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.”

Mary O’Connell of Clorox gave a great interview with eMarketer earlier this week (excerpt here).  In the interview, Mary talked about how Clorox has moved aggressively into social media in the past 18 months and is “creating a new vision of digital marketing, which is rewiring and re-imagining our entire brand experience.”

Mary mentions a number of great examples in the interview, including the launching the new Clorox Greenworks line which was supported by a blog site called the Shades of Green Journal and a program called 30 Days to Natural.

Why the strong move into social media and digital?  In the words of Mary, “we went where our consumers are.”  Another great example of a CPG brand adapting to today’s consumer.

In the past week, Walmart and Amazon have been engaging in a very public war over the price of popular new books sold online.  Walmart fired the first salvo with a $10 book price, and the two have traded cuts back and forth.  Amazon matched the $10 price, so Walmart dropped their price to $9.  Not to be outdone, Amazon and Target both went to $8.99.  Now Sears has joined the battle, with a very clever promotion (free books) that trades off the price war (more on Sears’ strategy here).

On the surface, this battle may not appear to be about CPG brands, but there are important lessons to take away.  At the end of the day, this isn’t about selling more books in the fourth quarter.  Instead, this is a battle for brand leadership.  These companies are fighting to be the most trusted, top-of-mind brand for consumers.  It is a battle worth billions.

The national CPG brands are fighting a similar battle in the face of increased competition from private label, retailer sku rationalization, media fragmentation, and a consumer focused on spending less in a tough economic climate.

Herb Sorensen recognized this fact in a very interesting commentary on the price war over on the BrainTrust blog.  In the post, Dr. Sorensen concludes that the way out of this “paying of customers to buy” is to “genuinely engage individual ’shoppers’ in personal ‘conversations.’”  The result will be an engaged and highly profitable consumer who trusts your brand and seeks our your products and marketing.

Importantly, Dr. Sorensen points out that this one-on-one strategy isn’t available exclusively to retailers.  In fact, he argues that the national brands have an even greater opportunity to use one-on-one marketing to engage consumers across all their channels of trade and realign the balance of power between manufacturers and retailers.

Will the national CPG brands respond to this opportunity?  P&G announced a clever social media campaign with its Charmin brand yesterday, and I expect we will see many more efforts like this as national brands continue to evolve their marketing to stay top of mind with consumers.  Mark Addicks, the CMO at General Mills, laid out the challenge nicely in a recent interview in The Hub Magazine: “Part of the next frontier of brand identity is how brands are going to continue to grow in this world of consumer engagement.”  It appears that national CPG brands are ramping up their digital and social media marketing to do just that.

Mark Addicks, General Mills’ chief marketing officer, gave a very insightful presentation on General Mills social media strategy at a recent BlogWell conference in Minneapolis. The presentation (located here) lasts about 20 minutes and is well-worth a listen. You can also check out Mark’s slides below:
BlogWell Minneapolis Social Media Case Study: General Mills, presented by Mark Addicks

It is great to see a big player like General Mills beginning to embrace social media with such gusto.  As Mark mentions in his presentation, General Mills is working hard to “bring scale to social media.”  A few key takeaways:

• General Mills understands that “the consumer owns our brands,” which is part of the overall shift in marketing that social media is driving
• General Mills is working hard to get closer to its consumer in lots of ways, and social media is a big part of that push
• A good social strategy enhances “margin advantage”
• General Mills is now launching many of its new products “conversationally” with social media

Want further evidence that General Mills is going after social media in a big way?  Mark mentions (almost in passing) that the Betty Crocker brand is almost completely out of t.v. in favor of social media.  That is a pretty amazing statement, but seems to make perfect sense when you see studies like this.

What other CPG brands are using social media in effective ways?  P&G’s Loads of Hope campaign comes to mind, but we’d love to hear of others.