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3 Things Consumer Packaged Goods Advertisers Should Know

Pandemic, inflation, economic instability, supply chain challenges—oh my! To say the landscape for consumer packaged goods (CPG) marketers is complicated feels insufficient. This year (and the year before…and the year before that…) has been a wild ride. And though no industry has escaped unscathed, CPG has been especially hard-hit.

If you’re still reeling from the changes, we’re here to give you the 411. Below, catch up on all of today’s CPG advertising “need-to-knows:” the challenges imposed by the last few years’ instability, the broader trends and shifts shaping the industry, and the interplay between these trends and today’s economic landscape. Settle in, grab your favorite packaged snack (Doritos for us!) and let’s get this party started! 

Setting the Scene: CPG Complexity is Soaring

Before we explore the latest trends, let’s set the stage for CPG advertising today. Here are just a few of the (many) factors at play:

  • CPG brands experienced intense growth during the pandemic, growing more in 2020 than in the previous four years combined.
  • Now, inflation is shifting consumer spending, and brand loyalty is faltering. More and more people are trading down from their go-to CPG brands as they seek lower prices.  
  • On top of inflation, rising logistics costs have further driven up product prices across industries.
  • Supply chain woes have been unrelenting (it’s no wonder that a recent study found these issues to be top-of-mind for CPG leaders).
  • The explosion of retail media networks has shifted the way that consumers shop and interact with products online. Not only that—brands are still trying to figure out how best to access inventory, and how this new channel fits within existing internal structures.

Talk about whiplash, eh? Now, onto some of the larger trends we’re seeing in the CPG advertising space and how they’re being shaped by the complexities of today.

1. Consumer Demands Are Evolving

Though some consumers are wavering on brand loyalty because of inflation, that doesn’t mean their expectations for go-to products and brands have gone out the window. With a multitude of products at consumers’ fingertips (thanks, internet!) and competition at an all-time high, the pressure is on for CPG brands to differentiate themselves from the rest of the pack.

And the two factors that are differentiators for many consumers today? Convenience and value. 

Convenience

During the COVID-19 pandemic, e-commerce soared, increasing by 43% in 2020. And though in-store shopping has returned, consumers have grown accustomed to a certain level of convenience. To accommodate for this demand, brands are optimizing their shopping experiences across e-commerce platforms, utilizing advertisements that allow integrated purchasing options, and balancing supply and demand (to avoid the dreaded “out-of-stock” that frustrates so many consumers).

Value

In the context of today’s record-high inflation, brands need to clearly communicate the value of their product for consumers. As mentioned earlier, reports show inflation has started to catch up with purchasing trends, and more and more people are buying less and showing price sensitivity. One way brands can highlight their value is through seeking to understand their consumers and crafting personalized customer experiences that emphasize how their product fits customers’ distinct needs.

Some brands have opted for an even bolder approach to communicating their value amidst inflation, by speaking openly with consumers about price increases and their justifications for these changes. For example, Mélanie Masarin, the founder of nonalcoholic aperitif company Ghia, said they made the choice to send a price-increase email when they had “waited to increase prices until [they] absolutely couldn’t anymore.” Though she was anxious about how the email would be received, she found the response to be overwhelmingly positive, and noted that many customers thanked the brand for its transparency.

2. Omnichannel Interactions Have Become Essential 

Can you remember a time when you made decisions about what to buy without using the internet?

If not, then shoot: looks like we’ve dated ourselves.

And if so—ah, weren’t those simpler times? Did your dad also spend hours at the local Ace Hardware comparing different models of drills, consulting staff, and inevitably buying the one he originally planned to? No? Okay, we’ll get back on topic.

In today’s increasingly-online world, utilizing an omnichannel digital strategy is a must for CPG advertisers.

The digital explosion of the past two decades has changed the way consumers shop. More and more people are shopping online, and even die-hard in-store shoppers are researching products on the internet before purchasing. Couple that with the fact that consumers’ attention spans are reducing year after year, and the takeaway for marketers is clear: people need to see your product at the right time(s), on the right channel(s), and with the right message.

This is where having an omnichannel strategy is critical for CPG marketers. Given how short attention spans are and the sheer volume of content people consume each day, consumers need to be exposed to your product multiple times and through varying channels.

And the best way to reach them? Where they’re spending the most time. Want to take a gander at where the average US adult spent approximately 8 hours and 5 minutes every day in 2021? With digital media.

As such, an effective omnichannel strategy should involve multiple touchpoints with consumers across different digital media channels. And with the exceptional cross-device targeting capabilities available today, reaching customers at the right time and on the right device has never been more seamless. 

3. Your Digital Shelf is Critical

Imagine this: you and your team work together to create an intentional, personalized, omnichannel experience for your target consumer. They first encounter your product through a video ad as they watch the newest season of The Handmaid’s Tale on their connected TV, and are then re-targeted via mobile search and social media. When they see the ad on Instagram, they click “shop now,” are taken to the online retailer that has your product in-stock…annnnnd end up clicking to a similar product that pops up alongside yours as “recommended.” It’s “add to cart” for your competitor, and a sad day for you.

This is a prime example of the growing importance of balancing supply and product presence not just in physical stores, but also on digital shelves. Today, thanks to the internet, when the average consumer goes to shop, they have a whole host of options available to them at every stage of the process. And with 10% of total US CPG sales happening online this year, establishing your brand and product’s digital shelf (in conjunction with a strong digital advertising strategy) is important.

Winning digitally looks very different from in-store: space is not finite, and online shopping offers endless “aisles” for consumers to browse. With this comes a notable increase in competition, as even more brands can compete within a given category. On top of that, many online retailers have features where products can be compared with just the click of a button, and retail media networks allow brands to advertise in the digital spaces where consumers shop.  

Instead of vying for a great location on an endcap or at eye-level on the physical shelf, brands must now use branding and product descriptions strategically and optimize their offerings for both paid and organic search. These same features must also speak to consumers once they click on a product, since alternatives will almost certainly be displayed simultaneously. The same copy and design on your product’s physical label cannot just be plopped online and expected to drive sales without being adjusted to better suit the digital shelf space and entice shoppers viewing your product on desktops, mobile phones, or other devices.

Establishing a strong digital shelf presence goes hand in hand with digital advertising for your product: as explored in our example above, you don’t want a consumer to follow an ad for your product, only to choose one of the competitors that will, inevitably, be displayed right alongside it.

Looking Ahead

By remaining flexible and agile amidst the present uncertainties, as well as adapting to consumer demands, enhancing digital presence, and utilizing omnichannel advertising capabilities, CPG marketers can effectively reach their target consumers. But, as explored here, the current landscape and broader trends are ever-evolving in the advertising world—both in CPG and beyond.

We know that staying in-the-know on the latest and greatest in adtech and marketing can take a lot of time. As much as we might want to spend hours perusing the news and doing deep dives on current trends in the industry, we also know that likely isn’t a high priority when SHTF.

Enter: Basis Scout. Each week, our team puts together a list of the most important news and trends we’ve seen; and every month, we do a roundup newsletter with all the hottest happenings. Interested? Subscribe here, and get ready for all the best news, tips, and insights from the industry to land straight in your inbox.

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