Digital CPG Blog

What do those young’uns want?

Well, as a Gen Yer myself, I can say this recent study is right on:

In general, you can remember that Gen Yers like to shop as an experience, not just a chore and all the things they tend to like fall under that idea. For instance, we love deli counters and prefer brands with a well-developed social and mobile media presence. Is your CPG brand set up to serve and reach the millenial generation?

Melissa Sowry, Content and Social Media Manager of Burt’s Bees has grown the brand’s Facebook fan base from 98,000 to more than 370,000 by creating compelling content that consumers want to interact with and discuss, reports eMarketer. That content, ranging from quizzes and video to sampling offers and behind-the-scenes access into the world of Burt’s Bees, is helping extend brand loyalty and generate powerful online viral engagement.

Here are some of her insights:

What drives word of mouth?

Beauty is a category where people take recommendations from their friends and talk about what’s new. They also look to experts for suggestions. For example, if we get a placement in Marie Claire or Lucky where they’re raving about the new tinted lip balm, we might share the link to the page.

We also find fans of the brand are recommending products to one another in this space. That’s the normal activity that takes place around beauty products. It’s mostly women talking to other women and finding out what works, but it’s taking place online in social media venues. For example, a mother might ask other moms about products that stop diaper rash: “What works for you?” These are important conversations and I think online social media is a place where people trust one another to get that information.

What’s your Facebook strategy?

Facebook is a channel for us to provide compelling content. When I came on board, we started doing simple things—posting content and behind-the-scenes images on a daily basis and discussing new products coming to market.

We use social media and Facebook in particular as relationship-building tools. We also create opportunities for consumer education around skin care, for example, and sampling offers. We ran successful sampling programs on Facebook for our relaunched body lotions and new tinted lip balm.

We talk about our products on Facebook but we also spend time talking about the culture at Burt’s Bees through our involvement with Habitat for Humanity, sustainability efforts, product ingredients and so forth.

How does your strategy stack up against Burt’s Bees?

This is the kind of graph we all like to see:

For CPG manufacturers, going online enables a deeper, more personalized relationship with the shopper, reports Nielsen.

Five things to know about online grocery shopping:

1. Consumers love online grocery shopping, but it takes time getting used to. You can simply the process by improving the online experience with navigation, search, online help and porting over shopping lists. Deliver a better time-saving experience and consumers will hang on.
2. Online baskets are different than offline baskets. The average transaction size is much larger for food and beverages ($80 online / $30 offline) and health and beauty purchase ($30 online / $10 offline). And online shopping offers a greater mix of pack sizes and categories.
3. Consumer perceptions and purchase behaviors are affected in important ways. The interactions with the online ‘store’ environment are fundamentally different than an in-store experience. The online experience is fueled by a needs-driven experience as a greater variety of options are made available on screen.
4. Online shopping “levels the playing field”. Big brand ‘physical’ advantages do not translate online. With universal distribution and search functionality an inherent bias toward niche players is created. Ultimately, price transparency, connectivity and open content favor a purely ‘rational’ market.
5. Large and small brands can win online by combining marketing savvy with digital capabilities to add value. With interactive websites, smartphone applications and social media connections, expanding your brands in new and innovative directions is virtually limitless.

“Consumer packaged goods giant P&G has indicated a desire to source 10% of its sales online. Given that it currently sources less than 1%, that sounds like an aggressive goal but one that it is putting its formidable resources against delivering. Many other CPG companies from Kraft, J&J and General Mills to Pinnacle Foods are placing a strategic imperative on the etailing selling space,” reports Chief Marketer.

With the numerous options to sell online through retailers and the ability to sell direct to consumers through other platforms, it shouldn’t take P&G that long to reach their goal. Etailers are well positioned to deliver on convenience “and selection (the online shelf set doesn’t have to adhere to the space limits of the brick and mortar shelf).”

“Etailers can also provide a experience, enabling consumers to customize the online “shelf” in a wide variety of ways, such as by size, product feature, price, brand and manufacturer. In this way, online is not just an incremental sales channel but also strategic marketing medium that engages consumers.”

