The Biggest TV Network You've Never Heard Of

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A third channel plays on music-section kiosks, which advertise product while letting shoppers sample CDs. Here, after you swipe a CD across a scanner, the screen plays a short ad for, say, Bounty paper towels, then a clip of the song you want above a Bounty banner ad, and then if you wish, a complete video. This gets the shopper to pick up the CD (a big step in any sale), plays the desired song to anyone within earshot, and advertises another product. According to Mark Mitchell, Wal-Mart generates more than one million song scans each day.

The programming loops, downloaded each week via a satellite hookup, vary in length depending on where they play. So as not to be overly repetitive (or drive store clerks insane), they're usually double the length of time a typical customer spends in an area; in a Wal-Mart, where shoppers usually spend 50 to 55 minutes per visit, the main product loop is two hours long. A 30-second ad that runs five times an hour on the PRN grocery checkout line network in just the Los Angeles market goes for $27,000 (for four weeks), while a storewide ad package on the national Wal-Mart TV network -- which includes more than a minute of commercial time each hour -- runs $245,000 for 28 days.

PRN had Nielsen Media Research assess the network using the standards other networks live by -- reach, brand recall, viewer attitude, and viewing duration. The study, combined with store data, found that in 2004 Wal-Mart TV had 180 million monthly viewers who watched for about seven minutes each visit (up 44% from 2002) and had a brand recall of advertised products of 65% (about three times the number for broadcast TV).

Using these numbers to set rates, Nooney says PRN charges a CPM -- the cost per 1,000 viewers -- that runs from the mid single digits to low double digits, depending on audience demographic. PRN then splits the ad revenue with the retailer. InfoTrends analyst McLeod estimates the retailer's cut to be between 15% and 45%; Nooney will only say that it could be "slightly bigger or smaller" than that.

There is some irony in the fact that a network that is cutting edge in many ways demands to be judged by the traditional -- and, some say, empty -- Nielsen measures of awareness and reach. And it is here that PRN finds itself at the center of an industry argument. The issue is simple: Considering that these networks are located inside stores, why aren't commercial prices set according to how well they boost sales? As retail consultant George Whalin caustically notes: "Sales lift is the only thing that counts. The rest is irrelevant."

Some PRN competitors agree. In December 2004, CompUSA announced that in a test of the CompUSA TV Network, sales of seven advertised brands grew 29% more in stores where ads were shown than in stores where they were not. PRN's largest competitor, RMS Networks, is paid based on the added sales its networks create -- CEO Jason Kates says clients attributed more than $200 million in added sales to RMS in 2004. Other competitors don't even believe in selling third-party ads: EDR Media and Creative Realities, for example, design custom in-store content paid for by the stores, not the brands. "When retailers are looking for another revenue stream -- advertising and maybe some sales lift -- that's what PRN markets," says EDR CEO Peter Vrettas. "We work with retailers who are more interested in using in-store media to build customer relationships."

"If you advertise a blender in a store, why would you be satisfied with awareness? You want people to buy the blender."

PRN is having none of these models. Mitchell says PRN "would never even entertain" a pay-for-performance model. Suppliers might make bad commercials, for one thing, or their products could just stink; all PRN can promise is an audience. Still, while there is evidence that retail ad networks do juice sales -- a study by Instrumental Media Group, a U.K. media strategy company, found that such networks increase overall sales by 1.5% -- there's little doubt advertisers would rather pay just for the sales they get. Andy Jung, senior director of advertising and media services at Kellogg, which has launched new products like Cheez-It Twisterz on Wal-Mart TV, puts it diplomatically: "Pay-per-performance is a big issue beyond Wal-Mart TV. It's an issue that the industry is struggling with." In the end, advertisers may get the upper hand, says Bill Collins, executive editor of the industry journal AKA.TV. "I just can't believe over the long term brands aren't going to want to see sales uplift," he says. "If you advertise a blender in a store, why would you be satisfied with awareness? You want people to buy the blender."

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