The Consumer Packaged Goods Industry is Going Digital

If you’re a Consumer Packaged Goods (CPG) company, there’s no doubt you’ve seen a shift in sales from your consumer base moving from retail to online over the past several years. Couple that with a global pandemic that suddenly forced consumers to shop for EVERYTHING online, and CPG’s like yourselves are scrambling to keep up. Don’t worry If you’re late to the digital game, you’ve found yourself in the right place to get ahead.

Let’s start off with some stats to help drive home the point of digital. 

The obvious: your audience is online more than ever before. A study conducted in 2020 reported that 80% of shoppers have shopped online in the past month. This goes across generations! 

• What this means: you need to position your brand where your consumers are actively browsing and shopping. They’re surfing the web, they’re scrolling through social media. They are more receptive to new brands and are so open to shopping online, all you have to do is find them, so all they have to do is point and click (well, it’s a little more complicated… but we’ll touch on that later).

The concern: in 2021, the US digital ad spend in the CPG and consumer products industry is forecast to reach 22.5 billion. Yes, that’s 22.5 billion dollars. Billion… with a B. 

• What this means: This is an incredibly competitive landscape, and it’s only going to become moreso. There are thousands of brands that sell exactly what you sell, trying to reach exactly the same buyers you’re trying to reach. You need an agency who is going to help position your brand in a way that drives home more sales, grows your market share, and implements tactics and strategies to keep you ahead of the competition. 

Are you tired of being blindsided by consumer trends and patterns? Not sure how to adapt to the ever-changing digital world? It’s high time you found a marketing company that could take your growth to the next level.  

What to Look for in a Digital Marketing Agency to do Your CPG Marketing

Friends, we’ve gotta break it to you: traditional marketing for CPG brands (like brand advertising on TV) is old news. COVID came in and disrupted the whole scene, and now CPG brands have been shifting dramatically to lean on digital performance marketing to drive sales. 

In a saturated online market, your CPG marketing needs to be trendy, catchy. Dare we say, flashy. But flashy in a tasteful way. A thumb-stopping way. A way that breaks up the noisy digital world and endless doom-scroll and catches the attention (and eventually, purchases and loyalty) of your consumer. It needs to be beautiful, compelling, data-driven marketing that piques your customer’s interest and influences each step of their shopping journey. 

Did you know that in the first half of 2020, the US CPG industry spent 591.8 million dollars on desktop video advertising and 19.4 million on mobile video advertising? During that same time, brands in the CPG industry spent 181.8 million on desktop display and 81.3 million on mobile display. 

THIS is where your CPG marketing agency needs to divert their attention and skills – creative-focused advertising. Specifically in display (that’s static, responsive, and video) and programmatic advertising, social media networks and video platforms, with a mega-emphasis on mobile. Bonus points if they continue to nurture customer relationships via email and text campaigns. We’re talkin’ omnichannel advertising, people. Your agency needs to be placing your brand and products everywhere!  

Beyond placements and platforms, your CPG marketing agency should have market research tools at its disposal for diving into consumer and audience insights. This means data-backed customer decision journeys and analysis. And if you don’t have clearly defined buyer personas, they should be able to help you. The more complete their knowledge of your audience is, the better and more effective their marketing efforts will be. 

Consider these takeaway questions: 

1. Can they pivot on a dime to embrace digital ad formats that will keep your brand ahead of the curve? 
2. Do they have the creative capabilities and storytelling sauce that will nurture your customers throughout your entire buyer journey? Is it enough to keep them coming back for more?
3. Are they using technology and tools to uncover crucial insights on your buyers to deliver on exactly what they need? And are they using these to stay a leg up on your competitors, day after day? 

When you’re looking to start up a digital marketing partnership, you need a team that can effectively, *ahem*, intuitively adapt to rapidly changing consumer behaviors and expectations. Because going online is not going to end when the pandemic ends. We’re just at the beginning of a long and beautiful digital journey, and we’d love for you to come along with us. 

KPIs Great CPG Marketing Agencies Should be Reporting On

Some agencies may tell you that there are many, many KPIs that they would consider to be absolutely essential for monitoring the success of your digital marketing campaigns over all the channels.

We disagree. 

