WHY CPG MARKETERS NEED TO EMBRACE DIGITAL SHOPPER MARKETINGA look under the hood at three CPG brands

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Executive Summary MediaMath has deep-rooted relationships with Consumer Packaged Goods (CPG) marketers and expert knowledge of what CPG brands are doing in digital, particularly with regard to programmatic and the use of data. But many brands have yet to realize the full potential that data collection and programmatic campaigns can bring to their shopper marketing efforts. We set out to explore questions regarding digital shopper marketing and share strategies for optimum success.

∙ What are the challenges marketers currently face internally and externally with regard to data automation and shopper marketing?

∙ What has worked and what hasn’t worked? ∙ What plans do marketers have for shopper marketing in 2014 and

beyond?

As a blueprint for the different types and levels of digital sophistication, MediaMath interviewed three executive-level digital marketers from different CPG brands. These interviews captured their thoughts around techniques and strategies for this market in particular and provide:

∙ A candid overview of digital efforts that they have implemented to date ∙ A window into the challenges they are facing in 2014 ∙ Tangible examples of successes and failures of shopper marketing

strategies ∙ Future opportunities in shopper marketing solutions

What we found was that some CPG marketers are spearheading their organizations’ – and the industry’s – adoption of automated methods for purchasing online advertising inventory and are integrating available consumer data to make this technique, also known as programmatic media buying, more effective. Other CPG marketers, however, are still eyeing it suspiciously and relying on more traditional, tried-and-true strategies.

Insights and FindingsBased on the interviews that we conducted, there is significant room for digital shopper marketing to emerge as a larger marketing segment, but full-service ad tech adoption remains in a nascent stage. We uncovered examples of CPG brands’ experimentation with a range of tactics from social media to online couponing, but leveraging the immense amount of data available to them through formal programmatic trading has only just begun. CPG marketers also face the challenge of minimal brand loyalty on low consideration products and competition posed by a greater number of choices available to consumers.

SHOPPER MARKETING

“Shopper marketing is based on a deep understanding of shopper behavior and designed to build brand equity, engage the shopper, and lead him/her to make a purchase. The premise behind shopper marketing is that manufacturers and retailers can together create a more engaging shopper experience, influencing shoppers at the point of purchase where they make final buying decisions. Shopper marketing is about using insights and specifically targeting the core shopper with the right environment, the right products, the right packaging, the right prices, and the right marketing communication — all combined to satisfy the shopper in a way that was not traditionally possible.”

“Delivering the Promise of Shopper Marketing”

Deloitte.

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CPG marketers informed us about obstacles related to measurement due largely to the challenge of converging online and offline data, limited access to sales-based first-party data, and the need for a consistent set of metrics across channels because of an historic reliance on TV as a primary media source. In one subject’s experience, waiting for offline retailer campaign results can often take six months or more. Another marketer was able to share that programmatic campaigns were driving ROI, but he wasn’t able to ascertain more detailed results, simply because he didn’t have his hands on all of the necessary data. So, how can CPG marketers overcome these constraints and take control of their own data?

The CPG marketers interviewed found retail partners their most formidable obstacle. The goal of retailers is to drive sales in a particular category, but they are often perceived as more or less indifferent to the needs of any specific brand. CPG marketers are on their own when it comes to driving sales for their products in any retail store. Additionally, marketers relate that some retailers tend to be set in their ways with respect to shopper marketing and may be unwilling to experiment with new tactics.

HistoryThe digital age has changed the game for CPGs, making the consumer consideration phase shorter and more competitive. Only by harnessing consumer data and making it actionable through advanced algorithms and technologies can those brands score against the competition.

Brands like Ivory and Palmolive were once able to reliably reach and influence their audiences during breaks in daytime soap operas. Over the years, that focus shifted to newspaper inserts and coupons in demographically appropriate print publications, which became a key tactic alongside in-store visibility where eye-level shelf space and end-cap displays have always been critical to CPGs (later replaced by their digital equivalent: the landing page).

In 2005, Proctor and Gamble began promoting what it called the “First Moment of Truth,” the theory that shoppers make up their minds about a product in 3-7 seconds — about the same amount of time it takes to note a product on a store shelf. Google took the ball 50 yards farther in 2010 with its “Zero Moment of Truth,” or ZMOT, which states that while this first moment of truth is still important, the rise of full Internet adoption leads to many brand interactions before the consumer ever sees a product on a shelf.

There are, however, tremendous opportunities for CPG brands to engage consumers with programmatic in a targeted and scalable way, and to drive shoppers into the store to purchase specific products. ZERO MOMENT OF TRUTH

FIRST MOMENT OF TRUTH

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Learn more about the evolution of CPG Marketing from “Soap Operas to ZMOT: The Evolution of CPG Marketing”

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In the era of Big Data, CPG marketers have more intelligence and insight at their fingertips than ever before. CPG marketers can harness the power of programmatic media buying to make that data work for them to win the

ZMOT.

