When Anita visited the supermarket, she just wanted to buy a packet of “atta”. She ended up spending four times what she actually meant to. Reason – an impromptu purchase of a hair conditioner thanks to that intriguing advertisement that was flashing on the television screen inside the store! “That was an impulsive buy, but I have been planning to try out that brand and that ad reminded me of it,” she says to her friend. This is precisely the behaviour many marketers try to capitalise on through this concept called “in-store” advertisement. This form of advertisement influences a consumer’s decision at the point of purchase – be it purchase of a new brand or changing the existing one.
Marketing strategies have proved that a message delivered at point-of-purchase has the best chance to influence the consumer,” says P.R.Satheesh, President and Chief Operating Officer at Tagmedia Network.
And here’s where Bangalore-based Tagmedia Network (Tagmedia) makes its presence felt. Tagmedia specialises in the business of in-store television advertising, which solicits consumer reaction at the point of purchase. A 100 per cent subsidiary of the US counterpart with the same name, Tagmedia is the first of its kind in India to introduce the concept of in-store advertising.
According to analysts tracking the advertising sector, 78 per cent of brand choice and 40 per cent of brand changes happen at the point of purchase. And many retailers have realised the importance of in-store advertisements. “Marketing strategies have proved that a message delivered at point-of-purchase has the best chance to influence the consumer into buying a product off the shelf, benefiting the whole spectrum of the cycle—the advertiser, the retailer and the consumer,” asserts P.R.Satheesh, President and Chief Operating Officer at Tagmedia Network. This led advertising professionals Bunty Peerbuoy and Dan Ginsburgto float the company in India.
Business model
Tagmedia customises advertisement content for FMCG companies and hypermarkets and installs television screens in supermarket to channelise this content. “Tagmedia specialises in conceiving an engaging and to-the-point mix of programming that influences customers into effecting a purchase. Studies in India have shown that 73 per cent of consumers are receptive to advertising messages in-store,” adds Satheesh. “Most often advertisers are unable to connect with the target audience, but our content redirects focus of FMCG products directly to the customers at the point of purchase,” he adds. Short and to-the-point content along with periodic monitoring of customer behaviour does the trick for the company.
Right from the time when the company rolled out in the first quarter of 2007, Tagmedia found partners in some of India’s noteworthy supermarket chains like RPG’s Spencer’s Daily, Aditya Birla Group’s Trinethra retail and Tru Mart of Piramal group. “Though we had allegiance from some prominent retail partners, our primary challenge was to design a viable business vertical,” explains Satheesh. As there were enough players in office complexes and mall space, we stayed focused on grocery supermarket and hypermarket business models, which turned out to be a commercial equation,” he adds. With a presence in over 530 supermarkets in 31 cities across the country, Tagmedia has struck the right cord. Another challenge at the operational level was to get the retail chains to utilise the medium optimally and ensure relevant content. They convinced store managers of the utility value of such advertising to increase revenues. As an incentive to store owners, most retail chains now have devised a revenue model that apportions a part of the advertising revenue to the shop itself.
With the business model itself being capital-intensive, Tagmedia sought funding from external sources after briefly being funded by the promoters. In early 2008, Tagmedia took advantage of being a niche business segment and attracted the attention of private equity funds. Intel Capital advisors invested in the company only to see the prospects of the company show robust returns. In July 2009, Tagmedia also entered into a marketing partnership with Kishore Biyani’s Future Group. “The alliance is a win-win situation for us as our combined strength is 46 million footfalls per month. Advertisers can look for better ROI and better reach,” prides Satheesh. Tagmedia is responsible for the combined marketing and will use its expertise in the field in content management and quality control.
An effective complement
Although commercials and press advertising will continue to dominate in the future, in-store advertising in grocery stores can be an effective complement to other traditional forms. As the distance between a brand’s marketing outlay and consumer spending is the least, this medium will remain dominant with companies that look for last minute conversion of consumers. Tagmedia network aims to evolve its business strategies with newer innovations in digital marketing. “With the retail sector continuing to show a positive sentiment, we have plans to add to our network 300 more stores in the next two years. Our growth is linked to the expansion plans of our channel partners,” says Satheesh. With the advertising industry itself projected to be a Rs. 20,000 crore industry, Tagmedia has in store a strong market to tap.
