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THE US CPG AND CONSUMER PRODUCTS INDUSTRY 2013Digital Ad Spending Forecast and Key Trends

OCTOBER 2013

Victoria Petrock

Contributors: Christine Bittar, Tobi Elkin, Cindy Liu, Martín Utreras

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THE US CPG AND CONSUMER PRODUCTS INDUSTRY 2013: DIGITAL AD SPENDING FORECAST AND KEY TRENDS ©2013 EMARKETER INC. ALL RIGHTS RESERVED 2

CONTENTS2 Executive Summary

3 Once a Digital Laggard, CPG Works to Catch Up

8 Mobile Investments Accelerate

10 Branding vs. Direct Response: A 63/37 Split

18 Putting Data to Better Use

20 Conclusions

21 eMarketer Interviews

21 Related eMarketer Reports

21 Related Links

22 Editorial and Production Contributors

EXECUTIVE SUMMARY

The US consumer packaged goods (CPG) and

consumer products industry’s advertising spending

on digital media will hit $3.51 billion in 2013 and rise

to $5.40 billion by 2017. Online and mobile campaigns

are commanding a larger portion of investment in this

historically TV- and print-focused industry, which was

slow to embrace digital advertising but is catching

up quickly. As a result, ad spending will grow at a

compound annual growth rate (CAGR) of 12.6% from

2012 to 2017.

This year, eMarketer has taken a closer look at digital spending to determine how much marketers are investing in ad tactics primarily focused on obtaining sales or leads compared with those designed to drive favorable opinion about a brand. eMarketer estimates that marketers in the CPG and consumer products industry will invest 63% of their paid digital dollars in branding-focused efforts this year. Direct-response campaigns will make up the remaining 37%. Targeted advertising in mobile and social formats is growing rapidly as marketers redouble efforts to establish direct and personal relationships with consumers in the last mile before a product purchase.

KEY QUESTIONS ■ How much will CPG and consumer products

marketers spend on US paid digital advertising

between 2013 and 2017?

■ How much of their digital budgets are CPG and

consumer products companies spending on

direct-response vs. branding initiatives?

■ How are online and mobile platforms changing

the way the CPG and consumer products industry

approaches advertising?

billions, % of total digital ad spending and % change

US CPG & Consumer Products Industry Digital AdSpending, 2011-2017

2011

$2.50

7.8%

25.5%

2012

$2.98

19.1%

8.1%

2013

$3.51

17.7%

8.3%

2014

$4.00

13.9%

8.4%

2015

$4.46

11.6%

8.5%

2016

$4.99

8.7%

11.7%

2017

$5.40

8.8%

8.3%

Digital ad spending % of total digital ad spending % change

Note: CAGR (2012-2017)=12.6%; includes advertising that appears ondesktop and laptop computers as well as mobile phones and tablets, andincludes all the various formats of advertising on those platforms; datathrough 2012 is derived from IAB/PwC dataSource: eMarketer, Aug 2013162035 www.eMarketer.com


ONCE A DIGITAL LAGGARD, CPG WORKS TO CATCH UP

The US CPG and consumer products industry

spent $2.98 billion in paid online and mobile media

advertising in 2012. eMarketer forecasts that this

number will rise to $3.51 in 2013 and hit $5.40 billion

by 2017. Above-average compound annual spending

growth will increase the industry’s share of digital

investment, relative to other sectors, during the

forecast period.

Changing consumer behavior is forcing brands to rethink the way they plan and execute their marketing. Many CPG and consumer products marketers—which were slow out of the gate to embrace digital tactics—have now fast-tracked investments, expanding their use of dynamic ad formats and targeting, not only to build brand awareness, but also to reach consumers in all phases of the purchase funnel. “Consumer and packaged goods companies really want to take control of the relationships they have with consumers,” said Mark Jacobson, Microsoft Advertising’s director of strategy.

billions, % of total digital ad spending and % change

US CPG & Consumer Products Industry Digital AdSpending, 2011-2017

2011

$2.50

7.8%

25.5%

2012

$2.98

19.1%

8.1%

2013

$3.51

17.7%

8.3%

2014

$4.00

13.9%

8.4%

2015

$4.46

11.6%

8.5%

2016

$4.99

8.7%

11.7%

2017

$5.40

8.8%

8.3%

Digital ad spending % of total digital ad spending % change

Note: CAGR (2012-2017)=12.6%; includes advertising that appears ondesktop and laptop computers as well as mobile phones and tablets, andincludes all the various formats of advertising on those platforms; datathrough 2012 is derived from IAB/PwC dataSource: eMarketer, Aug 2013162035 www.eMarketer.com

