Corrections or additions?
This article by Michele Alperin was prepared for the March 15, 2006 issue of U.S. 1 Newspaper. All rights reserved.
Battling for Supermarket Floors
Like IBN, FloorGraphics is finding new ways to reach buyers at a retail store. Founded in Princeton 10 years ago, it embeds advertisements in the floor tiles of supermarkets and drugstores.
IBN’s Andrew Friedheim speaks condescendingly of FloorGraphics business model, to embed advertising messages in the floor tiles. "It is static and sits on the floor," says Friedheim.
FloorGraphics’ Richard Rebh, to counter, cites advertising dogma about the validity of static versus moving messages in a retail store. "Advertising video is still being developed, and it may become something significant," he says. "Advertisers like video, but it involves moving shoppers and a moving medium. The challenge is how to fit that into the shopping environment."
FloorGraphics recently moved from 5 Vaughn Drive to the American Metro Center, where it has 18 staff members, 50 employees nationally, and a network of 8,000 in-store locations.
Seven years after its founding, FloorGraphics won the NJ Ernst & Young Entrepreneur of the Year award in 2003, and it stood number 11 on the Inc. magazine fast growing list that year.
But just after those figures were compiled, one of FloorGraphics’ most important clients, K-Mart, went into bankruptcy and its competitor, News America (owned by Rupert Murdoch), snagged that contract. The company shrunk by one-third to its present size and Rebh says that News America is determined to squash his firm completely.
"News America hired five of our people and dedicated $50 million to put us out of business," he says. "They didn’t count on the fact that we would work 24 hours a day to keep going."
"News America broke into our password-protected computer systems in 2003," says Rebh, "and stole sales information that they used, we allege, to improve their retail strategies." He says this claim is documented by records of IP addresses registered to News America. The company started in 1996 when founder Fred Potok was working for a Montclair-based fleet graphics business, which had just come across a decal that could be protected from road hazards by a bullet-proof laminate. This laminate, less slippery than the floor itself, could make floor advertising viable, Potok realized.
Potok turned to a graphic artist, George Rebh, a Williams College alumnus, Class of 1973. For the CEO job they brought in George’s brother, Richard, who has a 1976 degree from Princeton University’s Woodrow Wilson School, and business and law degrees from Stanford.
Because the partners positioned the floor ads as media, manufacturers could pay for the floor space, not from display budgets, but from their advertising budgets – funds that might otherwise be used for print advertising or direct mail. This represented extra income for the store. "By creating an advertising medium that could be purchased, retailers could monetize the media value of their stores," says Rebh.
With venture capital funding FloorGraphics bought a division of 3M that makes strong vinyl film for the decals. Patents are pending on FloorGraphics’ concepts for three dimensional and electronic floor ads.
"Our business is challenged by the fact that we compete with News America, and News America has not competed fairly," says Rebh. "We invented a great medium, and a lot of advertisers like us, but their buys get split across News America and ourselves."
FloorGraphics filed a federal lawsuit against News Media in 2004. FloorGraphics is represented by William Isaacson of Boies, Schiller and Flexner (the firm that took Al Gore’s election bid to the Supreme Court) and by Susman Godfrey in Houston. In New Jersey its attorney is Nathan Edelstein on Franklin Corner Road. "They are all taking this case on contingency, which means they believe in the case," says Rebh. Filed in 2004, the case is pending in Trenton in the court of Judge Anne Thompson; it is in the early discovery phase.
Three other anti-trust lawsuits have been filed against News America, each citing what Floor Graphics claims News America has done. A federal lawsuit filed by Insignia Systems is pending in Minnesota. Theme Co-op won a judgment for anti-competitive conduct in state court in California. And in Michigan federal court Vlasis recently filed a $1.5 billion suit that could turn out to be worth more than $4 billion.
Now ensconced in its new quarters at the American Metro Center, FloorGraphics hopes that its future will be looking up – because shoppers will be looking down. Says Rebh: "We invented a brand new medium."
FLOORgraphics Inc., 242 Princeton Avenue, American Metro Center, Suite 120, Hamilton 08619; 609-528-9200; fax, 609-689-0204. Richard Rebh, CEO. Home page: www.floorgraphics.com
Corrections or additions?
This page is published by PrincetonInfo.com
— the web site for U.S. 1 Newspaper in Princeton, New Jersey.