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March 18, 2010

This is my first post on a series about CPG advertising and the internet.  I think that a massive shift in CPG advertising to the web is happening, and it’s one of mytop 3 trends of the next year. 

What is puzzling to me is how slowly the shift of CPG ad budgets to the internet has come.  Online advertising isn’t new, and some big categories spend billions online.  I was puzzled by this for a number of years, but I think I’ve come to understand two major differences between the advertising that CPG’s want to do and the advertising formats available to them on the internet. 

1. Reach vs. Conversion.  Internet advertising in its most advanced form looks a lot like direct mail.  It’s a matter of being smart about presenting creative to the right people that show intent, and then tracking that user to a success event.  That’s why the retail, telecom, and financial services are such big online spenders. 

The problem is that this isn’t really the goal of CPG marketers.  For one thing, CPG’s aren’t typically purchased in large volumes online.  Folks still go to big box retailers and supermarkets for these items and their price points don’t justify any meaningfully high bounty for a conversion.  But more importantly, CPG’s typically measure the success of a campaign based on reach and awareness.  They want to know that they can spend x dollars and get y% unaided awareness across the country.  That’s one reason that startups have trouble working with CPG’s, because as great as their ability to target users may be, their reach doesn’t justify the effort required to work them into a marketer’s plans.  That’s also why content safety is such a big deal of these guys.  Even if they are presented in an ad in front of the right people, brand marketers don’t want the risk of being associated with risky content or scammy advertisers. 

2. Lack of Content and Limited Understanding of Distribution.  Given that conversion isn’t the goal for CPG’s, I’d argue that what CPG’s should be shooting for is engagement with their brand and influence.  But both cases require that the brands create and distribute engaging content.  But that’s not something that CPG’s are set up to do.  Part of it is just the nature of the category.  Auto companies can get a lot of engagement in their ads because people love looking at pretty pictures of cars.  But not a lot of people really want to watch a great online video about paper towels.  

Because of the great ability to target online, CPG’s are also now able to create content for more narrow demographics.  Spending a bazillion dollars on a few commercials that have mass appeal may not be the smartest thing to do when you can very precisely target people of specific age groups or income levels.  But CPG’s aren’t really well set up to create great content on an ongoing basis in an efficient way.

Finally, even if great content did exist, CPG marketers often don’t know the tactics of online distribution.  I’ve heard of a number of costly online campaigns that flopped because of poor distribution efforts, despite excellent content.  

But there is hope!  Increasingly, I’m seeing really creative campaigns come out of CPG’s and a really smart use of social media.  I think startups are emerging to make the distribution process much easier, and I think Twitter, Facebook, and other companies represent great ways for brands to engage their users in a meaningful way.  It will take work though – it’s not a matter of throwing up a Facebook page for a brand and checking the box.  But I think the time is fast approaching where brands will be able to cost effectively create influential content and distribute them broadly to the right people in the right format. 

  • Author robchogo
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