Among the US industries eMarketer tracks, CPG and consumer products—which we define to include food and beverage products, household products, packaged goods, tobacco, personal care products, toiletries and cosmetic products—ranks fifth in total dollars spent on digital advertising. But the sector’s 12.6% CAGR during the period from 2012 to 2017 will be significantly above the 10.8% average for all industries.

billionsUS Digital Ad Spending, by Industry, 2012-2017

Retail

Financial services

Automotive

Telecom

CPG & consumerproducts

Travel

Computing products &consumer electronics

Media

Entertainment

Healthcare & pharma

Other

Total

2012

$8.2

$4.6

$4.3

$4.3

$3.0

$2.9

$2.8

$1.8

$1.7

$1.1

$2.1

$36.8

2013

$9.4

$5.2

$5.1

$4.8

$3.5

$3.4

$3.2

$2.2

$1.9

$1.2

$2.2

$42.3

2014

$10.5

$5.9

$5.9

$5.3

$4.0

$4.0

$3.6

$2.7

$2.2

$1.2

$2.3

$47.6

2015

$11.6

$6.5

$6.6

$5.8

$4.5

$4.4

$4.0

$3.0

$2.5

$1.3

$2.4

$52.5

2016

$12.6

$7.0

$7.3

$6.3

$5.0

$4.8

$4.4

$3.4

$2.8

$1.4

$2.5

$57.3

2017

$13.5

$7.5

$7.9

$6.7

$5.4

$5.0

$4.7

$3.6

$3.0

$1.5

$2.6

$61.4

CAGR(2012-2017)

10.5%

10.2%

13.1%

9.2%

12.6%

11.3%

10.5%

14.6%

12.2%

5.9%

5.1%

10.8%

Note: includes advertising that appears on desktop and laptop computersas well as mobile phones and tablets, and includes all the various formatsof advertising on those platforms; data through 2012 is derived fromIAB/PwC data; numbers may not add up to total due to roundingSource: eMarketer, Aug 2013161990 www.eMarketer.com

This growth rate will help boost the CPG and consumer products industry’s share of the total US digital advertising pie from 8.1% in 2012 to 8.8% in 2017.

% of totalUS Digital Ad Spending Share, by Industry, 2011-2017

Retail

Financial services

Automotive

Telecom

CPG & consumer products

Travel

Computing products &consumer electronics

Media

Entertainment

Healthcare & pharma

Other

2011

22.4%

12.6%

11.3%

12.3%

7.8%

7.5%

7.8%

4.5%

4.4%

3.2%

6.2%

2012

22.3%

12.5%

11.6%

11.7%

8.1%

8.0%

7.7%

4.9%

4.6%

3.0%

5.6%

2013

22.3%

12.4%

12.1%

11.4%

8.3%

8.0%

7.6%

5.3%

4.6%

2.8%

5.2%

2014

22.1%

12.4%

12.3%

11.2%

8.4%

8.3%

7.6%

5.6%

4.7%

2.6%

4.8%

2015

22.1%

12.3%

12.5%

11.1%

8.5%

8.3%

7.6%

5.8%

4.8%

2.5%

4.5%

2016

22.0%

12.2%

12.7%

11.0%

8.7%

8.3%

7.6%

5.9%

4.8%

2.4%

4.4%

2017

22.0%

12.2%

12.9%

10.9%

8.8%

8.2%

7.6%

5.8%

4.9%

2.4%

4.3%

Note: includes advertising that appears on desktop and laptop computersas well as mobile phones and tablets, and includes all the various formatsof advertising on those platforms; data through 2012 is derived fromIAB/PwC data; numbers may not add up to 100% due to roundingSource: eMarketer, June 2013; confirmed and republished, Aug 2013157350 www.eMarketer.com


eMarketer’s US Digital Ad Spending Forecasts: Scope and Definitions

eMarketer’s US digital ad spending estimates for the years up to and including 2012 are benchmarked against data from the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers. Estimates for years subsequent to 2012 are eMarketer’s own projections. Estimates are based on the analysis of reported revenues from major digital ad-selling companies; estimates from other research firms; consumer internet usage trends; and eMarketer interviews with executives at ad agencies, brands, digital ad publishers and other industry leaders.

