How Ad-Tech Is Invading Physical Retail Spaces

Digital advertising inventory is expanding

Walgreens' coolers will feature digital doors that display images of the contents within, like drinks or frozen foods, and also offer targeted advertising opportunities.
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Just as brands have long been able to target consumers online with cookies, retailers are now experimenting with their own form of tracking technology—mostly smart shelves and cameras—that allow them to determine consumer characteristics and deliver more personalized messaging as they shop.

These in-store placements enable retailers to sell real estate to brands that want to speak to shoppers as they walk down aisles. But, while the data is anonymized, it also means shopping is becoming more Big Brother than ever before. And, like online advertising, brands and retailers must offer relevance, but not so much as to make consumers feel they are living out George Orwell’s Nineteen Eighty-Four.

Jeremy Hull, vp of innovation at iProspect, said to think of it more like an evolution of digital out-of-home.

“This is much more individually focused and coming much closer to real-time traditional digital advertising,” he said.

Grocery chain Kroger is one retailer experimenting with the technology. In January, it revealed a connected store concept that will use Microsoft technology to store and process data generated in stores and on Kroger’s app.

Brands like Kraft Heinz are among the advertisers who have used Kroger’s existing smart-shelf technology. In two new pilot stores, however, Kroger is selling on-shelf ad space to brands that will be able to target customers using demographics gleaned from video analytics.

Smart shelves will enable retailers and brands to speak to consumers as they shop.
Kroger, Microsoft

“We use basic, anonymized demographic data, focused on age and gender,” a Kroger rep said. “There isn’t an expectation of privacy in a store, so we are not legally required to post about the shelving cameras.”

AWM Smart Shelf has a similar concept. It uses a combination of smart shelves, end caps and tiny cameras to capture similar information. To date, AWM has worked with retailers like Albertsons, Stop & Shop and Walmart and brands like Frito-Lay, General Mills and Pepsi.

“If they grab a product off shelf X and put it back on the shelf and frown, that type of intelligence lives in our system,” said Kevin Howard, CEO of AWM. “Brands are using the system to, one, generate uplift of sales and, two, to understand better what people want on their shelves.”

This enables a brand like, say, Hershey’s to promote s’mores recipes for the Fourth of July.

“The messages will be specifically tied to the actual customer and who it is,” Howard added. “When you know for certain, what that allows you to do is streamline the supply chain because you’re not selling products on a hope and a prayer, but specifically [to that person].”

In addition, Howard said the company has built an ad exchange, which it will “turn on” later this year. This will allow agencies and brands to buy inventory on available shelves to promote products to target customers in specific stores in specific regions, as well as to target based on factors like weather. (Kroger and Microsoft also plan to market their in-store ad offering to retailers.)

Meanwhile, customers in Chicago, New York and San Francisco may have noticed coolers at Walgreens have gotten a makeover. That’s thanks to a company aptly named Cooler Screens, which produces digital doors that display images of the contents within, like drinks or frozen foods, and also offer targeted advertising opportunities. Options include what are essentially banner ads, as well as full-screen placements and icons like a flame to denote a hot product or lettering to highlight a new product.

In addition to demographics and behavior, CEO Arsen Avakian said Cooler Screens can detect empathetic and shopping data to provide estimates on gender, age, mood, facial features, attention and dwell time. It, too, anonymizes data to “optimize promotions.”

Evan Mack, research associate at Gartner’s business intelligence firm L2, said there’s a clear opportunity for retailers to expand ad impressions with offerings like these simply by expanding the available inventory.

“Where [retailers] may be limited in offering display ads for CPG brands on their websites … suddenly for a customer that is not inclined to shop digitally, but instead wants to take advantage of shopping list functionality, then all of a sudden that interface becomes a much more lucrative place,” Mack said.

He said this could also set the stage for dynamic pricing at grocery stores.

“Amazon is already an expert … the majority of retailers are not,” Mack said. “The first step will be inventory-based dynamic pricing, but obviously the data set will grow [and it could be] lucrative to start targeting different prices to different customers.”

This story first appeared in the Feb. 25, 2019, issue of Adweek magazine. Click here to subscribe.

@lisalacy Lisa Lacy is a senior writer at Adweek, where she focuses on retail and the growing reach of Amazon.
Publish date: February 25, 2019 © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT