Channel-blurring is an old subject, of course. The first time I had experience with it professionally was when I was doing a consulting gig with Circle K in the early eighties – one of the first things I learned was that a third of their volume was gasoline (a third of the remainder was beer, which I thought was an interesting combo). The blurring of the lines between gas stations and c-stores reached the point where 7-Eleven became the number one gas retailer, gas stations converted their service bays into stores, the oil companies opened c-store divisions, and, eventually, two channels merged into one.
Then there’s the blurring between manufacturing and retailing. One of the more prominent features of Chicago’s Magnificent Mile is Niketown; close by is the American Girl store (owned by Mattel); Apple has become a trend-setting retailer; outlet malls long ago ceased to be what their names imply – outlets for seconds, overstocks, and discontinued lines – and became instead a significant channel of company-owned or franchised stores. Meanwhile, retailers turn increasingly to marketing their own brands, and even marketing those brands through other retailers, as Loblaws has done with Presidents Choice and Sears is considering doing with its powerful private labels.
Let’s add in the increasing usage of retail as media and the movement of retail into media. The store’s development as a medium has been a steady process over the past decade or more, recently recognized by being given a name – Shopper Marketing. But I’ve been struck by a couple of developments within the past week or so that indicate that this particular picture is growing blurrier still, both involving – no surprise – Wal-Mart.
The first is that Wal-Mart has begun offering free classified ads through its website. Only time will tell, of course, what if any effect this will have on Craigslist, Cars.com, and Trader. What interrests me is that a retailer is turning itself into an advertising medium in a manner more explicit than selling display space at the end of its aisles. And then, a couple days later, I saw an item saying that Yahoo had signed an agreement with Wal-Mart to sell display and video ads on Wal-Mart.com. When a manufacturer buys such an ad, will it be booked in the national advertising or trade promo budget? That depends, I suppose, on whether they see it as purchasing advertising from a retailer or from a medium.
And then, to complete the confusion, there are a couple developments from Sony. First, we see them selling advertising on Play Station games:
Owners of PlayStation 3 consoles will soon see adverts inside video games after Sony struck a deal with IGA Worldwide, a company that specialises in 'in-game' advertising.
The adverts, which can take the form of anything from a bottle of soft drink a virtual character consumes to a large billboard inside a sports stadium, are updated by the PS3's internet connection.
The three sides of the trade promo triangle – manufacturer, retailer, media – were once three clearly different things. Today manufacturers are retailers and vice versa, and both are media.
Oh well, it wouldn’t be fun if it were simple, right?