CPG Brands Ramp Up Digital Marketing Spending

Molly Soat
Marketing News Weekly
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Key Takeaways
  • ​​​The CPG category's digital spending will hit $4.2 billion in 2014, according to eMarketer.
  • Mondelez International, the parent company for Oreo and Trident, will allocate 50% of its annual marketing budget to digital marketing efforts in 2015.
  • Mondelez has set up a partnership with TubeMogul Inc., a programmatic buying platform, to allow the company to program its digital media buys across desktop and mobile.

The consumer packaged goods market has long been viewed as a digital advertising laggard compared with other product categories such as retail, financial services, automotive and telecom, but CPG digital ad spending, including spending on mobile, outpaces that of the travel, consumer electronics and healthcare categories, according to eMarketer. Moreover, CPG brands are ramping up spending on digital quickly, with companies such as Mondelēz International planning bold increases.

According to eMarketer’s report, “The U.S. CPG and Consumer Products Industry 2014: Digital Ad Spending Forecast and Trends,” released in March 2014, the CPG category’s digital spending will hit $4.2 billion in 2014, and will increase to $7 billion by 2018. Retail, the biggest spender in the digital ad space, will allocate $11 billion this year.

Mondelēz International, the Deerfield, Ill.-based parent company for CPG brands including Oreo and Trident, announced this summer that it will allocate 50% of its annual marketing budget to digital marketing efforts in 2015, up from 25% in 2014. A rapidly growing portion of that digital spending will be for online video, said Mark Clouse, the company’s chief growth officer, at the Consumer Analyst Group’s annual meeting in February 2014, eMarketer reports. Clouse said that Mondelēz gets twice the ROI from digital marketing compared with other channels.

Mondelēz’s digital marketing budget allocation already is well ahead of industry averages, which hovered around 8.3% for CPG brands in 2013, according to the eMarketer report, and will grow to 8.9% by 2018.   

Mondelēz has set up a partnership with TubeMogul Inc., an Emeryville, Calif.-based programmatic buying software platform, that allows the company to program its digital media buys across desktop and mobile, and analyze the data that it has collected from them. TubeMogul also works with CPG brands Unilever and CAT on programmatic digital ad buying.

“CPG is being very aggressive in their shift of dollars towards digital media formats and devices, and specifically in using programmatic buying so they can use their data better and smarter,” says Keith Eadie, CMO of TubeMogul. “Mondelez is on the progressive end of the spectrum of CPG brands adopting digital platforms, specifically programmatic buying, but the whole category is recognizing that they are very big spenders on media, and as they spend, they want to get more efficiency, less waste and better use of consumer data.” 

For CPG brands, video has been a tried-and-true ad medium, and the move to digital will not change that, says Scott Marsden, senior vice president of media at Boston-based global digital marketing firm DigitasLBi. While there’s no shortage of digital ad formats and channels online, he says, smart CPG companies are buying more digital video ads to reach an increasingly fragmented millennial audience.

“Regardless of whether it’s programmatic or direct-to-publisher buys, digital video [ads] are becoming paramount for brands like Mondelēz and other CPGs [because] CPGs are focused on product attributes and storytelling,” he says. “Now there are ways that you can build extreme reach in the digital space in video. … I don’t think [CPG brands] will truly go away from TV, since it’s still pretty cheap to build reach and scale against that audience, but as the millennial audience becomes more important to these brands, they’re going to have to think more about what their digital footprint is.” 

This article was originally published in the Oct. 21, 2014, issue of Marketing News Weekly.​

Author Bio:

Molly Soat
Molly Soat is a staff writer for Marketing News and Marketing News Weekly. E-mail her at msoat@ama.org.
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