The mastery of leading consumer product goods (CPG) brands when it comes to bricks-and-mortar sales does not easily translate online. With new branding, pricing and merchandising approaches -- and radically different skills, tools and approaches -- needed to succeed in the digital world, old-school CPG brands have lost ground to faster-moving, new-in-market competitors. This new competitive landscape, the evolution of market expectations and the impact of online shopping have led forward-thinking CPGs to embark on digital transformations that touch most areas of their organizations.
Digital Marketing Outpaces Traditional Advertising
The history of CPG messaging has been defined by traditional advertising. The Budweiser frogs, Coca-Cola bears, even Joe Camel -- they're all indelible images of CPG advertising at its most resonant. With such a strong connection to advertising -- whether it be in print, on TV, or in brick-and-mortar stores -- how has it come to pass that the CPG industry turned away from that field to invest more in digital marketing?
2016 appears to have been the turning point, when digital marketing and advertising investments outpaced traditional advertising in the CPG space. According to a February 2017 Cadent Consulting Group survey of 600 brand marketers, retailers and shoppers, digital channels accounted for 15.9 percent of CPG marketing spend in 2016, while advertising slightly trailed at 15.5 percent.
The survey's results did not suggest that as a one-off aberration, either, as CPGs were expected to spend nearly 20 percent of their marketing budget on digital strategies and only 13.2 percent on traditional advertising in 2017. Some companies have taken to digital marketing more readily than others: According to AdAge, cleaning product manufacturer Clorox spends 45 percent of its working media on digital channels, due to the high return on investment these strategies have demonstrated.
CPGs Continue to Follow the Customers
E-commerce is obviously the elephant in the room here, as more consumers purchase goods over the internet and through smartphones and other mobile devices. It was only a matter of time before the CPG industry caught on to the incredible opportunity to drive engagement through digital platforms.
We're talking about much more than just creating product pages on brand websites here. The confluence of online portals, mobile applications, social media networks and other digital avenues presents new possibilities for targeted customer outreach. According to a 2016 Forrester report, more than three-quarters of online adults in the U.S. interact with consumer brands over social media platforms like Twitter or Facebook. 43 percent of consumers use social media when researching products to purchase.
The message is clear: If CPGs want to follow customers wherever they go, they need to go digital. Capitalizing on these developments requires more sophisticated, cross-channel digital customer engagement strategies as well as a mechanism to make sense of all of the data that's right there for the taking.
Creating a More Unified Engagement Strategy
All of these different channels -- social media, brand website, microsites, mobile apps, etc. -- should be working together to bring CPGs fresh insights into consumer behavior at a granular level. When done right, this kind of engagement can lead to more targeted brand interactions that create an incredible user experience and build customer loyalty.
One of the obstacles companies will encounter here is the issue of customer identity -- or, more accurately, the staggering volume of consumer identities and touch points. A single person could have numerous identities: Twitter handles, Facebook accounts, mobile application usernames, email and brand website accounts, among many others. Businesses often struggle to keep track of all of these identities and readily connect the digital user to the person behind the screen.
Adweek contributor Steven Wolfe Pereira summed up the problem pretty concisely: "Identity is not static." People constantly change their digital identity, closing accounts, adding new ones and letting old platforms languish in disuse. CPG companies need a way to untangle this web of identities and recognize users for who they truly are. Otherwise, they will never be able to completely trust the accuracy of their consumer data, which will impact the effectiveness of their engagement campaigns.
Consumer product goods companies using the Akamai Identity Cloud CIAM platform are able to recognize and manage consumer identities regardless of the brand interaction channel. Beyond the core capabilities of customer registration, social login, preference management and universal ID creation, Akamai's CPG clients are able to more quickly realize return on their digital transformations with trusted digital relationships, personalized consumer experiences and complete customer journey analytics.
The digital world is no doubt complex, and maintaining top-shelf customer engagement through all of the different available touchpoints is certainly challenging. It's worth the effort, though. CPG brands that successfully make the transition into digital marketing, outreach and engagement will find more opportunities to build customer loyalty than ever before.
To speed your digital transformation, start by learning more about consumer identity management for CPG brands.