eMarketer’s digital ad spending figures include advertising that appears on desktop and laptop computers, as well as mobile phones and tablets, and include all the various formats of advertising on those platforms: banner ads (static display), classified ads, email (embedded ads only), mobile messaging (SMS, MMS and peer-to-peer [P2P] messaging), rich media, search ads (including contextual text links, paid inclusion, paid listings and search engine optimization [SEO]), sponsorships, lead generation (referrals) and video (including in-banner, in-stream, in-text). Forecasts include direct spending in digital paid media by CPG and consumer products companies as well as those companies’ share of digital ad spending that is part of co-op advertising programs undertaken with retail partners.

eMarketer’s breakouts of direct-response vs. branding spending are based on overall estimates of spending by media from the IAB; analysis of third-party CPG and consumer products industry ad spending data; and in-depth interviews with brand marketers, agency media planners and other industry marketing strategists.

OVERALL MARKETING INVESTMENTS GROW By most accounts, overall US consumer products marketing spending—including paid advertising, trade marketing and consumer promotion—is expected to grow at a modest pace over the next few years. Paid advertising as a component of this expenditure will also see an uptick, fueled by stronger product sales and increased investments in both traditional and digital media.

Several of the largest consumer products companies are already among the country’s biggest ad spenders. A Kantar Media analysis found that Procter & Gamble (No. 1) and L’Oréal (No. 5) made the list of top 10 overall US advertisers in 2012. More recent research by Kantar Media in Q2 2013 found similar rankings for these two companies—Procter & Gamble at No. 1 and L’Oréal at No. 3—and also included PepsiCo at No. 9.

millions and % change

Top 10 US Companies, Ranked by US Ad Spending, Q2 2012 & Q2 2013

1. Procter & Gamble

2. AT&T

3. L'Oréal

4. Comcast

5. General Motors

6. Verizon Communications

7. News Corp.

8. Time Warner Inc.

9. PepsiCo

10. Pfizer

Total

Q2 2012

$595.0

$376.6

$380.5

$476.0

$295.7

$331.7

$298.1

$295.4

$264.6

$197.3

$3,511.0

Q2 2013

$804.8

$501.8

$397.9

$393.2

$378.6

$335.1

$322.5

$316.0

$308.5

$303.9

$4,062.3

% change

35.3%

33.2%

4.6%

-17.4%

28.0%

1.0%

8.2%

6.9%

16.6%

54.0%

15.7%

Note: excludes FSIs, house ads and public service announcement (PSA)activity; numbers may not add up to total due to roundingSource: Kantar Media as cited in press release, Sep 9, 2013163701 www.eMarketer.com


Kantar Media also reported overall year-over-year ad spending increases in full-year 2012 and Q2 2013 for some of the largest consumer products categories. These included personal care items (up 5% in 2012 and 0.4% in Q2 2013) and food and candy (up 2% in 2012 and 3.4% in Q2 2013). These figures likely underestimate true expenditure and growth because they include online display ads but exclude faster-growing digital formats such as online video, mobile advertising and paid search. eMarketer does not cite Kantar Media data from Q1 2013 in this report because the media tracking firm excluded internet display from its ad spending figures for that time period.


Top 10 US Product Categories, Ranked by US AdSpending, Q2 2012 & Q2 2013

Q2 2012 % change

1. Retail 0.1%

2. Automotive* 6.9%

3. Local services 4.4%

4. Telecom 19.5%

5. Personal care products 0.4%

6. Financial services -1.7%

7. Restaurants 12.6%

8. Food & candy 3.4%

9. Direct response -13.1%

10. Insurance 12.9%

Total

$3,821.0

$3,398.3

$2,295.4

$1,975.0

$1,927.3

$1,937.2

$1,538.2

$1,567.3

$1,625.3

$1,127.0

$21,212.0

Q2 2013

$3,823.5

$3,633.0

$2,396.6

$2,361.0

$1,934.1

$1,905.0

$1,732.6

$1,620.6

$1,411.9

$1,272.2

$22,090.7 4.1%

Note: excludes FSIs, house ads and public service announcement (PSA)activity; numbers may not add up to total due to rounding; *includesmanufacturers and dealersSource: Kantar Media as cited in press release, Sep 9, 2013163703 www.eMarketer.com

