As digital proliferates every facet of the retail industry and consumers’ lives, digital ad spending has grown into a multi-billion dollar business with CPG companies spending more than ever to get their brands and products in front of the right people at the right time. Looking forward into 2014 and beyond, companies will focus on brand messaging and mobile, with an eye on geotracking, according to a new report, The U.S. CPG and Consumer Products Industry 2014 Digital Ad Spending Forecast and Trends, from eMarketer.
Big player CPG companies have all voiced intent to increase digital ad budgets, creating spending projections of $4.2 billion in 2014 and $7.04 billion by 2018, the report says. Some examples from the report include:
“Mark Clouse, the executive vice president and president of Mondelez International-North America, said the snack food company wants more than half its spending to be digital by 2016. Clouse told Advertising Age it gets twice the return on investment (ROI) from digital than any other media.
General Mills devoted 17% of its ad budget to digital in 2013, up from 8% in 2008. CEO Ken Powell told Advertising Age he expects that spend will continue to increase.
Nestle revealed that its global head of digital marketing innovation has been working full-time for the past year in an office in Silicon Valley, indicating that the company feels a need to be closer to where digital innovation and decisions are taking place.”
While spending is projected to increase, data found that CPG advertisers’ spend on digital advertising is less than other industries, including retail, financial and automotive, and hasn’t fluctuated from 2012. According to the report, the lower share of spending on digital advertising may represent the fact that CPG companies are still attempting to determine where and how to maximize its advertising dollars.
Two areas where CPG companies appear to see value include branding and mobile, with eMarketer estimating that digital ad spending on branding in the U.S. will make up 65% of total budgets. Last year, branding comprised 63% of digital ad spending, and CPG chief marketing officers surveyed by Duke University said they anticipate increasing their marketing budgets by 8.2% over the next 12 months.
The recurring theme of marketing through story-telling is also highlighted by eMarketer, which states in its report that content is an increasingly popular vehicle to deliver brand messaging.
“Storytelling, in the form of native advertising, gives CPG brands opportunities to create connections with consumers,” the report says. “Those connections are an important tactic as private label brands eat up more shelf space in grocery stores, drugstores and mass retailers. The opportunities for native advertising — where brands create content that mimics the space around it, then pay to place the ad near related editorial — are increasing as online publishers realize the lucrative ad dollars that come with such initiatives.”
Geolocation tools are also trending with the CPG industry, with a study finding that mobile ads performed better when they were delivered one to 10 miles away from a store as opposed to less than one mile. The reasoning behind this, according to Mark Jacobson, director of strategy for Microsoft Advertising, is due to the way people shop and plan to shop. While spending on mobile advertising is still on the low end, eMarketer predicts that number to increase to 33.5% in 2014, and Jacobson said he has observed more marketing to consumers happening in the store and at the point of purchase.
“As the phone’s infrastructure changes and as you see in-store location capabilities changing, it will continue to be an area of significant interest for CPG brands,” he said.
Access a free download of the executive summary and obtain more information on eMarketer’s “Digital Ad Spending by Industry” report series.