direct interaction with consumers. These relational changes have had a big impact on how brand messages are delivered. It’s a connected universe. For a brand to succeed in today's marketplace, marketers need to craft a compelling story that can live in all places, and across all media channels.

Understanding Consumer Behaviour:
The Moment of Truth

“Brand loyalty is declining, and people are willing to buy something else,” said Tom Moseman, Senior Vice President, Sales and Marketing at Envirosell, a global research and consulting firm specializing in the study of human behavior in retail, service, home, and online environments.

Tom Standage, Business Affairs Editor at The Economist, moderated the discussion on Understanding Consumer Behaviour: The Moment of Truth. Candace Adams, President of Global Retail Strategy at SmartRevenue, and Noam Levavi, President and Founder of YCD Multimedia, joined Mr. Moseman on the panel, exploring the technological and psychological issues facing marketers who are trying to connect with consumers in today’s media environment.

Retailers have long wanted to unlock the secrets of the consumer’s mind in order to refine their message and target advertising with greater accuracy. New technologies that measure and track what a shopper is looking at within a retail environment are available and being used with greater frequency. Facial recognition that can categorize and differentiate between age and gender are being used with digital signage systems to control what content is being displayed at the point-of-sale. These systems have demonstrated a significant sales uplift when the right content is played at the right time.

“The content has to be made specifically for the in-store environment in order for it to be effective,” said Mr. Levavi of YCD Multimedia, a full service digital signage provider with expertise in retail, hospitality, and leisure brands. He spoke about how their software incorporates tools that enables marketers to optimize content on digital signage systems. YCD presented several case studies of their work with Burger King and Pizza Hut, demonstrating the effectiveness of digital signage at the point-of-sale.

Another interesting point raised during the panel discussion touched on the advantages of digital signage over traditional static signage. “Studies have shown that there’s no significant difference [in sales lift] between paper versus digital signage,” said Mr. Moseman. “It’s all about the location and product offer.”

Despite conventional wisdom, placing a brand upfront on an end-cap within a retail environment does not produce significant sales lift because these areas tend to be the most crowded, making access difficult for consumers. However, end-cap positions at the back of a store have been shown to be more effective because consumers can take their time and evaluate products.

“More than 50% of purchase decisions are made in-store,” said Candace Adams, President of Global Retail Strategy, SmartRevenue, a specialist research firm focused on shopper behavior. Consumers have more choice than ever before, there’s more brand proliferation, and they can select from a wider variety of products across all categories.

So what do consumers think of retail marketing? In-store marketing has its challenges. “There are too many voices pushing messages at the consumer,” said Ms. Adams. “Consumers want information on their own time.”

“Suggestive selling is particularly effective,” said Mr. Moseman. “When a sales associate makes a suggestion to a consumer the offer is accepted more than 30% of the time.”

Trendsetting, How the Kids Are Doing It

In order to connect with young people today, marketers need to establish a seamless relationship between their brand and popular culture. “For kids there’s no distinction between the virtual world and the real world—it’s all one world to them. Marketers need to think about adjusting their marketing plans to account for this change in behavior,” said Elizabeth Harz, Senior Vice President, Global Media Sales, Electronic Arts, who was part of a panel exploring technology and media use by young consumers. The panel was moderated by Andy Hines, Futurist at Social Technologies, and included William Battino, Global Communications Sector Managing Partner at IBM; and Michael Bellavia, President of Animax Entertainment.

Permission-based advertising has been gaining acceptance. “Seventy percent of adults between 18 and 24 years of age would make the trade-off to allow permission-based advertising on their devices provided that they received content that was valuable to their personal needs,” said Mr. Battino.

IBM released a study in March 2009 called Beyond Advertising—Choosing a Strategic Path to the Digital Consumer that looked at this shift in media consumption. One of the key facts from the study showed that between 2007 and 2008, the adoption of social networking tools such as Twitter, YouTube, MySpace, and Facebook had soared to more than 60% from 33%.

“Friending” is another new social concept that marketers need to consider. “Twenty-five percent of people between the age of 12 and 25 had a “virtual” best friend that they have never actually met in person,” said Battino.

“We see youth influencers who are very similar to adult influencers in terms of their social credibility,” said Ms Harz. “They have strong influence within their households.”

There are geographic differences that marketers need to take into account as well. “Eighty percent of youth outside of North America are highly receptive to advertising messages versus 30% in the United States,” according to Ms. Harz.

Story Continues: The Social Media Phenomenon —>