CPG Trend Report: How Digital Is Transforming the World’s Largest Retail Industry
As with most other industries, technological advancements are shaping the CPG (Consumer Packaged Goods) sector. Digital capabilities allow companies to interact with consumers in new and innovative ways, ultimately leading to a range of benefits for both businesses and customers. As the CPG industry becomes increasingly competitive, it’s more important than ever to present shoppers with relevant and lucrative offers. More and more, companies are using data to understand the wants and needs of shoppers. This knowledge can then be used to create personalized offers that cut through the noise in a world where consumers have access to more product choices than ever before.
State of the CPG Industry
CPG Brands on Digital Channels
While the online portion of CPG sales is rapidly gaining momentum, it still accounts for only 7% of the total global market. However, ecommerce was responsible for the vast majority of the total industry growth last year, as customers increasingly warmed up to the idea of purchasing CPG products through digital channels. According to a recent study, 70% of global shoppers have already bought some form of CPG item online. And while many customers are still hesitant to purchase perishable items, such as fresh meat and vegetables, this too is set to change. Online sales of grocery products are forecasted to grow at a compound annual growth rate (CAGR) of 17% between 2017 and 2022.
As consumers continue to migrate online, so do CPG companies’ advertising budgets. Reports indicate that 93% of businesses in the industry grew their digital marketing spend in 2018. Social platforms have become vehicles for establishing personal relationships with shoppers.
Our data predicts that CPG advertisers will continue to grow their media investments across social platforms in 2019. In the past year alone, there has been a 63% increase in overall spend, particularly driven by advertisers in grocery.
CPG Cross-Platform Social Spend
CPG advertisers used to rely heavily on Facebook as their primary social channel, but Adaptly data indicates that the industry is headed toward a more diversified split between platforms. While Facebook still accounted for the majority (52%) of spend in early 2019, this is down significantly from 74% two years earlier. Investment on Instagram has more than doubled in the same period, going from 15% to 34%, while Pinterest has tripled to account for 10% of current total spend.
CPG Social Spend by Platform
CPG advertisers seem to mainly use social advertising for upper and mid-funnel objectives. 59% of last year’s cross-platform advertising was focused on generating awareness, compared to only 2% on conversion-driving ads. Facebook and Instagram were the only platforms used for lower-funnel objectives (9% and 3% respectively). An analysis of other industries’ investment patterns shows a much more even split across objectives, especially on Facebook and Instagram where conversion ads account for 44% and 28% of spend across industries. As online sales of CPG items continue to grow, we can likely expect an increase in lower-funnel ads in this industry as well.
CPG Customers on Social Platforms
While consumers are still hesitant to purchase perishable items online, many turn to social platforms to connect with CPG brands and retailers. More than half (56%) of supermarket customers regularly interact with their food store of choice via one or several social channels. And while 60% of final purchasing decisions are still made in-store, social media is increasingly being used to research and compare products.
Not too surprisingly, millennials are driving the trend with 39% of shoppers using Facebook or Instagram to look for information about CPG products. Similarly, 61% of this age group says that they are already purchasing CPG items online. This new generation of customers has grown up with social media and will likely continue to use these platforms as key sources for brand and product information. As they grow older and become their household’s primary shoppers for CPG products, the importance of social media for advertisers will continue to grow.
Top Trends in the CPG Industry
As the CPG industry continues to go through a technological transformation, companies can no longer rely on the old ways of doing business. Historically, the industry has focused on traditional marketing methods. But as consumer behavior shifts towards digital, brands will either have to follow or risk becoming irrelevant.
Click below to download our 2019 CPG Trend Report to discover the top 4 trends driving the industry today. Plus, get insights on how those changes will impact your brand and how you can prepare for the digital future of the CPG industry.