Get a demo Do I subscribe? News sign-up
Print

CPG brands boost digital ad budgets

News, 27 February 2017
Topics

NEW YORK: Marketers at consumer packaged goods (CPG) brands now spend more on digital than all forms of traditional advertising, a new survey has revealed.

That is according to Cadent Consulting Group, which polled 100 CPG manufacturers, roughly 200 retailers and 300 shoppers for its study, Advertising Age reported.

The Connecticut-based firm estimated CPG marketing in the US to be worth about $225bn annually, when spending on trade and consumer promotion are included, while advertising and shopper marketing account for about $100bn of the total.

Cadent said trade promotion, at 46.2% of total marketing spend in 2016, remained the industry's biggest type of marketing, but that is down from 49% in 2012 and it is expected to fall further to around 43% in 2017.

The rise of digital marketing was another trend identified in the report, which last year made up 15.9% of total CPG marketing spend, and is projected to grow further to 19.9% in 2017.

With traditional advertising accounting for 15.5% in 2016, that meant digital took a bigger share for the first time. Meanwhile, shopper marketing and consumer promotion accounted for 13.2% and 9.2% respectively.

As well as noting the industry-wide shift to digital, which accounted for just 7.1% of marketing spend in 2012, Cadent examined its effectiveness with consumers and retailers.

Of the 300 shoppers who took part in the survey, only 14% said they were aware of brand digital ads, while just 10% said they were influenced by them.

Advertising Age described those figures as being "well below levels for traditional advertising, and even further below tactics such as price promotion or in-store marketing".

The results were better among retailers, but still only 60% of them said they thought digital advertising works for brands, while almost two-thirds (65%) rated traditional ad spending as effective.

Coming after Procter & Gamble recently criticised the transparency and integrity of digital media-buying, Cadent Managing Partner Don Stuart said there could be a "backlash" and a move back into "more traditional proven vehicles".

But, he added, "I don't know if that's going to be 2018 or 2019, since digital offerings are just proliferating and every manufacturer is trying to test what could potentially drive their business".

Data sourced from Advertising Age; additional data by Warc staff

Topics