Video cross-promotions have found a home in supermarkets. After years of trial and error -- and years of retailer skepticism -- the cross-promotion of video titles with other supermarket products has gained a high level of acceptance, and is growing strongly in effectiveness and sophistication. This was confirmed by a national survey of supermarket video executives conducted by SN and Brand Marketing, a monthly supplement to SN.
Detailed findings of the survey will be presented later this month during a two-day supermarket video conference titled "Cross-Promoting Video Titles in Supermarkets," sponsored by SN and Brand Marketing in conjunction Aim Promotions, Astoria, N.Y. This is the first video conference specifically for the supermarket trade channel. It will take place in Los Angeles at the Universal City Hilton and Towers July 20 and 21.
The survey found that 78.9% of the respondents will cross-merchandise videos with other related products three or more times this year. The retailers did this an average of five times in 1994.
A similar number, 77.8%, said they are doing more video cross-promotions this year than last, according to the survey. The report was based on returns from 38 retailers representing 2,226 stores.
"We are focusing on cross-promotions more than we did a year ago," said Clifford Feiock, video coordinator at Nash Finch Co., Minneapolis.
"Cross-promotion is more important than a year ago. We do it whenever we can," said Gary Schloss, vice president of general merchandise at Carr Gottstein Foods, Anchorage. "We are working more closely with the grocery people to take greater advantage of cross-promotion opportunities where it makes sense," he said.
"We're taking greater advantage of cross-promotions as these opportunities are presented," said Jim Key, nonfood direct-store buyer at Community Cash Stores, Spartanburg, S.C. "It's becoming more important to video, and manufacturers are doing it more often," he said.
Driven by high-profile tie-in deals, like "The Lion King" with Pillsbury and "Jurassic Park" with Jell-O, retailers are parlaying the glitz and glamour of Hollywood into incremental sales of the packaged goods products. Although the studios have made great strides in crafting effective cross-promotional programs, there is still lots of room for improvement, said the retailers contacted by SN.
"Depending on the tie-in partner, and depending on the communications between the studio, the tie-in partner and the retailer, cross-promotions can be very successful, not only for video sales, but also for the tie-in product's sales," said Kirk Mueldener, director of video operations at Hy-Vee Food Stores, West Des Moines, Iowa.
When asked their opinion about the cross-promotions on the survey, the majority of respondents said they are moderately beneficial to their companies. Twenty-seven percent said they are highly beneficial, while 2.7% said they are not beneficial. "Our company is starting to realize the importance of what video brings to the supermarket and that it is another way to build business. People are eating out more and more often, and grocery sales are harder to come by. It is another area that we really have to take advantage of," said Feiock of Nash Finch.
"The future of cross-merchandising is bright," said Schloss of Carr Gottstein. "It's a win-win situation for everybody and it makes a lot of sense. Anytime you increase the visibility of a product with a floor display that ties in with groceries, the foot traffic will automatically increase sales."
Raley's Supermarkets, Sacramento, Calif., has always cross-promoted videos with other products and is not necessarily increasing these efforts, said Dan Black, buyer. But the growing number of national tie-ins has made promoting video easier, he said. "When you have a Pillsbury, or another major food manufacturer, tying in with the studios and offering rebates, that makes it convenient. It's something we don't have to go out and do ourselves," he said.
Noting that Kodak is joining the video party with a rebate linked to Disney's "Cinderella" this fall, Black said cross-promotions will continue to increase in importance. "As they get further along and more contacts are made, you will see more and more of it," he said.
Video cross-promotions are not limited to sell-through, noted Dave Mathis, buyer-coordinator at Super Food Services, Miamisburg, Ohio. Super Food is a grocery wholesaler that also operates a video racking operation to support the video departments of its retailer customers. "We are trying to encourage cross-promotions," Mathis said.
"People go into the grocery store for more than just the return of the video rental. We figure that while they are in there, we might as well cross-promote other items that are in the stores," he said. For example, a retailer might give away a 2-liter soft drink bottle with a rental, he said.
In the survey, retailers were asked to identify what elements contribute the most to the success of video cross-promotions. The attractiveness of the rebate offer was No. 1, cited by 29.7% of the respondents, followed by cooperation from other departments, cited by 27%; size of the marketing campaign, 24.3%; information about the promotion, 21.6%; availability of floor space, 16.2%, and management support, 13.5%. (Multiple responses were allowed.)
However, when asked what contributes to the failure of video cross-promotions, retailers rated lack of information about the promotion first, cited by 29.7%, and unattractiveness of the rebate offer second, cited by 24.3%. Other factors trailed considerably: lack of floor space was cited by 16.2%; lack of cooperation from other departments, 13.5%; size of the marketing campaign, 13.5%, and lack of management support, 13.5%.
The effectiveness of communications through the sales organizations of the partner companies is one of the biggest challenges facing video cross-promotions, said the retailers contacted by SN. Often, field sales representatives don't know enough about the deals for the buyers to make purchasing and advertising decisions in time for deadlines. However, several retailers pointed out that this has been much less of a problem with recent Disney cross-promotions.
"We are trying to do more video cross-promotions, but it is sometimes very difficult to work with our category managers in a timely fashion," said a video executive with a large Midwestern chain. "It is often the case where the vendor reps don't work far enough out on the tie-in promotions for them to be effective."
Armed with lots of information from Disney and General Mills, and with plenty of lead time, Nash Finch was able to pull together advertising for the summer promotions that links a $10 rebate to the purchase of Disney "Masterpiece Collection" movies and three boxes of cereal, Feiock said. "That gave us the ammunition to bring in some extra videos. I really think the advertising is going to help build that program so that, hopefully, we will sell a lot more General Mills cereals and a lot more videos, too," he said.