DIGITAL RISES ON PRIORITY LIST CPG and consumer products marketers still invest the majority of their budgets in traditional broadcast and print. However, digital channels are increasingly important to the marketing mix. In an April 2013 survey of global consumer goods executives, KPMG and The Consumer Goods Forum found that 44% of respondents rated marketing—including digital and mobile—as a high priority for investment over the next two years. Another 39% of respondents saw it as a moderate priority.

% of respondents

Areas for Investment* of Consumer Goods ExecutivesWorldwide, by Priority Level, April 2013

High Moderate Low

Product development/enhancement 48% 38% 9%

Marketing (including digital, mobile) 44% 39% 14%

Supply chain/distribution 38% 43% 15%

Internet/ecommerce 38% 36% 19%

Manufacturing/production process 31% 44% 17%

In-store/retail innovation 29% 44% 16%

Sustainability/environmental initiatives 27% 45% 21%

Note: over the next two years; *in R&D and innovationSource: KPMG and The Consumer Goods Forum, "Consumer Executive Topof Mind Survey 2013," June 14, 2013161770 www.eMarketer.com

On the paid advertising front, a sampling of CPG industry marketing experts—representing both brands and agencies that work with them—told eMarketer that approximately 10% to 20% of industry ad spending was currently invested in digital media. An analysis by GroupM, which encompassed all of North America, pegged that number slightly higher. For the past three years, 22% of total media investment in support of fast-moving consumer goods (FMCG) went to digital channels, GroupM reported.

% of total

Digital Share of Total FMCG Media Spending in SelectRegions Worldwide, 2010-2012

2010 2011 2012

Asia-Pacific 13% 19% 23%

North America 22% 22% 22%

Western Europe 9% 11% 13%

Central & Eastern Europe 4% 4% 6%

Latin America - - 6%

Worldwide 15% 16% 18%

Source: GroupM, "GroupM Interaction 2013," March 28, 2013155345 www.eMarketer.com


Other studies affirm that CPG and consumer products advertisers are increasing online and mobile advertising, often at the expense of mass-audience TV and print tactics. Path to Purchase Institute and Shopper Marketing magazine’s “Trends 2013” report noted that 74.0% of US CPG marketing executives planned to boost digital advertising and promotions budgets. This compared with only 5.0% who foresaw a decline.

% of respondents

Change in Advertising and Promotions in 2013According to US CPG Marketing Executives, by Promotional Channel

Shopper marketing47.3% 41.8% 10.9%

Consumer promotions32.0% 55.0% 12.3%

Trade promotions19.8% 53.0% 27.2%

Traditional media (TV, print, etc.)19.5% 43.5% 37.0%

Budget increase Stay the same Budget decrease

Note: numbers may not add up to 100% due to roundingSource: Path to Purchase Institute and Shopper Marketing, "Trends 2013,"Jan 2, 2013152014 www.eMarketer.com

Digital media (mobile, paid search, etc.)74.0% 21.0% 5.0%

In fall 2012 and spring 2013, Advertiser Perceptions asked US CPG ad and marketing executives whether they planned to increase or decrease their ad investments in specific media in the next 12 months. It then calculated the difference between percentages. The study’s “optimism index” showed generally high numbers for most digital media, indicating intent to raise spending, especially in mobile and digital video.

optimism index*

Consumer Goods Ad Spending Outlook of USAdvertisers, by Media, Fall 2012 & Spring 2013

Alcoholicbeverages

Beauty/toiletries

Consumerpackaged

goods

Mobile

Digital video

Cable TV

Digital search

Digital display

Broadcast TV

National newspapers

Magazines

Advanced/interactive TV

Fall2012

59

51

19

41

30

6

-17

-23

10

Spring2013

68

62

53

28

24

6

-18

-19

-

Fall2012

57

51

16

35

43

20

-4

-9

23

Spring2013

57

57

-8

11

33

-6

1

8

-

Fall2012

64

57

18

40

40

9

-35

-10

25

Spring2013

61

61

23

44

37

-4

-5

4

-

Note: includes client-side marketers and agencies; *difference betweenthe percent of respondents increasing and those decreasing their adspending in the next 12 monthsSource: Advertiser Perceptions, "Advertiser Optimism Index Wave 18, Fall2012" and "Advertiser Optimism Index Wave 19, Spring 2013," March 14,2013 & Sep 24, 2013153947 www.eMarketer.com