As a result, customers are responding. “Close to 50% of online shoppers have purchased personal care products online within the last six months and 40% have purchased food items, according to an etailing solutions CPG eCommerce Study developed with Catapult Marketing.”

Let me guess. Your target demographic is a young mom?

Thought so.

Here’s a refresher on who she is:

She Is Not Paying Attention to Your On TV

“In broadcast primetime, ad recall levels are 8 percent lower among moms 25-54 than non-moms of the same age and the general population. Nielsen has found that the ads that resonate most with moms are often family- and convenience-oriented with relatable characters/situations, sentimental tonality and good natured humor. A heavy focus on products/services tends to reduce ad effectiveness among moms.  For moms, the 30-second sitcom (or drama) might just snag her much-divided attention.”

She Is Paying Attention To You Online

Moms are more likely to become a fan or follow a brand (31% more likely) than the general population and and comment on others postings (27% more likely). “Moms account for one-fourth of all video streams occurring on social networks, and are also more likely to post their own content: photos (37% more likely), links/articles/videos (25%), status updates (33%).”

“Moms make up more than one-fifth of online video viewers and spent an average of 258 minutes viewing online video in March 2011.  Compared to the overall usage in the US, Moms spent 25% more time, about 52 minutes longer on average, viewing online video from Home PCs.”

Forrester tried to claim last week that Facebook will not drive e-commerce.

Uh… have they been awake lately?

Lucky for Facebook, they were able to show exactly how the site is driving commerce earlier this month. After all, where there is community, there is commerce.  Simple as that.

Facebook has long promoted the value of such social ads, saying that word of mouth from friends is more valuable for users and marketers alike than generic marketing messages. The company now says that, similarly, e-commerce sites are increasingly benefiting from tying their services into the Facebook platform. In other words, Facebook says a purchase shared on Facebook generates more purchases from friends.

“We now have a direct link between sharing on Facebook and revenue generation at e-commerce sites,” said Dan Rose, vice president of partnerships and platform marketing at Facebook. Mr. Rose said that 18 of the top 25 e-commerce sites are using Facebook features like Facebook Connect or the “Like” button. Giantnerd.com, a shopping site for outdoor gear, saw a doubling in revenue generate from Facebook within two weeks of adding the Like button, Facebook said. American Eagle saw users referred by Facebook spend 57 percent more than average on the site, Facebook said.

Nothing like some hard numbers showing your relevance and dominance to prove the naysayers wrong.

Should retailers offer coupons on their website?

“I think it has a future [because] retailers continue to drive consumers to their websites. I think a brand manager will want to keep in front of their consumers as they plan shopping trips. It really is in early stages,” said Bob Cristofono, vice president-sales at Marx, a Kantar Media solution.

CPG coupons on retailer websites take several forms:

• Links to national coupon sites; consumers can redeem these coupons at any store
• Coupon offers downloadable to loyalty cards, specific to the retailer
• Direct-to-mobile coupon offers, which are also specific to the retailer.

The latter two kinds of digital coupons turn websites into destinations, noted Cristofono, adding CPG marketers that do this “can be key drivers in aligning with key retailers and securing merchandising support. Destination websites provide direct exposure to shoppers when they’re planning trips and making purchase decisions.”

Besides leading consumers to the stores, manufacturers could also use digital offers and coupons to form a direct relationship and hold onto all of the data.

“More than three of four coupon users (77.3%) report that they ‘search the Internet for CPG coupons ahead of their next shopping trip, with7.4% doing so always and 50.6% with regularity,’ details the NCH 2010 Consumer Survey.”

Making those coupons available at the point of sale online would also be a powerful way to build loyalty and more and more manufacturers are going in this direction.

Oopsies. Rising commodity costs mean CPG companies are facing the difficulty, despite the gradual economic recovery, of passing these along to consumers. “Making matters worse are price wars aimed at protecting market share,” reports the Wall Street Journal.

“Sentiment toward the sector, usually a safe haven because consumers will buy toothpaste and soap even when cash is tight, has soured recently. Over the past 12 months, shares of companies that make nondurable household products have underperformed, rising only about 3% compared with the broader market’s roughly 20% gain.”

