Home » Big Publishing, Bookstores, PG's Thoughts (such as they are) » Sears Stopped Buying National TV Ads in Critical Holiday Season

Sears Stopped Buying National TV Ads in Critical Holiday Season

1 January 2018

From The Wall Street Journal:

The struggling parent of the Sears and Kmart stores hasn’t run paid national television commercials since late November, according to ad research firm iSpot and a person familiar with the situation. The Kmart brand has been absent from national TV networks since Nov. 24, , iSpot said, while Sears hasn’t run a paid national TV spot since Nov. 25—the Friday and Saturday after Thanksgiving.

That compares with about $8.4 million the Sears brand spent on national TV ads in December last year, while the Kmart brand shelled out roughly $6.5 million during the same period, according to iSpot estimates.

Sears Holdings Chief Executive Edward Lampert has championed the use of digital marketing over traditional TV and print advertising, arguing that digital is more cost-effective and quantifiable.

. . . .

For a retailer to back off of TV ads during the holidays is a highly unusual move, ad experts said. “Retailers establish their value and relevance with consumers during key shopping times,” said Dean Crutchfield, a corporate branding expert.

Indeed, retail rivals such as Macy’s Inc. and J.C. Penney Co. spent tens of millions of dollars during the final month of 2017.

. . . .

Sears spent $285.1 million on paid advertising in 2016, down from $664.2 million in 2011.

. . . .

In meetings over the past year or two with [Sears CEO Edward] Lampert, Sears executives produced data showing that the deep cuts to TV and newspaper advertising had hurt sales, particularly since the majority of Sears’s revenue still comes from brick-and-mortar stores where commercials and circulars are particularly effective at driving foot traffic. According to retail research firm eMarketer, 11% of Sears sales come from e-commerce.

But the executives were overruled

Link to the rest at The Wall Street Journal

PG suspects Sears may be having cash flow problems as foot traffic in its physical stores continues to plummet under Sears’ “managing the decline” strategy.

Fewer and fewer people are going to physical stores to buy all sorts of different items, preferring an online experience and pricing.

But the public position of legacy publishers is that bookstores are different than all other retailers and people will always want to travel to physical bookstores to buy books.

PG wonders when Amazon will schedule meetings with major publishers to revisit agency pricing so Amazon can once again discount books from those publishers to price levels that will increase sales.

Or perhaps Amazon has a long memory and will simply allow publishers to continue to overprice their books and die by inches.

Between indie authors and Amazon’s own publishing imprints, Amazon has positioned itself to continue to increase its book sales regardless of whether New York publishers walk off a cliff or not. Amazon will still have a larger collection of books for sale than any other commercial entity.

Ironically, PG suspects the decline of Big Publishing because of poor pricing decisions will more effectively kill off traditional bookstores than anything Amazon is doing.

If Randy Penguin cuts the number of its titles in half to save money or if the gnomes at Bertelsmann decide the US book market is a long-term financial loser and shuts down US trade book operations, bookstores lose a lot of bestselling titles and authors that are one of the few attractions that may still bring people into the stores.

Big Publishing, Bookstores, PG's Thoughts (such as they are)

12 Comments to “Sears Stopped Buying National TV Ads in Critical Holiday Season”

  1. I was in a B&N, yesterday. First time in…don’t know when. Walked through on our way to women’s apparel further on down the mall.

    Dan

    P.S. Can’t remember the last time I was in that mall, either.

  2. The only time I go to a mall is when relatives are visiting. It’s a cool place to walk out of the Texas heat. And mom’s a shopaholic who can’t imagine we might want to go to *anyplace* other than a store.

    I only go to our used bookstore because 1) a friend runs it, and 2) I share books with Mom and she won’t consider using an ereader. When I lose her, I’ll get a Kindle.

  3. Just as fewer people are going to the mall/bookstore, fewer people watch commercial laden TV. They either record to play later and skip ads or they watch ad free shows. So why should Sears and others waste money on something no one is seeing?

    As to PG’s comments on Amazon and the qig5, I myself am waiting for Amazon to decide to turn up the heat on them.

    If the qig5 insist on continuing their agency games with ebooks, then Amazon can treat the pbooks as if they were under agency as well (and we saw them whine when Amazon reduced the discount back in ’16.)

    The other ‘game’ Amazon could play is the same one WalMart uses – you will sell it to us at this price-point so we can sell it cheaper – or we won’t sell it here. Like every other company, Amazon has the right ‘not’ to sell what it doesn’t want to – just as the qig5 only publish what they want to …

    Either way I can hear the squealing from here. 😉

    • They either record to play later and skip ads or they watch ad free shows.

      I’ve noticed more and more shows make all episodes available free with my cable subscription. Commercial time is reduced, but I can’t fast forward through them. Can’t go forward at all, but can go backwards.

      • Had an interesting discussion with my 14- and 15-year-old about advertising. In their world (YouTube, Spotify, etc.) you either pay for a subscription OR have to be exposed to ads, but not both. To them it’s quite baffling that networks would both charge viewers to receive programming and still show advertising. As soon as they put it that way I thought, “Hmm … yeah, that does seem wrong.” (And even “double-charging” in that way, the networks still don’t produce any shows I watch)

  4. I went to the mall last week for the first time in two years last week. I only go to Dillards (for certain things that really need to be fitted and tried on) and this time to go to James Avery jewelers. It was deserted, relatively speaking. I go to bookstores far more often. I’ve not visited Sears in at least a decade, since I last needed tools.

  5. Walmart has been packed the last two times I’ve been there (most recently yesterday). Carts with piles of items and long lines at the cash registers. Even the self-scan stations had long waiting lines. Maybe that’s where Sears’s customer have gone. Local Kmart is closing.

    • When the Walmart parking lot was full last week, and cars were overflowing onto every space within a city block, I surrendered and drove back home.

      • Yep, that would send me back home, too. I live in a suburb that doesn’t have traffic problems. On Christmas Eve (actually at noon that day), I met my daughter for lunch and the restaurant was packed to the gills with a waiting line. Usually you just walk in and are seated. Driving there was slow and tedious because it seemed that everyone who owned a car was on the roads. Bumper to bumper, creeping along, waits through multiple light changes. I’ve never seen anything like it before in my area. People must be feeling wealthy.

  6. PG wonders when Amazon will schedule meetings with major publishers to revisit agency pricing so Amazon can once again discount books from those publishers to price levels that will increase sales.

    If they did schedule those meetings, my first question would be whether Amazon thinks it will make more total book money by lowering eBook prices. And, if so, to what level? As a follow-up, if they won’t make more book money, will they make more in total company profits?

    What average eBook retail price plus average paper book price makes the most money for Amazon?

    Amazon’s profit depends on cross price elasticity. If they make $100 more on eBooks, did they lose more or less than $100 on paper?

    It’s unlikely the current price levels deliver the max profit to Amazon, and when Amazon advocated for $9.99 for eBooks a few years back, they said nothing about the effect on paper.

    Before such changes, one rarely knows exactly what will happen. There are always surprises. But before embarking on such changes, firms like Amazon take a hard look at what they think will happen. I only wish Jeff still called…

    • Another string in Amazon’s bow is appearing to be the one-stop-shop, so anything that will bring you in can keep you buying more there, so they don’t want to be seen offering things at prices that cause buyers to say ‘no’ or go elsewhere/give up.

  7. > hasn’t run paid national television
    > commercials since late November,

    I’d be interested in seeing their December 2017 sales compared to previous years.

    I’m betting their largest demographics don’t watch much TV, and were probably going to visit the stores anyway.

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