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What's With Wal-Mart TV?

9/23/2005 8:00 PM Eastern

Last week, I was a little taken aback when I read a front-page article in The Wall Street Journal about Wal-Mart bringing advertisers to the company's headquarters in Bentonville, Ark., for, of all things, an upfront TV-buying meeting — just like the broadcast and cable networks do.

I hope you are, too. This could be big. Or it's a fluke.

The idea is all about Wal-Mart, a global company with reach, creating another advertising vehicle to divert ad dollars from traditional media to the promotional TV monitors set up in its stores. For Wal-Mart, it's all about getting advertisers closer to their customers (a “touch point,” as they say), about blasting their customers while they are in the aisles. How loving.

I wasn't the only one who noticed the WSJ article. I spoke with Harvard Business School's Tom Eisenmann, who, just by coincidence, happened to have a lunch with his colleagues where the import of this piece was discussed at length. It's on their radar screen and mine.

We talked about the economics of television, and Eisenmann looked at the Wal-Mart news as “one more insult on top of another” in terms of what's wrong with that existing, eroding model.

So take heed. Interestingly, Eisenmann was less concerned about what Wal-Mart was doing than what the cable networks were not doing. In his view, the threat to cable comes from its not paying enough attention to the Internet — specifically, embedded rich-media opportunities, like broadband programming, which could capture some of those dollars lost to Wal-Mart. Think about that.

Procter & Gamble, for example, told networks it was slicing 20% out of its TV-ad spending this year. But P&G didn't decrease its overall spending. The company just moved it over to other, perhaps more-promising opportunities.

So let's do a little reality check here. I also talked with Cabletelevision Advertising Bureau president Sean Cunningham about the latest Wal-Mart developments. For better or worse, he was pretty serene abut this whole new ball of wax. And perhaps he's the realist here, having been a denizen of Madison Avenue for years, toiling at an ad agency before he accepted his current gig at the CAB. For years, he said, ad dollars have been diverted to promotional budgets, and that's the case with Wal-Mart.

OK, I said — but Wal-Mart's tentacles are global. And then Cunningham hit me with a statistic. In his overview of cable's last upfront market, he points out, 96% of TV buys were placed in pods with traditional 30-second spots.

So, I guess we can talk until we're blue in the face about new technologies like TiVo's digital video recorder — or Wal-Mart's in-store video marketing. But as Cunningham so aptly says, it's not a revolution, but an evolution: Consumer behavior is catching up with technology. TiVo, after all, was supposed to skyrocket, with everyone zapping past commercials.

The fact is that TiVo underperformed. And so might Wal-Mart TV.

 

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