10.01.05
Case Study: Health Club Panel Network (HCPN)
Business Description: Health Club Panel Network (HCPN), Los Angeles, CA, is the largest nationwide provider of advertising and marketing programs in health clubs within the U.S.
Theme: HCPN offers a unique way to help build brands. It has a targeted approach that reaches consumers with attractive demographics and spending habits, but its challenge lies in enticing smaller, more core health and nutrition companies/brands to understand its value proposition.
Background: Founded in 1995, HCPN offers exclusive access to almost 2000 health clubs, over four-times that of their nearest health club media competitor. HCPN’s network reaches 6 out of 10 health club members working out in the top 20 markets. HCPN’s primary offerings are advertising panels strategically placed throughout its health club network, plus a host of customized panel enhancement programs, from take-one racks for coupons/literature to off-panel advertising to sampling to in-club event marketing. Part of its unique proposition is its ability to place and manage the panels through its own organization, and its ability to promote to an attractive consumer base. HCPN handles all program execution through its own national network of over 120 installers, removing the need to rely on health club personnel, who tend to be too busy with their primary jobs in the health club to properly execute advertising and marketing programs. Active health club members who work out at least two times a week tend to be more educated, successful and influential, and consume substantially more sports clothing, healthy and active products and nutritional supplements than the U.S. population overall.
Situation Assessment: Health clubs offer an excellent way for health and nutrition advertisers to reach an affluent, loyal and influential customer base. The environment is highly uncluttered (with less then 2% of the wall space used for advertising; compared with up to 50% of a magazine’s pages). With such a dominant presence in this medium, HCPN offers both depth in key markets, as well as the flexibility to buy nationally, regionally, and even by zip code. However, there are two areas in this market that present specific challenges: (1) access and ability to service the accounts due to the fragmentation of the HC market and (2) bringing new advertisers into the category.
Opportunities: Within health and nutrition, and specifically in the dietary supplement industry, many companies lack sophistication around advertising. For many, the issue is not where to spend their money, but whether to spend money. This makes HCPN’s challenge with these companies more difficult, as it often needs to coach these companies about the value of advertising, and then sell them on HCPN’s offering and its effectiveness. Demonstrating that advertising is working is not easy. It is a fairly complex business, since the difficulty is in understanding the casual relationship between any advertising campaign and its results—and this dilemma becomes more complicated as marketing efforts get larger. The challenge for HCPN is three-fold: (1) convince larger players of the effectiveness of this opportunity as a part of a larger, overall campaign; (2) bring new, typically smaller players with limited budgets and experience into the world of advertising; and (3) devise a system to work back into the supply chain and not just with finished goods marketers. Within nutrition, where many products are being positioned around active ingredients, a key challenge exists in that finished goods marketers want to use ingredient brands that pull in customers, but often ingredient players are hoping to sell their brand through wider availability in multiple brands.
Lessons Learned: (1) Due to the ability of HCPN to focus on a highly targeted medium that uniquely reaches core health and nutrition consumers, it offers a great opportunity to test market products and advertising. Most companies have ways to do testing before rolling out a larger campaign, but HCPN offers additional tools to use in evaluating a plan before committing sizable dollars. (2) The fundamental step for many of the smaller ingredient players is to begin a focused, cost effective program that they can describe to their customers, and which demonstrates what they’re doing to build their own brand. The clear majority of ingredient players do not have sufficient funding to properly build a brand, but HCPN is a particularly cost effective tool in building awareness around ingredient brands. (3) HCPN is working to convey the point that it is not selling advertising, so much as it is selling brand-building solutions through a customized offering. A key advantage that HCPN has, and others lack, is the ability to work with individual companies to produce a customized plan that can measure results.