Opportunities in Shopper Marketing Shopper marketing has evolved dramatically in recent years. With audience behavior changing rapidly as internet use, tablets, and mobile proliferate, CPGs can’t wait any longer to leverage digital and the wealth of consumer data it brings to find their targets and reach them at work, play, and across all devices and channels.

As data becomes a bigger factor in all aspects of marketing, shopper marketers are looking for new ways to gain insights into why consumers buy certain products. To quote Shopper Marketing 5.0, published by Booz and the GMA:

“As marketers increasingly come to understand that consumer behavior is not always a predictor of shopping behavior, they are becoming more focused on what drives shopper choice, both in online and physical stores. And as retailers themselves come to understand that their wealth of transaction data (what people bought) doesn’t give them true insights into why shoppers behave the way they do, retail merchandising and marketing leaders are questioning everything: store layout, navigation, promotional displays, packaging, associate training, and more.”

Shopper marketing today not only focuses on driving sales, but on understanding what drives shoppers to the store and what other items they might buy. It also, out of necessity, focuses on the many touch points a consumer will encounter along his or her path to purchase, both online and offline.

While giants like Coca-Cola rely on a strategic, not just a tactical approach to data for shopper insights, encompassing multi-channel retail data and customer profile data, they’re in the minority.

According to a GMA and Deloitte study:

∙ Only 36% of CPG marketers regularly collect this kind of data, compared with 75% who leverage more general consumer research.

If leading CPG marketers know that these deep shopper insights are driving growth for industry leaders, why aren’t the rest following suit? The simple answer is that it seems like a lot of work. There’s an overwhelming amount of data, and it can appear hard to collect and parse — and harder still to glean actionable insights. There’s also a perception that processing all that data will be costly. But, that doesn’t mean it shouldn’t be done, and it’s critical to success in an increasingly competitive market.

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Learn more about “Why Shopper Insights Mean Much, Much More than Consumer Trends”

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Learn more why brands and publishers are investing in programmatic. “Brands and premium publishers get on the programmatic ad bandwagon”

LEARN MORE

LEARN MORE

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With the right partners and technology in place, collecting shopper data and putting it to good use doesn’t have to be difficult or expensive, and it can produce exactly the insight CPG marketers need to drive effective shopper marketing strategies. A recent gathering of top CPG brands at the Consumer Analyst Group of New York validated the rapidly growing role that digital and online consumer data now plays in their marketing strategies, in some cases overshadowing budget allocations to print and TV. With digital budgets comprising less than 10% of overall marketing budgets just a few years ago, CPG giants such as Procter & Gamble, L’Oreal, General Mills, and Clorox Co. are now actively allocating higher budget percentages to digital based on a stronger return on investment in comparison to other media.

The “Inside Scoop” With CPG Marketers“The path to purchase is not a straight line, and neither is it a circle as

some have described it. It is more like a pool or a puddle.” -- Sonja Mathews, PepsiCo

CPG MARKETER NO. 1Marketer No.1 is among the most sophisticated that we have encountered in the CPG space. An early adopter of programmatic trading, this senior CPG marketer is considering ways to reach consumers with relevant messages all along the customer journey. His forward-thinking approach to data-driven marketing leaves him wondering about the fine line between consumer and shopper from a data perspective. (When collecting data for insight to guide marketing strategies, these two groups are perceived as different.) His challenges center on acquiescing to retailer requests and the timely receipt of campaign results.

Creating a Digital Center of ExcellenceWhen Marketer No. 1 walked into his new role to lead digital marketing for North America at a multi-national food manufacturing company, he made a big assumption about big box retail stores - that they have one goal: driving foot traffic. “There is a tension point, which I knew, between the manufacturer and the retailer. The manufacturer wants the consumer to buy more products, and the retailer couldn’t care less if they sold one more box of our product. They just care about getting more people into their store.”

WHY DIGITAL GRABS CONSUMER PRODUCT BUDGETS

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Determined to prove that digital can translate to foot traffic in stores, while also meeting brand marketing objectives, he created a center of excellence - bringing digital marketing, creative, social, any sort of paid media -- the whole gamut -- together. Confident in the value of programmatic technology, he organized his teams to activate it efficiently.

Programmatic and CPGThe key to programmatic success, according to Marketer No. 1, is layering data over media to inform buying decisions, placement, and creative to deliver a truly unique offering to a retailer. “This shows the retailer that we are are utilizing the appropriate resources and implementing throughful strategies to drive valuable consumers into retailers’ stores” he said.

For example, by combining online and offline data and leveraging information such as geographical location, loyalty card status and more, CPG marketers are better armed to deliver the right message at the right time to the right person. This is the cornerstone to success in programmatic media buying. What’s more, by layering behaviorial data into your buy, you can also change creative elements to ensure your message has a better chance of resonating with the consumer.

