In CPG advertising in the past, much of the marketing was done through retailers via in-store advertisements and shelf placement. Retailers acted as middlemen that passed the CPG products to the masses. Direct to consumer sales was not an area most CPG brands spent time on. That all changed with the arrival of the digital age of shopping, where CPG brands are able to reach consumers directly. Massive platforms like Amazon now allow companies to place their products but, for the most part, don’t take responsibility for the advertising of those products. Here then, many CPG brands are unprepared to compete because they’re unaware of how to gain the most advantageous digital shelf space.
Whether customers purchase a product from an online market, buy it direct, or just learn about it online, most CPG brands are going to experience some level of online interaction with a product prior to a sale. Many CPG brands are struggling to get past the days when advertising was one-sided and did not require engagement with consumers. However, some of the most traditional CPG brands have found ways to stay relevant and develop rapport with consumers by advertising as much as major retailers. By taking a consumer-first approach to CPG advertising, brands will be better able to adjust to the market as consumer behaviors change.
The CPG Industry’s Slow Progress to Digital Sales
Many industries made the transition to the Internet so quickly that certain positions became obsolete. Think of the travel industry, where travel agents quickly found themselves displaced by online flight scheduling websites. This was because the Internet changed who the gatekeepers were—an impact felt in just about every industry. One category of goods, however—the CPG category—remained primarily offline until the early 2000s for several reasons, including:
- Market segmentation: The CPG market is unique because of how many products it encompasses. The companies behind those products are as diverse as the products they represent. Small challenger brands that provide niche products are competing with large global conglomerates with thousands of items in their portfolios.
- Retail limitations: CPG products were traditionally viewed as items to be sold through a retailer. In the early days of the Internet, there was little point in CPG brands attempting to garner direct sales specifically because of the product distribution models that existed for brands at the time.
- Shipping costs: CPG products tend to have low price points, many times so low that the cost of shipping would actually exceed the cost of the product. As such, purchasing a single CPG product online then having it shipped made little fiscal sense to either consumers or brands.
Advances in technology helped CPG brands overcome these barriers to entry. E-commerce websites made it easy to browse and buy products while consolidating shipping costs. Stores began relying on mobile to help consumers browse their shelves and order items for pickup. Geotracking and digital marketing now offer opportunities for brands to target consumers more specifically. It’s clear the digital market has adjusted itself for the entry of CPG brands. Now, CPG brands need to reevaluate their advertising to determine if their company is ready to take advantage of those adjustments.
CPG Advertising Success With Direct to Consumer Strategies
One nearly iconic detergent company was able to stand out in its category by shifting its focus from advertising at consumers to engaging with them. About two years ago, the Clorox Company chose to focus heavily on digital commerce and increased business in that channel by 50%. They used mobile advertising and social media campaigns and worked with digital platforms directly to increase sales in this category.
This CPG marketing strategy was done in anticipation of the digital sales route growing. The company is now connecting with the consumers directly on the same level as retailers like Walmart, Target, and CVS. By shifting advertising strategies to engage directly with consumers, rather than going through a retailer, brands can create a lasting connection with the consumer, regardless of where they do their shopping. Often, these advertising strategies center around:
- Being tech forward: One of the key people in the Clorox story was their chief marketing officer, who was intensely focused on the future of ordering. He was heavily invested in emerging technology and solutions like voice-based ordering and smart speaker advertising. His focus was not because these programs are big now, but rather due to a belief that they would be major avenues of purchase 10 years in the future. Delivering a new consumer experience, before the consumer even knows they want it, is an essential step for brands that want to stand out.
- Engaging consumers in-store: Many CPG brands are using shopping apps to engage with the consumer as they’re in the shopping aisle. Using incentives like rewards points delivered via a mobile app is a strategy that works for CPG brands, who get even more of a return than a discount might offer, without the same margin impact the discount would have. This is because consumers often perceive rewards points as having greater value than their actual dollar amount. That’s in part a result of the emotional return they provide. Shopkick, for example, offers a gamified app that consumers can use to scan and purchase items in-store and online and gain kicks that can be exchanged for gift cards. This engages the consumer twice: at the time of purchase and when they’re trading in those points for the gift card.
- Going direct to consumer: This is one of the biggest shifts in today’s CPG marketing trends. In the past, consumers had to go to the CPG brand, seeking out a favorite brand’s product in the store. This created a challenge because the first time the consumer saw the brand’s product was when it was on the shelf, next to competitors, many of which were lower cost or more visibly prominent. Today, CPG brands can proactively engage these consumers before they reach the store, which helps the product stand out. For example, brands can connect with consumers directly on social media channels and via mobile apps.
CPG advertising strategies need to be designed to work both in brick-and-mortar locations and through digital platforms in order to capitalize on an increasing direct sales market. Advertising should travel to the consumer rather than wait for the consumer to come to the brand. By connecting with consumers via mobile apps, social media, and other digital avenues, brands can proactively reach their target market.
CPG brands need to be prepared to move faster in developing their marketing strategies than they did in the past, in part because consumers’ physical and digital worlds are starting to merge. Using mobile app-based marketing as part of a consumer engagement campaign can help position CPG advertising to meet the demands of shoppers in the digital age.
Shopkick offers our partners the ability to travel with consumers through an engaging app designed to drive sales in the store and online. For more information, contact us.
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