For CPG companies dipping their toe into digital, the only KPI that matters is ROAS, or return on ad spend. Why? Because reach and message engagement mean nothing if they’re not clicking and converting – high click and conversion volume means nothing if they’re not actually generating revenue for you.

For good measure, we’d also throw in CPA (cost per acquisition) as another anchor point for reporting, because we don’t want to see the cost of converting a user exceed the revenue generated by the product itself, and the ad spend used to promote it. These KPIs are where your true north lies.

* Mobile accounts for about 73.2% of all CPG digital ad spend, so bonus points if your agency reports on these KPIs by device type.

Don’t get us wrong, during reporting we may throw in some vanity metrics if they can help paint the picture of how users are reacting and engaging with our campaigns – because they do help us determine how to optimize and understand where users are falling out in the process. We want to help you envision the entire customer journey through our campaigns. But from a pure business perspective, your bottom line is all about ROAS and CPA. So your agency needs to deliver on these with every report.

How CPG Marketing Agencies Should be Reporting on These Metrics

Data is at the heart and soul of digital marketing. That’s why we call it data-driven marketing. 

Beyond simply announcing the data as “Hey you made 2,000 total sales last month!” or “Your conversions are down and cart abandonment rates went up,” your agency needs to tell the story behind the KPIs. 

• They should be able to both understand and explain (in layman’s terms) the consumer behavior across each channel and touchpoint. 
  • This reporting can then be utilized for customer acquisition and segmentation strategy, or for optimizing your media mix. 
• Reports should not only indicate how well products are performing and where they are performing well, but where the gaps and missed opportunities are in the customer journey. 
  • Here is where they can analyze churn analytics (when users no longer buy or subscribe to your products) and customer attribution (lifetime value is key here!), tap into social listening, or track how competitive each platform is.
• They should be using data analytics to isolate these problem areas and actually leverage this data to create a cycle of continuous improvement (one of our core values). 
  • This means asking focused, specific questions as to what patterns they are seeing, and using them to forecast and test.

All reports and KPIs should be able to connect your marketing investment to actual consumer behavior. Is your ROI clearly demonstrated? Have they not only identified your key markets, but broken it down further by category, channel, or region of sale?  How are they analyzing shopper behavior to optimize and adapt your customer journey? 

We have high expectations for CPG marketing agencies like ourselves, because we know how badly you want to see your brand rocket itself to growth. So as you’re being schmoozed by all the digital marketing agencies out there, make sure whoever you partner with can put their money where their mouth is, and put YOUR money back into your pocket. 

Speaking of… 

How Much Budget do CPG Companies Need to Invest into Digital Marketing?

We know, we know, no one likes talking about money. But when it comes to determining the right investment for digital marketing, there is a formula you need to know. Being informed about budgets only empower you more, especially when it comes to finding the right digital marketing partner. 

1. First, you need to figure out how much it should cost you to acquire a new customer (CAC). 
2. Then, determine how much lifetime value (LTV) each customer generates on average. 
3. The last factor is speculative, how much time do you have to see a return (ROI)? 

Whatever this calculation turns out to be would be the right amount of money you need to invest. 

If you need help, don’t worry, we can provide that Media Mix recommendation during our Strategy presentation. There’s a reason why we’re the data nerds you’re turning to for this! 

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We’ll end this with a final note – some statistics to help give you an idea of what the budget and growth patterns of the CPG industry have been over the last couple of years.  

A study conducted back in 2019 indicated that CPG companies were dedicating 21.9% of their marketing budgets on digital channels, compared to 13.6% for traditional marketing. But that was back in 2019, where digital advertising spend was projected to grow to just 22.8% of marketing budgets in 2020, before COVID. And before the mass migration of brands within the CPG industry to move to digital.  

We’ve mentioned before that the CPG industry is experiencing exponential growth in digital. Digital spend as a whole for CPG is subject to increase over 16% in 2021 compared to 2020 (that’s the 22.5 Billion we were telling you about earlier). 

CPG is the third-largest spender in digital marketing, right behind retail and financial services. But don’t let these numbers dissuade you. These big budgets and saturated markets from your competitors simply add some spice to our “strategery”. 

Our marketing team is a force to be reckoned with and will happily accept any challenge. We’d love to learn more about your company’s needs and how we can contribute to your success. Ready to ride off into the digital sunset? Drop us a line.