The way brands approach CPG advertising is continually evolving.
A shift to digital encourages new opportunities for manufacturers and emerging brands in the U.S. packaged goods industry.
While CPG companies generally enjoy healthy margins and large balance sheets, these brands are constantly fighting for space in the hearts, minds, and shopping carts of consumers.
However, thanks to the power of social media and digital search, the barriers to enter the CPG industry for growing brands are lower than ever.
With the right CPG advertising agency and digital targeting, smaller brands can gain a foothold in the $2 trillion marketplace.
Things this article will cover;
- What is CPG advertising?
- Why is CPG advertising online important?
- CPG advertising trends
- Where do CPG companies spend their CPG advertising dollars?
- Who spends the most on advertising CPG?
- What percent of sales do CPG companies spend on advertising?
- How much should you spend on CPG advertising?
- Work with a CPG advertising agency
What is CPG advertising?
Consumer packaged goods (CPG) advertising, is a sector of marketing dedicated to the advertisement of perishable consumer goods.
Consumer packaged goods refer to the merchandise that we consume and replace regularly. Examples of packaged goods include food, beverages, hygiene items, cosmetics, cleaning products, and other household goods.
CPG contrasts durable goods (DG). Durable goods refer to merchandise that isn’t consumed or destroyed when used and not often replaced. Examples of DG items include vehicles, furniture, and appliances.
Why is CPG advertising online important?
In the last decade, especially, power has shifted to the consumers. It’s easier than ever for them to search for what they want when they want it, and packaged goods are no exception.
As the acceleration of digital continues to grow, CPG brands that settle for traditional advertising methods may be left behind.
Studies show that smaller, consumer-centric digital brands consistently outperform their larger counterparts. Ninety out of the 100 top CPG brands report losing market share to digital brands in the last several years.
Purchasing goods by tapping on our devices is the norm, so it doesn’t come as a surprise that global online CPG sales have grown over 35%.
The brands that capture consumer interest are the ones reaching them at the right place, at the right time with highly-targeted, data-driven CPG advertising.
What are the current CPG advertising trends?
With a cultural shift towards health and wellness, an expectation of convenience, and a mounting interest in sustainability, CPG marketers have had to take a closer look at how they position their products.
In today’s digital landscape, connecting with your audience is all about leveraging data. Data-driven insights will help you identify your best audience while understanding their evolving wants and needs.
This knowledge is used to create highly-relevant personalized offers that show up at the peak of your consumers’ interest. The most effective way to accomplish this is with a thoughtful, creative strategy and a healthy media mix.
Here are the top CPG advertising trends performing right now:
- Replacing demographics with behavioral targeting.
- Using data-driven insights to identify evolving audience/preferences.
- Focusing on rich media like video advertising and sponsored content.
- Using programmatic to serve ads with greater precision.
- Exploring omnichannel opportunities.
Where do CPG companies spend their CPG advertising dollars?
Packaged goods marketers spend more on digital CPG advertising than all other traditional forms of advertising combined.
According to more than 600 brand marketers surveyed by Cadent Consulting, CPG advertisers planned to spend 19.7% of their total budgets on digital ads, compared to 13.2 percent on traditional advertising.
As a whole, the U.S. CPG industry dedicated $11.12 billion to digital CPG advertising this past year.
Mobile CPG advertising makes up an impressive $7.54 billion of this total, rising 22% from the previous year, while search ad spends rose 27.6% in the CPG sector.
Who spends the most on advertising CPG?
Not surprisingly, CPG giants are notorious for big spending on advertisements. Major household brand, Procter & Gamble, spent an impressive $4.3 billion on advertising this last year.
With 53% of U.S. household product ad spending from P&G alone, the company earned the title as the largest consumer packaged product advertiser in the world.
This doesn’t come as a surprise. Brands like Bounty, Charmin, Downy, Febreeze, Gain, Tide are the top household products in ad spending, and they’re all owned by P&G.
What percent of sales do CPG companies spend on advertising?
Due to high competition in consumer packaged goods, CPG marketing and advertising spend is higher than in other industries.
On average, CPG manufacturers dedicate 19.5% of their total sales to their marketing and advertising budget.
A report by Statistica reveals that 13.3 percent of this marketing budget went to traditional CPG advertising, and 19.9% went to digital channels in 2017.
How much should you spend on CPG advertising?
If you are a new company doing less than $5 million a year, the U.S. Small Business Administration recommends spending 7-8% of your gross revenue on all marketing.
If you own an established business that does over $5 million in gross revenue, the SBA recommends raising your marketing investment to 12-20% of sales.
Keep in mind that marketing casts a wide net. For example, marketing may include video advertising, Google AdWords, social media, sponsorships, etc.
When it comes to CPG advertising – including traditional and digital advertising – established companies budget an average of 6.5% of their total sales.
New companies, on the other hand, will want to focus an average of 2-3% of gross revenue on their advertising budget.
Work with a CPG advertising agency
The takeaway: Growth is possible for CPG brands of all sectors, sizes, and price tiers – with carefully targeted approaches.
A CPG advertising agency can help ensure that your business cuts through the noise of the competition.
At LiftIntent, we can help:
- Pinpoint, test, and optimize your best audience.
- Identify content types with the largest opportunity.
- Target the best time of day, week, and year to reach your audience.
- Deploy in the countries and platforms with high potential for success.
- Target KPIs commonly used in your industry, measure them, and A/B test effectively.
See what we’ve accomplished for other companies with our case studies and tell us your goals today to receive our media kit!