An earlier poll by Advertiser Perceptions in June 2012 found that 63% of US CPG ad and marketing executives planned to boost spending in digital media. And in a similar study, a Booz & Company analysis of data collected by the Brand Activation Association in March 2013 found that digital tactics were expected to have the steepest increases among the US brand manufacturers and retailers studied.

% of respondents

US Brand Manufacturers and Retailers Who WillIncrease Their Ad and Promotions Spending, by Tactic,March 2013

Total

Mobile marketing 100%

Social media 96%

Internet ads on retailer sites 96%

Internet ads not on retailer sites 96%

Shopper marketing 96%

Paid search 89%

Brand manufacturer sites 89%

Trade promotions 52%

TV advertising 48%

Print advertising

Increase0%-5%

26%

30%

41%

44%

52%

22%

37%

33%

33%

19%

Increase5%+

30%

30%

26%

26%

26%

30%

26%

15%

4%

-

Increase10%+

44%

37%

30%

26%

19%

37%

26%

4%

11%

11% 30%

Note: in the next two yearsSource: Booz & Company and Brand Activation Association (BAA),"Reimagining Shopper Marketing: Building Brands through OmnichannelExperiences," June 6, 2013160773 www.eMarketer.com


Top Spenders Lead Digital Charge Not surprisingly, the largest spenders in the industry are also leading the charge to digital. In an August 2013 article in The Wall Street Journal, Procter & Gamble CEO A.G. Lafley said his company is now spending up to 35% of its marketing budget on digital media in the US. “The bottom line is we need and want to be where the consumer is, and increasingly that is online and mobile,” a Procter & Gamble spokesperson said.

Unilever CFO Jean-Marc Huet told investors that digital ad spending had recently risen nearly 40%, according to a January 2013 article in Advertising Age. Huet also noted that Unilever had put 2,000 of its marketers through digital training and was continuing its program to reduce the overhead, or “nonworking,” ad outlays.

Roy Benin, chief consumer officer of Mars Chocolate North America, told eMarketer that his division has consistently been investing about 10% to 20% of overall marketing spend in digital media, including social, mobile, video and display.

L’Oréal, which has been ramping up total ad investments since 2009, is also placing particular emphasis on digital tactics, which Americas CMO Marc Speichert told Advertising Age had grown by “double-digit percentages annually” and “more than doubled overall” since he took the CMO reins in 2010. “We’re certainly significantly higher than we were three years ago, and that will continue as we go into 2014,” he added.

The J.M. Smucker Co. is slated to spend 15% of its total marketing budget on a variety of digital marketing initiatives, according to an April 2013 CPGmatters article. “Our research continues to demonstrate that digital marketing has been an efficient and effective method for our marketing mix,” CEO Richard M. Smucker said earlier this year at a securities analyst conference. He added that “the addition of digital has enabled us to easily target key consumer groups, and in combination with traditional media, expand our consumer reach.”

Even companies not as heavily invested in digital across the board are using it strategically to reach specific demographics. Kasper Rorsted, CEO of Germany-based consumer goods company Henkel, told The Wall Street Journal that while digital spending is growing as a percentage of total ad budgets, TV is still the predominant advertising vehicle. “The consumer is still fairly traditional in the way he or she is exposed to most of our products,” he said. “But if you take some of our youth-oriented styling brands, such as [haircare line] göt2b, that’s largely digital because that’s the only way you can engage with that group.”

And while Campbell Soup Co. reported that it decreased its total ad budget for some of its brands, according to a February 2013 Advertising Age article, the company is increasing its strategic digital use. For example, it recently turned to social and digital channels to introduce a new line of microwaveable soup pouches targeted at millennials.


MOBILE INVESTMENTS ACCELERATE

eMarketer estimates that CPG marketers currently

invest about 5% to 10% of digital ad spending in

paid mobile advertising. According to Microsoft’s

Jacobson, this spending as a percentage of digital

is “low right now, but there is a lot of emerging

activity. We have an expectation that it’s going to

grow at a faster pace than some of the current spend

in search and display. The growth rate is going to be

relatively high.”

