Here at gap intelligence we spend a lot of time each week going over retail circulars as part of our weekly Pricing and Promotions service.  Each week brings new promos and new models, so I thought it would be revealing to look at how the ads change over time.  The beginning of a new quarter is a great opportunity to reflect on the past three months and compare it to where we were a year ago.  As the desktop PC analyst, I was particularly interested in how retail circular ad placements for desktop PCs have changed over time.

Print advertising for desktop computers during Q1 2012 totaled 342 retail circular ad placements, a year-over-year decline of 22% from the 436 desktop ad placements in Q1 2011.  The decrease in print advertising comes despite the fact that total desktop SKUs in retail increased from 272 in Q1 2011 to 339 in Q1 2012.  The first quarter of 2012 brought a continued dominance in print ads by HP, as well as an increase in desktop ads within Best Buy and Staples’ circulars.  Additionally, Q1 2012 saw an increased share of print ads for tower PCs over other form factors.

Desktop Print Ads by Manufacturer

HP remained dominant in Q1 2012 with a 39% share of desktop ad placements, but placed 26% fewer ads in Q1 2012 with 133 placements compared to 180 ads in Q1 2011.  Gateway and Dell both made a big increase in the amount of ads they placed, with Gateway more than doubling its share of all ads to 13% with 43 ads, compared to 28 ads in Q1 2011.  Dell’s ad share increased from 11% to 17% in Q1 2012 with 57 ads, up from 46 ads in Q1 2011.  Asus desktops were still included in less than 10% of all print ads, but the company nearly tripled its ad share from 3% in Q1 2011 to 8% in Q1 2012, jumping from 12 ads to 27.  Category newcomer Samsung crept in with 8 ads in Q1 2012, representing a 2% share of the category’s overall ads, which is more notable considering that the vendor’s market share is just two SKUs at Best Buy.  Compaq’s share of overall ads declined from 8% to less than 1% in Q1 2012 when it placed only one ad, and eMachines also showed a sharp decline in advertising and did not place a single ad in Q1 2012, from eight in Q1 2011.

Desktop Print Ads by Retailer

Best Buy was the most active advertiser in Q1 2012, climbing from the number two spot in Q1 2011 to take over the top spot in Q1 2012 with a 33% share and 114 placements, a notable increase over last year’s 96 placements.  Fry’s Electronics fell to number two in Q1 2012 with 100 placements, equaling 29% of all desktop ads, from its total of 168 ad placements in Q1 2011.  Staples was the only retailer aside from Best Buy to increase its ad share and went from 17% in Q1 2011 to 23% in Q1 2012 with a total of 77 ads.  Ads from Office Depot and OfficeMax declined; Office Depot dropped from 56 ads in Q1 2011 to only 20 ads in Q1 2012, while OfficeMax fell from 41 ads in Q1 2011 to 29 ads in Q1 2012.  Walmart jumped in with two placements total in Q1 2012, or 1% of all ads.

Desktop Print Ads by Form Factor

Despite the increasing popularity of AIOs in the market, tower desktops remained by far the most-advertised form factor in Q1 2012, increasing its share of ad placements to 70% from 61% in Q1 2011 despite the total number of tower ads dropping from 263 to 247.  AIOs held steady with 20% of all ads in both Q1 2012 and Q1 2011, although the total number of AIO ads decreased from 88 in 2011 to 70 in 2012.  This is particularly interesting considering there were 22 more AIO SKUs in retail in Q1 2012 for a total of 78 different SKUs compared to the same time period last year when there were only 56 total SKUs.  Slim form desktops and nettop ads declined in Q1 2012.  Nettops held onto less than 1% of all ads with only two placements compared to eight placements a year ago, and slim form desktops decreased to 10% of overall ads with 36 placements versus 75 in Q1 2011.

What Does It All Mean?

Comparing desktop PC ads to other categories such as notebooks and digital cameras helps to add context to changes in desktop advertising volume.  Notebook ad placements actually increased between Q1 2011 and Q1 2012 from 824 ads to 841, a 2% year-over-year increase.  Digital camera ads decreased by 12% within the same time period, from 809 total ads to 720 ads.  Something interesting happens when you look at the discount amount for each category.  The average discount for both notebooks and digital cameras increased from one year to the next, while the average discount for desktops dropped quite a bit.  In Q1 2011, the average desktop discount was $94 per ad, and in Q1 2012 the average discount fell by 25% to $71.  Notebook discounts increased by a small 1.9% from $154 in Q1 2011 to $157 in Q1 2012.  Digital cameras, however, increased their average discount by 19% year-over-year, from $57 in Q1 2011 to $68 in Q1 2012.

What can be inferred from this difference is that it is most likely not larger economic forces related to the recession or consumers’ discretionary spending that has spurred the drop in desktop advertising while other categories have increased spending.  The 25% increase in total desktop SKUs in contrast to the downward shift in desktop ad spending also tells us that it does not necessarily reflect a shift in focus for retailers away from the desktop category.  It is more likely that unforeseeable forces such as the flooding in Thailand negatively affected supply of desktops which rely on components from that region.  Fewer products in the supply chain may have prompted manufacturers and retail chains to slow the ad presence and average discounts on their products in an attempt to keep the flow of goods steady while waiting for the component market to return to normal, which will likely happen by Q3 or Q4 of this year.  That said, these same component pressures also impacted notebooks so this trend certainly suggests that vendors are redirecting some of their advertising dollars away from desktops.