Could it be that they are competing with private label? Hmm…

“Basically, all of these companies have to explain what’s going on,” says Jay Freedman, a managing partner at Crystal Rock Capital Management, who plans to attend the conference. “There’s probably more dislocation than there’s been in a long time.”

While the article goes on to talk about the tough decisions these companies will need to make (firing and lay-offs, cutting costs), I believe they should also be pushing their money and strategy into new ways to reach their existing and new markets. CPG desperately needs to figure out the direct to consumer and e-commerce models and fast to have any chance of succeeding. But in an industry that is traditionally slow-moving, it will be interesting to see if investors can put enough pressure on the household companies to show results efficiently.

Ad Age recently had a great interview with Virgin America’s top marketer Porter Gale. Some of the more interesting revelations were that Virgin does see a positive financial return from it’s social media efforts and why they won’t be using TV anytime soon for their marketing efforts. Read our favorite excerpts below:

Ad Age: What are you getting out of Twitter and Facebook?

Ms. Gale: We found social media is an amazing channel for us in terms of engagement with our fans and guests. We are also finding that it is a nice channel for guest service. When we have had to cancel flights due to storms we have been able to connect with people via Twitter and re-accommodate them. It has a revenue component for us that we have been able to track and can actually see when sales are closed if someone has come from Twitter or Facebook. So it’s serving a lot of functions for us.

Ad Age: Is it driving a significant amount of revenue for the airline?

Ms. Gale: It is constantly increasing in terms of the revenue that it is bringing in so we are happy about that. In particular, at one point we did a sale with Twitter called the Fly Forward, Give Back sale and they used promoted tweets to help push it. And that was actually our fifth-most successful day ever in terms of ticket sales.

Ad Age: How far do you think word-of-mouth and positive buzz can carry you before you have to start investing significantly in TV and print media?

Ms. Gale: The positive halo around our brand is amazing right now. We have increased our Net Promoter score to a number that rivals Apple. Word-of-mouth can carry us a long way, so I don’t believe we will be doing TV anytime soon, being that we are still in only local markets. We don’t have the footprint where TV makes sense for us. The other reason TV isn’t that high on our list is that a large percentage of our sales are done on our website and things we can do that can capture a person while they are on their laptop is that much closer to a sale. So I don’t see TV in our future. We, potentially, will use more print as we try to get more business travelers into the brand. Now that we have more cities and will be announcing more in the near future we become a more interesting play for business travelers. But the bulk of our buy will continue to be online, out-of-home, partnership marketing and untraditional efforts.

Do you think that CPG marketers could take the same approach or is the CPG market so entrenched in television advertising and marketing that a statement declaring Twitter and Facebook superior is way far off?

“Consumer packaged-goods marketers are counting on growth in e-commerce and seeking to drive it, in part because of what it can mean to them in developing closer relationships with their consumers,” reports Jack Neff at AdAge.

“This is an emerging trend for branded manufacturers in particular because they believe, rightfully so, that they’ve lost touch with their end customer, kind of ceded that to the retailer,” said Pat Conroy, vice chairman and U.S. consumer products leader of Deloitte.

While Alice provides a system for CPG to sell direct to consumers (and gain access to consumer data), CEO of Alice.com Brian Wiegand said “it doesn’t really matter to most marketers whether it’s a true direct sale to consumers or through a third party like Amazon or Walmart.com, as long as they can participate directly with consumers in the process.”

“Mr. Wiegand said he’s seeing increasingly ambitious projections from CPG marketers of having 1% to as much as 5% of their sales direct to consumers online — fulfilled either by their own systems or those of e-tailers such as Amazon — by 2015. He believes that may be overly ambitious for an industry that still gets far less than 1% of sales online today. But the bigger goal by CPG manufacturers, he said, is to have “a direct relationship with 50% to 80% of their customers, meaning I have them in a database.”

With retailers typically holding the control over the data and the relationship between manufacturer and consumer, will gaining more access to the customer online help? How else can CPG manufacturers build a more meaningful relationship with their customer?