The size of the rebate was another factor in the company's decision to heavily support the promotion, he said. "Disney is going to continue that on 'Cinderella,' with a $5 General Mills rebate and a $5 Kodak rebate, which is absolutely perfect for the supermarket industry," said Feiock.
Since the summer promotion involved no new releases, that gave Nash Finch more flexibility. "It is not so street-date-sensitive. We may be running it at different times in our different ad groups," said Feiock.
The Disney sales staff took the initiative in setting up meetings with Hy-Vee and General Mills, said Mueldener. "They coordinated it all," he said.
On an upcoming title from another studio, the sales staff of the tie-in partner -- a company that was very aggressive on past Disney promotions -- has been strangely silent so far, said Feiock. "I'm not sure what the differences are, but we have not heard from anyone," he said.
Other retailers cited the size and requirements of the rebate offer as crucial to the program's success. "The value-added savings of a rebate or coupon promoted for a grocery product or another video is what makes the whole cross-merchandising concept work," said Key of Community Cash.
"I'd like to see more of these cross-promotions that offer an added value to the consumer when they buy a video," he said. "A sure kiss of death is if the consumer has to purchase a large number of cross-promoted items," said Jan Winn, director of health and beauty care and general merchandise at Big Y Foods, Springfield, Mass. "The rebate request has to be reasonable and logical."
The success of the cross-promotions depends more on the hit video title than on the tie-in offer, many retailers said.
"The Lion King" would have sold just as many copies for Big Y without a tie-in promotion, Winn said. "But titles like 'Dumbo' and 'Mary Poppins,' which are in the summer Disney promotion, will pull some business but need some kind of a rebate to make them more successful," she added.
Reflecting the problems in getting information on cross-promotions in a timely manner, less than two-thirds of the survey respondents, or 60.5%, said they advertise the tie-in products with the videos.
"We promote the video and the tie-in item together in the general merchandise part of our ad," said Schloss of Carr Gottstein. The survey asked the retailers to pick the most successful video cross-promotions from 1994 to 1995, and to no surprise, "The Lion King" with Pillsbury and Mattel came out on top, selected by 78.4% of the respondents. (Multiple responses were allowed.) "Snow White" and Pillsbury was second, picked by 32.4%; "Jurassic Park" and Jell-O, 29.7%; "Forrest Gump" and in-house tie-ins, 24.3%; "Return of Jafar" and Pillsbury, 16.2%; "The Secret Garden" and St. Ives, 8.1%; "The Mask" and Pop Secret, 8.1%, and "Little Giants" and Energizer, 5.4%.
More retailers are getting involved with tie-in promotions that they either create themselves -- as was the case with many on "Forrest Gump," which had no national cross-promotional partners -- or are offered with some degree of exclusivity.
In the survey, 34.2% said they ran these kinds of special promotions in the last year. As to their effectiveness, 17.9% said they worked better than a major national cross-promotion, while 21.4% said they were worse, and 60.7% said they were the same.
Hy-Vee has done many of these, Mueldener said. On "Forrest Gump," for example, "we put together a promotion in which every store had a park bench to give away. We ended up giving away over 190 park benches," he said.
The retailer also offered a $1 discount on a floral bouquet with the purchase of "Mrs. Doubtfire," and held a contest for a specialty meat package in conjunction with the release of "Another Stakeout," he said.
"I feel good about these kinds of promotions because they get the stores excited," Mueldener said. "It gets the managers and store personnel involved and it brings awareness to the title. Otherwise, the video would get lost and you would get nowhere near the sales numbers that you want."
Tie and Tie Again
Retailers cross-promoted an average of five videos with related products last year. Will your company cross-merchandise videos and other products three or more times this year? YES 78.9% NO 21.1%
A Growing Trend
The number of video cross-promotions, and supermarkets' confidence in their effectiveness, is increasing rapidly. Will you cross-promote videos more in 1995 than 1994? YES 77.8% NO 22.2%
When hit sell-through titles are released, the majority of retailers mention tie-in products in their video advertising. Do you consistently advertise cross-promoted products with video? YES 60.5% NO 39.5%
The Top Tie-Ins
Retailers ranked the tie-ins of hit videos and found "The Lion King" to be No. 1. Which video cross-promotions were most successful for you?
1. "The Lion King" with Pillsbury and Mattel
2. "Snow White" with Pillsbury
3. "Jurassic Park" with Jell-O
4. "Forrest Gump" with in-house tie-ins
5. "Return of Jafar" with Pillsbury
6. "The Secret Garden" with St. Ives
7. "The Mask" with Pop Secret
8. "Little Giants" with Energizer
The size of the rebate and other departments' cooperation are the main factors in the success of video tie-ins. What contributes to the success of video cross-promotions? ATTRACTIVENESS OF REBATE OFFER 29.7%
COOPERATION FROM OTHER DEPARTMENTS 27.0%
SIZE OF THE MARKETING CAMPAIGN 24.3%
INFORMATION ABOUT THE PROMOTION 21.6%
AVAILABILITY OF FLOOR SPACE 16.2%
MANAGEMENT SUPPORT 13.5%
What Doesn't The biggest reason video tie-ins go bad is the lack of information about the promotion. What contributes to the failure of video cross-promotions? Note: Multiple responses were allowed to these questions.
LACK OF INFORMATION ABOUT PROMOTION 29.7%
UNATTRACTIVENESS OF REBATE OFFER 24.3%
LACK OF FLOOR SPACE 16.2%
LACK OF COOPERATION FROM OTHER DEPARTMENTS 13.5%
SIZE OF THE MARKETING CAMPAIGN 13.5%
LACK OF MANAGEMENT SUPPORT 5.4%
About one-third of chains have run retailer-specific video cross-promotions. Most found they work as well as big national campaigns. Have you run store-specific or locally exclusive cross-promotions?