The Mobile Marketing Association (MMA) and mLightenment predicted that US CPG manufacturers would collectively spend $597 million on mobile marketing this year, up significantly from $382 million in 2012. MMA and mLightenment also expect CPG mobile marketing outlays to nearly double by 2015.

millionsUS Mobile Marketing Spending, by Industry, 2010-2015

Finance, insurance, real estate

Retail trade—otherManufacturing—other

Information

Professional, scientificand business services

Manufacturing—consumer packaged goods

Retail trade—consumerpackaged goods

Government

Transportationand warehousing

Wholesale trade

Accommodationand food services

Healthcare andsocial assistance

Resources (agriculture,mining, utilities,construction)

Educational servicesArts, museums, sportsand recreation

Other

Total

2010

$470

$397$269

$240

$152

$139

$107

$116

$93

$72

$68

$56

$42

$20$17

$145

$2,405

2011

$784

$648$471

$389

$245

$227

$171

$179

$156

$119

$110

$95

$74

$36$27

$227

$3,957

2012

$1,332

$1,082$842

$648

$407

$382

$281

$294

$266

$202

$181

$164

$132

$64$44

$371

$6,693

2013

$2,080

$1,676$1,373

$991

$632

$597

$433

$432

$422

$322

$281

$265

$218

$105$67

$562

$10,456

2014

$3,032

$2,425$2,023

$1,401

$903

$867

$625

$622

$612

$473

$403

$396

$323

$156$95

$807

$15,162

2015

$4,017

$3,164$2,691

$1,778

$1,163

$1,123

$804

$771

$814

$630

$512

$539

$446

$204$120

$1,028

$19,806Note: includes mobile media advertising, mobile-enhanced traditionaladvertising and mobile CRM; numbers may not add up to total due toroundingSource: Mobile Marketing Association (MMA) and mLightenment, "MobileMarketing Economic Impact Study" in partnership with IHS Global Insight,May 9, 2013157001 www.eMarketer.com

Though the MMA’s definition of mobile marketing is broader than just paid advertising, the numbers serve to illustrate the large investment CPG companies are making—and the potential they envision.

As with total digital advertising, some of the industry’s biggest spenders are leading the mobile pack. Most notably, Mondelez International announced late last year that it would spend 10% of its entire global marketing budget on mobile. “As we look at mobile as a pure media platform, we’re seeing engagement rates that are sometimes four times greater than traditional display,” said Beth Reilly, head of the company’s global digital strategy, in a May 2013 press release. “We’re mapping media against the entire consumer journey and rethinking our media investment through a mobile lens.”

Alessio Rossi, vice president of digital marketing, ecommerce and CRM at Lancôme, is seeing mobile use compress the path to purchase. “The consumer decision journey has become much shorter [and much more instinctive]. It doesn’t take days anymore for consumers to decide what they want to purchase,” he said. “We see that the higher volume of store locator requests and how-to requests and consumer review requests are coming through a mobile device. So mobile traffic now accounts for 25% of our traffic, but 12 months ago it was only 10%.”

Tata Consultancy Services projected that by 2015, 33.3% of marketing campaigns by consumer products manufacturers in North America would be designed exclusively for mobile consumers, up from 17.2% in 2012.


Percent of Marketing Campaigns Designed Exclusively for Mobile Consumers According to Large Companies in North America, by Industry, 2012 vs. 2015

Projected(2015)

Telecom services 51.8%

Travel, hospitality and leisure 47.8%

Airlines 50.0%

Automotive manufacturing 44.3%

Energy and utilities 36.5%

Retail 41.5%

Industrial manufacturing 36.5%

Media, entertainment and sports 35.8%

Computer (hardware and software) 32.9%

Government (federal, state, local) 35.0%

Banking/financial services/insurance/private wealth management

34.1%

Transportation logistics 31.2%

Consumer products manufacturing (food, beverages and durables)

33.3%

Healthcare services 32.7%

Pharmaceuticals 29.1%

Other 25.1%

Average

Current(2012)

35.0%

29.1%

27.3%

27.1%

26.3%

23.2%

20.9%

20.0%

19.9%

18.9%

18.0%

17.3%

17.2%

16.3%

15.0%

13.4%

21.4% 36.9%Source: Tata Consultancy Services, "The New Digital Mobile Consumer: How Large Companies Are Responding" conducted by Research Now, Sep 26, 2012145893 www.eMarketer.com

Over the past several years, paid mobile advertising for consumer goods has seen significant growth, both in the US and around the world. Millennial Media reported that global 2012 CPG/FMCG advertising on its network made up 6% of all mobile ad campaigns and increased 235% from 2011. The same metrics for Q1 2013 showed that consumer goods ad investments rose 188% year over year.