A Tool Set for Measuring SuccessAchieving a true closed-loop system which measures the consumers’ entire path to purchase, while also considering cross-channel activity is the holy grail for the marketer. “When we go where the consumer is, our ROI is very strong. With the right balance of different media - TV, online, print - that’s when we’ve found the most success. We need to understand how those channels work together - and in real time - in order for us to take advantage of what programmatic really enables and delivers.”

Getting Serious About Online Shopper MarketingThis CPG marketer believes the industry needs to get serious about moving beyond price promotions to really show value and entice the consumer to try new products and become loyal customers.

“Too often what we see today in shopper marketing is ‘how do we do a buy-one-get-one-free’, or ‘how do we do a coupon or give something away?’ While these tactics are effective ways to move the needle in the short-term, it’s not a sustainable model. CPG really needs to step back and think where and how it can deliver true value to the shopper and drive long term brand loyalty.”

This CPG is ahead of the pack in terms of programmatic marketing implementation. They’re setting an example from which other brands can learn. Programmatic can help CPG brands target better, reach their audiences at scale, enable closed loop attribution, and make their advertising more efficient overall. Of paramount importance is the consideration of the consumer over the retailer. What’s the best way to reach our target shopper with the right message, at the right time, and on the right device?

OPPORTUNITIES

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CPG MARKETER NO. 2CPG Marketer No.2 runs digital marketing for one of America’s largest packaged foods companies. He works within a significantly larger team and budget than Marketer No. 1. He is passionate about his work and his industry, and he’s an incredibly sophisticated digital marketer. His challenges are related to budget, silos, and limitations set by retail partners. He is frustrated by these impediments but remains creative and excited about what’s ahead.

The Retailer Ecosystem: Challenges and OpportunitiesThis CPG marketer’s organization uses digital media extensively, including programmatic technologies. The marketing organization, however, is divided. One group focuses on driving brand awareness, while the other is tasked with running shopper marketing efforts in collaboration with retailers. Although the teams are solid, there are certain tools that are used by both groups which inherently breeds a lack of efficiency.

“The vendor we use for media is driven by the ecosystem of the retailer, but we use online display media that is co-branded to include both our brands as well as our retailer partners’ to drive people into stores. Targeting is varied depending on the retailer. You also have two base scenarios: One where we are advertising on the retailer’s website, and in that case it tends to be a fairly rigid approach, and one in which we’re going out into the marketplace and using other providers to buy media that’s not on the retailer’s website to drive people in.”

According to this marketer, strong collaboration is the way to achieve a win-win-win for the brand, the retailer and the shopper. But there is no single way to achieve this because retailers have such different ecosystems and a vast partner portfolio. Marketers must be prepared to adjust their go-to-market approach based on the retailer, which can certainly pose a challenge.

“Look at a retailer like Walmart. They do not have a card loyalty system, and in fact, it wasn’t until recently that they introduced print-at-home coupons. While allowing coupon activation on their website opened a whole new area of exploration for the CPG marketers representing the brands on their site, there remains a tremendous amount of online marketing opportunity for both the retailer and the brands. As retailers become savvier about their online tactics, it gets easier to talk to them about how to execute, and how that links into broader merchandising plans.”

Goals and Objectives“Keeping the traditional funnel in mind, we must not neglect brand and product awareness before driving shoppers into a store,” say Marketer No.2. “While the most important objective is absolutely sales, we incorporate tactics that fuel sub-objectives and help move consumers through the funnel. The brain essentially

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CPG MARKETER NO. 3This CPG marketer represents the food and beverage division of a major multinational conglomerate. As with other CPGs, her products are primarily sold in supermarkets, convenience, and big-box stores, however, products are also sold directly through a newly opened online store. This marketer is smart and savvy, partnering with multiple digital agencies to manage display, social, and other channels. Relatively new to digital, she and her organization have set out to leverage new and emerging tactics to maximize their budgets and results. They’re creatively adopting new strategies and tools, including programmatic media buying, with the lion’s share of the brand’s advertising budget earmarked for television.

is a big pattern-matching organ with memory storage sitting behind it, so it’s not just about using one tactic, but weaving together multiple tactics across channels to allow the consumer’s brain to pick up that pattern and store it.” This also commands a need for communication and data sharing between the brand marketing group and the shopper marketing group.

Measurement ChallengesAccording to this marketer, measurement for CPG brands is always challenging because you don’t sell directly to the consumer; you’re always dependent on someone else to supply the data. But with diligence, there are methods to obtaining the necessary metrics which actually benefits all marketing strategies.

