Over the last year, FMCG brands have been under increasing pressure to cut marketing and advertising budgets in order to maintain profitability. Brexit, demand for "Everyday low price" from retailers, and increased market competition (as well as inflationary pressures) have created a challenging environment that doesn’t bode well for the FMCG industry.
Bosses within these companies are therefore taking a closer look at FMCG marketing budgets, with many marketers having to justify spend in terms of ROI and effectiveness.
While this means that many FMCG brands are cutting budget from above-the-line channels such as TV and even digital, we’ve noticed that they are increasingly looking to "shopper" as a channel to engage with customers and drive revenues during uncertain times.
Shopper media is one of the few channels that brands can measure in depth to understand ROI and impact on product sales, as it is the channel closest to the point of purchase and can be evaluated on a test vs. control methodology. Not only is the channel closer to the point of purchase, but it offers more ways to target the media to specific shoppers to maximise reach efficiency.
Campaign’s Gideon Spanier made an interesting point last week when he noted: "the fact that FMCGs don't have a direct relationship with the consumer and rely on third party retailers looks increasingly problematic in an age of data driven marketing".
In fact, this is exactly why FMCG companies are, and should continue to, put more focus on how they can influence the conversation that retailers have with their brands. By investing adspend wisely and supporting products at the point of purchase in store, FMCGs can get closer to having a more direct relationship with the shopper.
What’s even more interesting, however, is that whenever marketing and advertising budgets are discussed and split by channel, the shopper channel is rarely included within that marketing media mix, despite it becoming increasingly important to FMCGs.
Although sometimes forgotten about, shopper media has been used effectively by many brands, even if in small capacity, for a number of years. Shopper is more than just cardboard in-store; from six sheets to in-store radio through to targeted text messaging, there is a lot for brands to consider and there are preconceptions that need to be reconsidered in order for the effectiveness of shopper to be truly realised.
However, it remains a relatively infant channel compared to TV and print media and does come with its own set of challenges as both brands and retailers continue to strike a balance between their communication priorities and customer needs.
When tasked with a difficult decision about where to cut marketing budgets from, FMCG companies must think about the shopper first and ensure they are investing spend in the right place. More often than not, communications and media planning starts in the wrong place and often fails at the last hurdle – that crucial point of purchase.
FMCGs must start from the point of sale first and work backwards because there is one inevitable truth – every person who is going to buy your product will walk into a store/shop or a retailer website to do so. This is where we find an FMCG brand’s captive audience.
That’s not to say that FMCGs shouldn’t continue to invest in broader reach media like TV that can drive mass awareness and demand for a product. But in an incredibly fragmented media landscape, FMCG marketers should place equal emphasis on closing the gap between advertising and point of sale.
Matt Lee is managing director at Capture