Digital CPG Blog

We’ve talked before on this blog about the need for CPG brands to shift more of their marketing spend online to “go where the consumer is.”  And even though the industry is forecasting big increases in digital spending this year (see here, for example), digital CPG marketing budgets are still small as a percentage.  I think this is due in part to the challenge of finding good digital opportunities, and in part to the “inertia of advertising budget allocation.”

So just how will CPG brands ramp up digital spending in 2010?  We got a glimpse into P&G’s strategy this week, when venture capitalist David Hornik recounted a meeting in which P&G execs indicated that they are “bullish” on Facebook.  So bullish in fact that “P&G’s explicit goal for 2010 is to assure that each of its brands has a meaningful presence on Facebook.”

It will be very interesting to see what a “meaningful presence” means.  I wonder just how much “engagement” P&G can achieve for CPG goods on Facebook in 2010 and beyond.

At least one P&G exec has expressed skepticism that Facebook users will respond to interruptive commercial messages when “breaking up with their girlfriend.”  Are there enough permission-based marketing opportunities for P&G to leverage on Facebook?  Or will this digital spending simply be viewed by users as more interruptive advertising?  A user comment on the AdAge article covering this news lays out P&G’s challenge nicely “Great. I became a fan of Febreze, but the page *still* smells like advertising.”

It looks like 2010 is shaping up to be a banner year (bad pun, sorry) for digital ad spending by the Consumer Packaged Goods industry. 

According to an Adversiting Age article this week (article here), digital CPG spending has seen a big upswing in the back half of 2009, with at least one agency claiming “a hockey stick of growth in CPG.”  Interestingly, most of this growth isn’t coming in measured media like online display ads.  Instead, the growth is happening in things like social media projects, digital POP, mobile, and eCommerce initiatives. 

And herein lies the huge question for 2010 and beyond: As CPG tries to scale its digital advertising, will the industry find enough high quality places to put those ad dollars? 

In my view, eCommerce will be a lynchpin to these efforts.  If CPG brands use eCommerce as a tool to energize their websites with real consumers, those sites can serve as a centralized collection point for a host of diverse online campaigns.  As always, I’d love to hear your thoughts as well.

The move towards two-way advertising has been much heralded.  The digital world has allowed advertising to become more participatory, and consumers are starting to demand the ability to interact directly with their brands (great study here).

That is why it is so exciting to see the giant $65 billion television advertising market start to give two-way advertising a spin.  The Wall Street Journal had a great article this week (Talking Back to the TV) about how major players in the television advertising industry are enabling interactive features in tv ads.  

Both Unilever and P&G were featured in the article for their early success with the new features.  Unilever’s Axe brand, for example, had more than 3.5 million users spend an average of 5 minutes playing with their interactive advertisement. 

Even more interesting, P&G’s Charmin advertisement married in a direct response component, allowing tv viewers to request a Charmin coupon through the mail.

I find this tie-in to direct response pretty exciting.  Think about the possibilities of a CPG brand being able to capture an actual sale directly through a tv ad. 

The Charmin advertisement featured in the WSJ piece delivered a traditional paper coupon to the user, but this is just the start of the possibilities.  For example, what if the user could link the coupon directly to a store loyalty card?  Or submit an e-mail address and have a digital coupon e-mailed to them for use at the CPG’s own online store (or a shared storefront like Alice.com).  In these advancements, the CPG company not only captures a sale, it is able to assign an ROI directly to the tv advertisement, and gain rich insights into the actual customer segment responding to the ad.  Accountable television advertising may (finally) be coming.     

The lack of a uniform technology platform will certainly slow adoption, but the possibilities are exciting and the development of this new digital, interactive environment will be fun to watch.

For many industries, online advertising has been a game changer.  Online search and display advertising has brought a level of accountability and measurability that marketers of past eras could only dream about, making John Wanamaker’s famous advertising saying almost obsolete (”Half the money I spend on advertising is wasted; the trouble is I don’t know which half”). 

If I sell digital cameras online, for example, I can hop onto the Google search platform and pay only when an interested person clicks on my ad.  And better still, I can set a precise return on those search dollars by tracking not only who clicks, but who ends up actually buying because my sale is online.  This can turn much of my advertising work into a math exercise.   

But what about the Consumer Packaged Goods category?  Although CPG is by category one of the largest advertisers in the world, to date, they haven’t really been able to connect the dots between online advertising and consumer sales.  Why?  Because there hasn’t been a measurable direct response platform for CPG online.  As a CPG brand, I can spend like crazy on online ads, but I’m left guessing whether the advertising actually worked in driving more sales (let alone whom it might have worked on). 

CPG shouldn’t be left guessing when it comes to online advertising ROI.  And apparently I’m not the only one who thinks so.  News today from Kantar-owned firms Compete Inc. and Cannondale associates that they are combining online consumer data and offline loyalty card data to actually tie online advertising exposure to a subsequent purchase in the grocery store aisle (post here).  What a great idea.  Here’s a quote from the news that should get your juices flowing  if you are in digital CPG:

‘It’s really finally connecting the dots, getting down to actual in-store purchase volumes, amounts spent, loyalty switching, etc.,’ Pace said. ‘Not only can we see how exposure to advertising campaigns last month had an impact…but we can compare that to the consumer’s previous purchase levels of that product.’

It is great to see digital CPG advertising take a step in this direction.  We are working on the same goal of accountable online advertising at Alice.com, but instead of tying offline purchase data, we provide the CPG brands with an actual direct response platform online.  Consumer sees the ad/coupon/free sample and responds with a purchase at Alice.com, giving the brand a direct view into ROI for that ad unit.  It is one of many efforts percolating to bring better accountability to online advertising for CPG.  We think these efforts are long overdue.

Let us know if you disagree or think there are better ways to make online advertising work for CPG.