Corporate pitches deck the malls

Discover Card employees cruise Philadelphia's Franklin Mills on Segway scooters promoting a lottery that gives shoppers a chance to win gift cards worth $5 to $1,000 for every $150 they charge on their Discover Card.

And in the most extreme example, employees at the Auburn Mall will work the Santa line at peak times, asking parents and children if they'd like to talk to Mrs. Claus at the North Pole -- on a Nextel cellphone equipped with a two-way walkie-talkie feature, of course -- as they wait for their turn to sit on Santa's lap.

A television monitor nestled into Santa's toy factory plays a continuous loop of a Nextel ad, signs are visible throughout the mall, and parents are handed a Nextel coupon as they pick up their Santa photos.

"I put on my business hat, and it makes a lot of sense," said Andrew Moser, senior managing director of GMAC Commercial Finance's retail group. But even as a 14-year veteran of the retail industry, Moser has his qualms about the practice. "As a parent, I'm not too excited about the idea of someone encouraging my 10- or 6-year-old to use a cellphone."

In the age of TiVo, do-not-call lists, and Internet pop-up blockers, the mall has become an ever-more appealing place to advertisers. About 100 million shoppers visit Simon Property Group Inc.'s 238 malls across the country for a total of 2 billion visits a year, according to the Indianapolis company. Similarly, General Growth Properties Inc., another of the nation's largest mall owners, said it logs about 2 billion visits a year at its 168 malls.

"People have gotten better and better at filtering out ads," said Gary Ruskin, executive director of Commercial Alert. "So advertisers need to clobber us with messages at a higher intensity. That's what this is." Dressed in their holiday finery, Kyle Lyons, 3, Sydnie Lyons, 2, Rose Pelletier, 2, and Mackenzie Barry, 2, stood with their faces inches away from a TV screen intently watching "Santa Clause 2" as they waited in the Santa line at Burlington Mall. After posing with Santa, Sydnie spotted a "Santa Clause 2" DVD, picked it up and handed it to her mother. Andrea Lyons laughed.

"I'm sucked in, and I guess I'm buying the stupid tape," she said. But on hearing about the Nextel promotion, which begins this week, she wasn't quite so merry. "It's cute," Lyons said, "but then the kids want the walkie-talkie cellphone. I think that's offensive. Here, they see a Disney movie."

This holiday season, Walt Disney Co. is promoting its "Santa Clause 2" DVD at nearly 20 malls nationwide. Nextel is at nearly a dozen shopping centers around the country, and Discover is at another 14 malls.

"It's basically product sampling," said Mark Adams, Nextel's vice president of retail distribution. "But we're trying to do it in a way that enhances the Santa experience and that helps keep the children occupied while they are waiting in line and looking for something to do."

Over the past two decades, a handful of large publicly traded companies have bought most of the nation's malls from the private property managers and real estate developers who once made up the industry. As public companies, they have come under increasing pressure to increase their revenues and their profits. Meanwhile, industry consolidation has made it easier for advertisers to strike deals with malls. They can access the nation's malls by dealing with a few big players.

In recent years, malls have sold companies like Coca-Cola Co. the right to be the exclusive vendor of sodas. They've lined up a growing number of corporate sponsors for mall events. Procter & Gamble this spring distributed samples of its new disposable bib in mall food courts nationwide. Mills Corp., which owns about two dozen malls, sold the naming rights to one of its malls to Discover Financial Services for a reported $10 million.

"How much can a mall make off this stuff? That I don't know," said Lou Taylor, a senior real estate analyst at Deutsche Bank Securities in New York. "It's in its early days. But I'm certainly intrigued by the potential."

At the mall, analysts and consultants say, retailers have the ability to add a "call-to-action" to mall promotions. Signs around Auburn Mall direct people to the Nextel store. At the end of the Santa line there, Nextel is handing out discount coupons that can be redeemed at its mall store. When a parent got the Disney coupon at the Burlington mall and asked where she could buy the DVD, the cashier there pointed her in the direction of the nearby Sam Goody store.

"The mall really puts you face-to-face with a consumer who is already in an open frame of mind to make a purchase," said Sally Hertz, Simon's vice president of mall marketing in the Northeast.

The strategy is not without its risks, however. The business of a mall depends almost entirely on traffic. The more traffic the mall generates, the more attractive it is to retailers, and the more it can charge in rent -- the mainstay of a mall's finances. If promotions offend mall-goers or become so pervasive as to inundate the shopper, malls could end up alienating people at a time when many time-starved shoppers are already bypassing malls for stores like Wal-Mart, Target, and Kohl's.

"I personally believe it's terribly misguided," said Darrell Rigby, head of consulting firm Bain & Co.'s retail practice. "The last thing a mall operator should be doing right now is further inconveniencing its customers to make a few dollars on the side."

Parents in the Santa line at Burlington Mall, where the Disney promotion began this week, didn't seem bothered by the added commercialism. Debbie Billias and her daughter Jessica Dyess, a 24-year pediatric nurse, said they thought the Disney promotion was in the spirit of the holidays, adding to the Christmas cheer and offering entertainment for those waiting in line. Traci Alberti, who was there with her 3-year-old daughter and 20-month-old son, called the marketing effort "harmless."

Standing among her four children ranging in age from 3 to 13, Jayne Stafstrom said the promotion was relatively "low key" compared to the veritable cavalcade of advertising directed at children these days. Alex, her 13-year-old son, gave the movie a thumbs up. Donna Ruvolo echoed the sentiment of many parents in the Santa line as she straightened her 3-year-old son's sweater and smoothed his hair: "If you're electing to come to a mall to visit with Santa, you have to expect a certain amount of commercialism."

Naomi Aoki can be reached at naoki@globe.com.