The World: Insider's view - France

With France's biggest stores now free to advertise on TV, all eyes are on the strategy and scope of retailers on-screen, Philippe Sarrazin writes.

On New Year's Eve, French TV viewers were greeted by a new breed of advertiser: TF1 reserved its first 2007 ad block for retailers and 11 of them wished France a happy new year for the first time. As the ban on TV advertising by French retailers expired, supermarket, hypermarket and merchant retailers immediately converged on the medium.

In just three weeks, the retail sector has parachuted in as the fifth-largest TV advertiser in France, with more than EUR22 million invested - 90 per cent on TF1 and M6.

With retail as the biggest spender in 2005 on print, radio and outdoor advertising, you can easily imagine that deregulation could trigger dramatic consequences in the TV market. Initiative predicts the cost of TV adspace could rise by as much as 10 per cent as retailers drive up demand, while digital terrestrial TV drives audience fragmentation.

The overall impact on the market will hinge on whether retailers increase overall adspend, the extent to which they change their mix and the consequences on previously preferred media, the way they communicate through TV and advertising content, how this changes retailers' perceptions of media, and, crucially, whether this will this change consumers' perceptions of retailers.

Initiative created D-Track, a monthly online barometer to measure impact. Media communications issues are addressed through investment analysis, media choices and communication content. Retailers' perception and consumers' response are captured by a questionnaire to a representative panel of distributors operated by Marketing Scan and a consumer online survey administered via AOL.

Having benchmarked retailer and consumer response in December, results showed where brands were positioned before entering battle. It was already apparent that while retailers prefer local newspapers for local communication, 35 per cent had confidence in TV effectiveness for national campaigns.

From a consumer perspective, before the New Year TV campaigns hit the screens, their shopping preferences were Carrefour, Leclerc, Auchan and Lidl. Given that, of these, so far only Leclerc and Auchan have advertised on TV, a change in our January ranking could be read as proof of TV effectiveness, or an absence of it.

TV effectiveness is heavily influenced by the type of messages bombarding consumers. Our research shows that after two weeks of retail TV advertising, price plays a critical role. Intermarche, Auchan, Leclerc and Super U hinge TV ads on price, whereas Champion and Casino focus on pleasure and convenience.

This first salvo merely exposes intentions and suggests how retailers mean to fight off competition. Hostilities open in the second round, as brands promote specific products and pricing to woo consumers.

- Philippe Sarrazin is the chief executive of Initiative France.