“We test and learn. We’re pretty good at the scientific method: create a hypothesis, put out an experiment to disprove or prove the hypothesis, learn and evolve. At the end of the day, we’re more limited by capacity and budget, but that’s true everywhere.”

While this marketer is already well-versed in digital media, he recognizes there is a greater opportunity to leverage programmatic to drive both awareness and sales. As is the case for many CPG marketers, the retailers create a bit of a barrier between brand and consumers. He and his organization would benefit from more access to data and insights to better understand and reach their audiences directly. Scalable, data-driven, top-of-funnel campaigns may be a smart move in the future.

OPPORTUNITIES

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New to DigitalMarketer No. 3 recognizes they are in the infancy stage in terms of digital marketing. Over the years, they’ve embraced social media and developed an online store. This year, they refreshed their brand in an attempt to have a more contemporary image, which included a greater investment in digital marketing to accompany their primary TV budget.

Coupons and OffersLike most organizations, Marketer No. 3 hoped to gain a better understanding of their consumers’ online behavior and, in turn, target them more effectively.

“We want to reach consumers with more intriguing and engaging information about our brand. We’ve used digital couponong in the past to incentivize shoppers to buy our products, however, this year, we’ve stepped it up a notch in hopes to achieve more meaningful engagement.”

By partnering with Ibotta, a free mobile application provider that offers couponing tied to geo-location targeting, we were able to give consumers a new way to engage with our products while they shop. Ibotta pays its users cash for learning about our favorite products on their phone or tablet before they go shopping.

Leaning on Agency PartnersUnfamiliar with using programmatic technologies, this digital marketing professional entrusts the heavy lifting of media buying to her agency. She relies on them to buy the right media to reach the right shoppers at the right time, as well as leverage features such as dynamic creative to optimize their buys. “There are a a number of tools out there and we’re just starting to learn about how they help us identify a target consumer based on certain parameters. Our agency is continously educating us on how to maximize our digital investment.”

Measuring SuccessUltimately, this marketer believes that measuring digital marketing success is no different than any other type of targeted marketing and there are many ways to measure the effectiveness of digital efforts. From an engagement perspective, are consumer engaged with your brand? Are they clicking on your digital ad? Are they taking the intended action from that ad?

This marketer is also conducting traditional studies with the Advertising Specialty Institute to measure awareness. “By understanding the base level of consumer awareness, purchase intent, and imagery perceptions, we are able to track that intelligence over time.” They we’re able to marry the digital metrics with their television metrics, and will be better positioned to execute truly customer-centric marketing.

IBOTTAibotta.com

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There’s a great opportunity for this marketer to leverage data, mesh it with the data she’s getting from coupon sites and ibotta, and her own first-party data to target customers via programmatic. Targeting her current prospects and look-alikes with local offers at scale could yield exactly the results she wants.

OPPORTUNITIES

Key Takeaways for CPG Marketers Because the shopper’s path-to-purchase is no longer direct, CPG marketers should invest in digital shopper marketing. Internalizing the lessons learned from consumer insights and shopper insights, marketers should determine the best strategies for their efforts.

As technology continually evolves, it’s imperative for CPG marketers to keep up — and remain focused on consumers. Multi- or omni-channel programs are critical for staying on the radar of shoppers who toggle between desktops, tablets, and smartphones. And while it’s still easy to write mobile off as an experimental channel, mobile users are expected to surpass desktop users in 2014, according to comScore. Shoppers are on their mobile devices, and they expect the brands they love to be there, too.

Data is the fuel that drives the most effective and efficient campaigns. The “information explosion” has everyone buzzing about big data, due largely in part to the fact that the development of programmatic marketing channels has enabled marketers to handle data to their greatest advantage.

This capability has been around for more than five years, but only now are those at the forefront of our industry’s rapid evolution beginning to use it wisely. Programmatic technology within a marketing operating system allows for the combining of data and market insights, the aggregation of that intelligence, and the ability to connect it with advanced logic for making smarter decisions.

The need for a methodology to activate data by either mapping audience profiles to contextual channels or leveraging third-party data sets to target heavy buyers of their brand or competitive brands will continue to grow as innovative brands embrace technology and data in a way that improves and speeds up strategic decision-making. Ultimately, these brands will recognize the need for a technology stack that includes a marketing operating system to best leverage the data they already have.

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About MediaMath Based in New York with 12 locations across five continents, MediaMath develops digital marketing technology and offers deep industry expertise, enabling marketers to connect with consumers individually and at scale across the entirety of the world’s digital media. MediaMath’s TerminalOne Marketing Operating System™ enables marketers to customize their own technology infrastructure and leverage their data and industry data in the planning, execution, optimization, and analysis of digital marketing programs, resulting in smarter decisions that grow their business. Powering the operations for thousands of marketers, including those representing 55% of the Fortune 100, TerminalOne enables its users to drive transformative business results across the entire digital ecosystem.

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