Consumer product goods (CPG) ad spending is in flux, as shown by the public comments of marketers like Kimberly-Clark and technology shifts such as the matching of offline data with online users to track the effectiveness of digital ads. The impact of this shift may be most visible in the area of digital video.
In a new report, eMarketer indicates packaged goods companies will be the most aggressive buyers in the programmatic digital video advertising market.
“CPG will be the most aggressive in putting budget dollars through programmatic in video,” said Charles Gabriel of AOL, commenting in the report. “Marketers want it, agencies want it, and these systems will allow for better control of (advertising) supply.”
Still, there remains a steep learning curve for brand managers to begin adopting programmatic solutions en masse. AdExchanger Research found complexity came in second among marketers’ concerns, with more than 20% citing it as the “biggest” challenge programmatic faces.
The CPG sector’s affinity for digital video ads is an extension of its traditional preference for television ads, platforms which allow a brand to tell a story and create an emotional connection between brand and customer.
Seeking to connect with customers emotionally differs from the objectives of other industries, which may be more concerned with ads converting directly into dollars. CPG brands are an outlier when it comes to direct response vs. brand advertising. According to the report’s analysis of 10 industries, the CPG industry spends the least on direct response (35%) and the most on brand ads (65%). Meanwhile its overall US digital ad spend is expected to grow from $3.6 billion in 2013 to $7 billion in 2018, a 14.7% compound annual growth rate.
Click-through rates for CPG brands’ digital video and rich media ads were 260% higher than standard banner ads, according to 2013 data from Millennial Media. That was among the largest difference among industries surveyed, with automotive seeing the highest (350%) and pharmaceuticals the lowest (170%) click-rate enhancement from video/rich media.
CPG brands take up 19% of the total ads served for Videology, a video advertising platform, the report said. That was top among industries, above next-highest automotive and financial services, both at 12%.
Gabriel said in the report that CPG brands are repurposing their TV campaigns for digital, as well as pushing toward native advertising with custom campaigns for digital content. This as native advertising supply becomes abundant, with the Online Publishers Association finding 73% of 29 publishers surveyed now offer native advertising.
For the trend to continue toward native digital video ads bought programmatically, CPG brands will need to become more familiar with programmatic and find trusted partners. The Forrester/ANA survey found 46% of marketers “had concerns about the levels of transparency between them and their agencies in terms of how their money was being spent,” the report said.
