Building Your Brand at Wal-Mart

I read two articles last week that come together to make an important point about how brands are built and maintained.

The first was this article, by the chief research officer of the Advertising Research Federation, which argues that suppliers are destroying their brands by diverting funding from national advertising to trade promotion.

He bemoans the shift of national advertising funds to trade promotion over recent years, arguing that the move diminishes brand image by emphasizing pricing. He also notes that the shift is in part due to the measurability of the effectiveness of trade promo spending through scanner data, and argues for the development of better measures of brand value and the effect of advertising in maintaining and growing that value. An excellent article.

The other was this article in Advertising Age, which notes that Wal-Mart is partnering with some of its suppliers to produce innovative ads that don't have the traditional retailer-centric look.

The Advertising Age article makes several interesting points, among them, an estimate that Wal-Mart collected about $100 million in vendor funding for this initiative last quarter, enough to merit attention on the quarterly analysts' call:

In an earnings call Nov. 12, Wal-Mart U.S. CEO Eduardo Castro Wright said vendor funding accounted for about two-thirds of the retailer's increase in ad spending for the fiscal third quarter and a substantial portion of the around $480 million increase in his unit's gross margin…

But of greater interest is the nature of the ads themselves. In this ad for Unilever's Dove products, the Wal-Mart logo is shown only briefly in the background as a shopper crosses the parking lot, and in the close, with Dove's logo. There is no mention of price. Of particular interest is that the ad was jointly produced by Wal-Mart's agency (Martin) and Unilever's (Ogilvy & Mather).

The connection between these two articles, I think, is that while the point of the first is valid (it is essential that manufacturers invest in their brands), it makes the assumption that brands can be built only through traditional national advertising. The Wal-Mart article brings up one way in which that assumption may be false; national ads need not be traditional, an ad that promotes both the retailer and the supplier's product might also support the brand's image.

Additionally, it's important to consider shopper marketing and other in-store promotion; with the decline and fragmentation of traditional media, the best medium for promoting your products may in many cases be the store. Too often, we think of in-store promotion as an endcap with a big "SAVE!!!" sign on it. But there's no reason innovative marketers need to be any more limited in the store than they are in print or broadcast.