Business

A new type of advertisement is popping up in grocery stores, thanks to this NC startup

If you’ve noticed an uptick in video screens in your grocery store’s beer and wine aisle, you might have a Durham-based startup to thank. Or blame.

The Looma Project, a boutique advertising startup founded in 2015, is beginning to see wider adoption of its flagship product, a small video tablet that tells short documentaries about products being sold in the grocery store.

The company’s tablets are slated to be added in more than 50 Lowes Foods stores in North Carolina, the company said this week. That expansion comes in addition to being placed in most of the Harris Teeters in North and South Carolina last year.

And the growth isn’t expected to slow down, with potential partnerships in Texas, the Midwest and California in the pipeline, the startup said.

The goal of the advertisements is to humanize the products that people are picking up off the shelf — to tell the story and process of how a product was made.

The company handles the production from shooting the advertisements, which it bills as mini documentaries, to putting them inside the grocery stores. So far, it has worked — more than 70 brands have purchased the mini-docs, which are played in 30-second, continuous loops on the tablets. A company can pay to be part of the loop in what is usually a four-week interval. (Most of the time, grocery stores do not pay Looma to install their tablets — the company makes most of its money from partnering with brands.)

“We are trying to get the feel of a farmers market in a traditional grocery store,” said Renu Mathias, vice president of brand at Looma Project.

The company’s growth was kick started by the Cary-based investment fund Cofounders Capital, which put $375,000 into the company last year. But already, the company’s CEO and founder Cole Johnson said, the Looma Project is turning a profit through its deals — though it may look to add more funding next year to boost growth.

Johnson said the company’s model works because of the changing nature of what shoppers value from the products they buy.

“The really simple premise behind Looma is this fundamental belief that the most powerful way to drive a purchase is telling a story,” he said in an interview. “Consumers are asking questions like who made this product, how is it made and what is its impact on me, the local community and the global community.”

Beyond offering a boutique production for advertising, Looma is also hoping to add predictive analytics to its offering.

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A Looma Project advertisement placed in the wine section at a Chapel Hill Harris Teeter grocery store. Looma has signed a deal to be inside most Harris Teeter’s in North Carolina and South Carolina. Zachery Eanes zeanes@newsobserver.com

Looma said its campaigns can provide a median boost during a campaign of nearly 70% for craft beer brands and 188% for wine. But it wants to give brands data about what specific parts of videos are driving that growth.

The company breaks down all of its videos into 67 variables, things like what percentage of the video has a human face in the foreground or how often a logo is shown during the 30-second clip.

“We are at the bottom of the marketing funnel ... directly at point of purchase,” Johnson said. “A really big challenge for marketers is understanding what things actually move the needle.”

Robert Poitras, the owner of Chapel Hill’s Carolina Brewery, said smart advertising is crucial as the beer aisle has become more crowded.

“We have been doing this for 25 years, and now the consumer has so many choices, which is great for beer fans but tough for the beer makers,” Poitras said in an interview. “How do you stand out? Looma has allowed us to tell our story about our staff and quality control and rewards.”

Poitras said the company saw an uptick in sales after a Looma campaign, and it has now done four. That spurt of growth stands in contrast to the beer industry as a whole, as both craft brewers and large national beer conglomerates have seen slowing growth.

“We are growing by close to 20% this year, which is tough,” he said. “Strategic moves like Looma allow us to stand out and we plan to continue doing it.”

But don’t expect to one day find video tablets on every aisle of the grocery store, Johnson said.

“I think there is a point of saturation where the impact diminishes rapidly,” he said, adding that Looma will likely stick to the produce and alcohol sections of the grocery store. “We do not want to convert your grocery store into a sports bar.”

“We want to make these carved-out, almost intimate experiences of the people behind your products,” Johnson said. “That will rapidly disappear if these things are on every aisle.”

This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate

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Zachery Eanes is the Innovate Raleigh reporter for The News & Observer and The Herald-Sun. He covers technology, startups and main street businesses, biotechnology, and education issues related to those areas.
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