What's Happening?
A recent study published in the Journal of Marketing highlights the effectiveness of instore digital signage in boosting sales for brands and retailers. Conducted by Professor Dennis Herhausen, Professor Dhruv Grewal, and David de Jong, the research involved data from 237 campaigns and over 30 million shopper visits. The study found that instore digital signage yields an advertising elasticity of 0.18, which is 50% higher than benchmark brand advertising elasticities. This translates to an average gross ROI of 21% on digital signage investments. The signage not only increases sales of featured products but also enhances the performance of other branded items. The study also noted that ads perform best during weekends, late afternoons, good weather, and in busy stores, with emotional appeals proving more effective than fact-based messages.
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Why It's Important?
The findings underscore the potential of instore digital signage as a lucrative media channel for retailers, offering a measurable impact on sales. This development is significant for advertisers seeking to optimize their ad spend and for retailers aiming to enhance their Retail Media Network propositions. The ability to link digital point-of-sale campaigns directly to sales performance provides a 'closed-loop' measurement similar to online retail media, which has been challenging to achieve in physical stores. The study suggests that instore digital signage can generate profit through both advertising revenue and incremental purchases, with 87.7% of additional revenue stemming from digital signage exposure alone.
What's Next?
Retailers and advertisers may explore further optimization of ad delivery on instore screens to improve ROI and raise the value of impressions. The study indicates untapped potential in targeting strategies, which could shorten payback periods for retailers. As GDPR-compliant measurement technology becomes more prevalent, brick-and-mortar stores can leverage first-party data without infringing on privacy, enhancing the effectiveness of instore advertising platforms. Advertisers are encouraged to engage with Retail Media Networks to understand specific methodologies for measurement and to push for performance proof.
Beyond the Headlines
The rise of instore digital signage reflects broader trends in the digitization of retail spaces, offering dynamic and interactive media experiences at store shelves, end caps, and checkout aisles. This shift not only transforms advertising strategies but also impacts consumer behavior, as shoppers exposed to ads tend to purchase more items from the same brand and category. The integration of technology in physical retail environments may lead to long-term changes in how brands engage with consumers and how retail spaces are designed.
