CPGs and performance marketing go together like peanut butter and jelly … at least, that was the message during AdWeek’s virtual summit. During his session “Performance Marketing: Maximizing Marketing Dollars with Data,” Quotient founder and CEO, Steven Boal, shared his advice for CPGs in this new landscape of uncertainty and opportunity.
Check out the recording of his session here.
COVID-19 Has Driven Changes in Shopper Behavior
COVID-19 has driven some of the biggest changes that grocery retail has seen in a lifetime. Just six months ago, eCommerce represented a low percentage of total grocery spend amongst a select group of consumers. Post-COVID, eCommerce usage has surged. Shoppers are experimenting with grocery home delivery, curbside pickup and third-party services like Shipt and Instacart.
When exploring some of the major changes driven by COVID-19, Boal specifically touched on the appearance of trial by force. Whether in-store or online, out-of-stocks have forced consumers to try new brands outside of their usual preferences. When consumers buy a particular brand for a long time, they build brand affinity. According to Boal, if that brand has been good at knowing their shoppers and marketing to them, they’ve built loyalty in the way consumers shop. But when consumers are forced to trial new brands because of out-of-stocks, it raises the new question: How do shoppers make that decision and what does it mean for their long-term buying habits?
“When shoppers end up in a grocery shop situation, they’ve got a lifetime habit of buying a certain brand. When they walk into the store and see that brand isn’t on the shelf, there’s a feeling of loss.”
Finally, COVID forced many shoppers into a hybrid buying situation. They had to quickly adjust their normal purchasing behavior to find the products they needed to keep themselves and their families safe and fed.
Brand Behavior Is Shifting Too
Consumers aren’t the only ones experiencing changes. Brand behavior is shifting, too. For the first time, retailers are telling CPGs to stop promoting. According to Boal, that’s unheard of.
Thanks to COVID, retailers have had to implement a number of precautionary measures to keep their store staff and consumers safe. When CPGs market and offer value via coupons, Boal pointed out that two things happen. First, CPGs could be offering value for products that are not currently on the shelf. That’s a bad shopper experience. The secondary issue is that CPGs were driving more people into the store than retailers could safely accommodate.
On the CPG side, brands had to figure how to react based on the medium they were participating in. If CPGs had long-standing programs that were pre-planned in offline mediums, like the free-standing insert (FSI), those were difficult to turn off quickly since certain print and distribution processes were already in place. However, digital mediums give CPGs the flexibility to pivot quickly as circumstances changed.
“The beauty of being able to turn things off and turn them on again is that you can turn them on carefully. You can let your partners change their messaging.”
For example, Boal pointed out how some ad messaging wasn’t appropriate during the pandemic. Brands had to become agile and strategic by tweaking messaging to reflect new social distancing norms and ensure they were delivering products in regions where it was actually stocked. This has led to a tremendous amount of coordination between CPGs and retail.
The Ongoing Case for Value-Based Messaging
While there’s always been an element of value for shoppers, Boal says that this has become even more important given our current recessionary period. And brands understand and embrace this new reality. Widespread coupon usage really came into the mainstream during the Great Depression. Value is a strong motivator for consumers, as is brand affinity. The challenge is to balance brand messaging and value messaging.
Because grocery is a slim-margin business, Boal pointed out the need for CPGs to balance their national promo and media spend against shopper spend and any retailer-specific events that are taking place. Offline, that’s difficult to do without extensive planning. In digital, Quotient can use sophisticated technology to recognize when there’s both brand and promotional messaging and automatically bring those things together.
And since our systems know shoppers and what they’re looking for, we can put products in front of them that the shopper has either purchased in the past or is likely to purchase in the future given their category affinities. Boal also highlighted how Quotient can pair those shopper insights with value-driven messaging like “save at retailer” or “save on national promotion offers.” So, shoppers can save even more money on brands that they already planned to purchase. This added value is incredibly motivating for shoppers and helps drive higher return on ad spend (ROAS) for CPGs.
The Future Opportunity for Performance Marketing
Finally, when it comes to traditional grocery retailers adopting eCommerce, Boal predicts they’ll get their fair share of consumer spend despite Amazon’s move into the space. In large part, that’s due to the rise of performance media.
Retailer-based media platforms are allowing CPGs to do media and promotional planning against shoppers using the retailer’s shopper data. In the end, Boal believes shoppers will want a hybrid experience that is partially digital and partially in-store. The retailers that win in this model are the retailers that have the most locations, closest to the biggest parts of the population, who focus on value and build omnichannel offerings so shoppers can have options like curbside pickup, in-store pickup or home delivery.
“Think about the grocers with the most stores, closest to the most shoppers that are doing omnichannel. Those are the long-term bets to make.”
To learn how Quotient can help you develop strategic performance marketing campaigns for the digital age, contact us at communications@quotient.com.
