Retailers Build Internal Infrastructure to Optimize In-Store Advertising

Grocery delivery is convenient, but it certainly isn’t cheap. As price concerns and inflation move into the forefront of consumers’ minds, growth in the online grocery space has flattened. The shift has more consumers heading back to physical stores and more brands looking at how they can capitalize on the change to boost in-store sales.

Target, Kroger, Walmart, AT&T, and even the coffee giant Starbucks are all investing in audio out-of-home advertising as a way to direct traffic to existing kiosks inside brick-and-mortar stores. For Starbucks, which is ramping up to allow for mobile ordering at kiosks in more than 1,300 Target stores across the country, the investment in AOOH is especially pronounced.

“Starbucks’ presence in stores has been around for a while, but recently, they’ve started using AOOH ads to direct shoppers to stop by their mini-shops for their favorite drink,” says Paul Brenner, CSO and president of AOOH advertising at Vibenomics, a location-based Audio out-of-home advertising and experience company. “Their ads range from promoting seasonal items to directing users to order ahead with the app. However, these messages play an important role in directing traffic.”

The idea of using AOOH to direct in-store traffic is not new. Long before Covid-19 took hold in 2020, retailers were already using AOOH to help customers navigate stores using audio announcements over in-store speakers. However, with the popularity of in-store kiosks skyrocketing during the pandemic, more retailers are now using AOOH to help customers navigate stores and receive new information through audio. Grocery leaders like Walmart and Target have also launched their own retail media networks, making it easier for brands to manage in-store advertising on the fly.

“After Covid-19 restrictions lifted, customers started returning to their favorite brick-and-mortar stores, forcing brands to re-evaluate how they wanted to invest in their in-store presence,” Brenner says. “On the advertising side, digital advertising became saturated during the pandemic, making the digital ad space highly competitive. As a result of this heightened attention on digital marketing, privacy concerns and corresponding restrictions added new challenges for digital advertisers, forcing them to consider new tactics.” 

As the last line of communication brands have with potential customers before they reach the checkout stand, in-store audio advertising can be incredibly impactful. According to data from Vibenomics, AOOH advertising increases buyers’ propensity to purchase an advertised product by 77%.

As more brands prioritize in-store advertising, the number of pop-up kiosks appearing in chain stores and department stores is on the rise, as well. Creative partnerships between CPG brands and retailers are helping to drive traffic to specific locations within physical stores and also educate consumers about the products they’re about to see. Some stores are even using audio advertising as a way to introduce shoppers to sales staff in specific departments. At Kroger, for example, audio advertising has been used to drive traffic to in-store telecommunication kiosks, where telecommunications providers offer exclusive incentives and benefits to Kroger shoppers.

“Audio out-of-home plays an essential role in directing traffic to these in-store kiosks,” Brenner says. “When customers navigate the store, looking for specific products, the only way they can receive new information is through audio.”

According to Neilsen, 70% of purchase decisions are made in-store. With that in mind, Brenner says brands’ use of resources to display products and manage display inventories indicates that brands today are willing to invest to make impressions with shoppers navigating the aisles.

“It’s hard to say definitively whether pop-up in-store kiosks will be around forever, but I believe that brands’ investment in in-store advertising is here to stay,” Brenner says. “The growth of retail media networks and how they have simplified brands’ ad buying experience is a significant part of the equation. Retailers are building internal infrastructures to optimize in-store advertising – an undeniable indicator that this is just the beginning of a new era of advertising.”