StoreBoard Media Creates New Place for Ads

February 3, 2006

Where’s the consumer? Ad agencies, marketing departments, and TV producers are all trying to find the consumer, who has become about as elusive as Waldo. The growth of TiVo, declining newspaper readership, and the allure of the Internet have helped create pandemonium among advertisers.

The head of a new company called StoreBoard Media, Douglas Leeds, thinks he has figured out how to reach the consumer. Mr. Leeds – former longtime head of Thomson-Leeds, a leading in-store ad agency – and his partners have developed a new marketing medium. They’re selling advertising on five-foot billboards mounted on the security pedestals at the entrances to drugstores and grocery stores.

In case you think this sounds insignificant, consider this: Ads run during the Super Bowl this Sunday will reach some 75 million adults older than 18. Vendors are spending $2.5 million for a 30-second spot commercial. With the stores that Mr. Leeds already has under contract, including Rite-Aid, Duane Reade, and Albertsons, StoreBoard ads will be viewed by four times that many people in a four-week period. And the cost of reaching those people is less than $1 million. Impressed?

The StoreBoard signs are more powerful than the in-store marketing devices attached to grocery shelves or mounted onto TV screens. Why? Because everyone has to enter and leave a store through the security devices at the front and is therefore guaranteed to see the ads. Only 9% of shoppers end up cruising every aisle of the stores they visit, so advertisers are playing roulette with conventional in-store approaches. Also, these are large ads; a typical store will have 35 square feet of signage. The billboards are being marketed partly as a cost-effective alternative to outdoor signs; that they reach the consumer as she is heading into the store almost guarantees more impact.

Also, 80% of the activity in any given store takes place near the front. Mr. Leeds has decided that the ads placed on the security pedestals will all promote one product. The message, therefore, is big, dramatic, at eye level, and pretty unavoidable.

Does it work? Trials have shown that products advertised get a boost in sales. Glaxo did a controlled test that indicated that their product’s sales rose 12%; a similar test of Claritin resulted in a 14% lift. This is not the only benefit to the retailer.

Retail drugstores typically suffer shoplifting losses of about 9% of sales. The response has been to install the unsightly and costly security barriers. Through partnering with StoreBoard, the retailer recoups the cost of the device, while also boosting sales.

Why don’t the stores sell the ad space on their own? Most store managements have already pushed vendors pretty hard to lower costs, and don’t want to spend incremental goodwill trying to drum up ad dollars. Wal-Mart is an exception: They handle sales of in-store ads internally. Most chains, however, don’t want to be bothered and are happy to let StoreBoard manage the business. Mr. Leeds is extremely well-known in the in-store and point-of-sale merchandising fields, and is therefore well equipped to woo retailers. He has served as vice chairman of the Board of the Point of Purchase Advertising Institute and has been chairman of its annual conference and show. He was inducted into the organization’s Hall of Fame in 2002, the youngest member ever.

Mr. Leeds started in the industry by joining his family’s firm after college, just as it was sold to Ogilvy & Mather. He became president, and then some years later sold the company to British ad giant WPP. It was a tough time in the business; revenues were down and cutting costs was the order of the day.

Restless as part of a large organization, Mr. Leeds negotiated successfully to buy the company back from WPP. Under his unfettered management, Thomson-Leeds recorded a doubling of revenues in its first year. The company merged with Array Marketing Group in 2000; Mr. Leeds continued to manage Thomson-Leeds until 2004, when he left to start up his own venture. Last December, Mr. Leeds merged his new company with a group called Impact Media, which had established a pedestal-ad business and brought in the national chains mentioned earlier.

This is not the first time the entrepreneurial spirit has taken hold. While an undergraduate at Babson College, Mr. Leeds started and sold a total of five companies, almost all of which are still operating today. One outfit manufactured weights that fit on hockey sticks, which were used to strengthen young hockey players’ wrists, much like those used by baseball players. He also started an advertising journal that consolidated campus bulletin boards around Boston; that firm was sold to a publication called Boston After Dark. Another company sold stickers for $1 each that advertised “Leeds Protection Services,” which could be stuck on windows to deter thieves. The fact that there actually was no Leeds Protection Services was a well-kept secret.

This sort of creativity is now being applied to StoreBoard Media. Mr. Leeds points out that the displays are easy to assemble and will definitely be used. He claims that one of the shortcomings of more conventional approaches is that store owners frequently don’t bother to put displays up.

Also, on a cost-effectiveness basis, StoreBoard can’t be beat. The company delivers “impressions” at less than $2 per thousand, which compares favorably with outdoor billboards ($4.23), radio ($8.33), or TV ($21.55 – and we’re not even talking Super Bowl). At present the company is creating 327 million impressions per month, through 4,800 stores. The goal is to be placed in 12,000 stores by year-end, delivering more than 500 million impressions. That, according to Mr. Leeds, is the magic number. Why? That’s the number of people who visit Wal-Mart every month. And that, dear reader, is huge.