% change vs. same period of prior year

Leading Industries Worldwide, Ranked by Mobile AdSpending Growth, Q1 2013

Sports 600%

Nonprofit & charities 264%

Energy & power 261%

Employment 231%

Government services189%

Consumer goods 188%

Automotive109%

Telecommunications102%

Note: based on campaigns on Millennial Media's networkSource: Millennial Media, "Scorecard for Mobile Advertising Reach andTargeting (SMART)," June 24, 2013160955 www.eMarketer.com

Millennial Media also found that in 2012, the beverages category accounted for the largest share of CPG mobile spending worldwide, followed by the cosmetics and hygiene space.

MOBILE TARGETING IMPROVES Jim Norton, senior vice president and head of advertising sales at AOL, sees “different types of mobile ad targeting, mobile couponing and in-game mobile applications” driving much of mobile’s growth. Indeed, mobile ads are especially attractive to CPG and consumer products advertisers for their ability to target desired audiences, who may often be near the point of purchase, by location.

Verve Mobile reported that 49% of consumer goods-related campaigns it served were targeted by designated market area or ZIP code, while 30% made use of location-based real-time data, and 21% were aimed at specific audience segments that had been built based on a user’s location and time.

% of total

US Location-Based Mobile Ad Campaigns Served byVerve Mobile, by Industry and Target, 2012

Political73% 27%

Auto70% 10% 20%

Financial67% 11% 22%

Travel57% 30% 13%

Retail55% 32% 13%

Restaurant50% 43% 7%

Consumer goods49% 30% 21%

DMA/ZIP/ZIP+4 Geoaware or geofenced Audience*

Note: *includes third-party data and place-based targetingSource: Verve Mobile, "Location Powered Mobile Advertising Report," Feb 6, 2013151520 www.eMarketer.com

Telco69% 28% 3%


Local targeting is proving especially valuable to sectors of the industry that encourage impulse-based purchases. For example, research by Millennial Media and comScore found the beverage category, when compared with other industries, was responsible for the largest percentage of mobile ads using location-based targeting on the Millennial Media network.

% of total

CPG Industry Mobile Ad Campaigns Worldwide thatUse Location-Based Targeting, by Category, 2012

Beverages52%

Cosmetics & hygiene17%

Food16%

Householdproducts

12%

Pet products3%

Note: on Millennial Media's networkSource: Millennial Media and comScore Inc., "Mobile Intel Series:Consumer Goods," April 16, 2013156001 www.eMarketer.com

BRANDING VS. DIRECT RESPONSE: A 63/37 SPLIT

This year, eMarketer has taken a deeper dive into

US paid digital spending to determine how much

marketers in vertical industries are investing in ads

primarily focused on driving favorable opinion about

a brand compared with those aimed at obtaining

sales or leads. As a result of this analysis, eMarketer

estimates that in 2013, the US CPG and consumer

products industry will spend 63%, or $2.21 billion,

on brand-focused digital advertising. These formats

include online and mobile banner ads, rich media,

online video, paid social placements, in-game ads,

content sponsorships and native ads.

The remaining 37% of the industry’s digital ad dollars, $1.30 billion, will go toward direct-response tactics. eMarketer includes online and mobile paid search, classifieds, online directories and paid ads embedded in email messages in our definition of direct response.

billions and % of total

US CPG & Consumer Products Industry Digital AdSpending, by Objective, 2013

Branding*$2.21 (63%)

Direct response**$1.30 (37%)

Note: includes advertising that appears on desktop and laptop computersas well as mobile phones and tablets, and includes all the various formatsof advertising on those platforms; *includes banner ads, rich media,sponsorships and video; **includes classifieds & directories, email, leadgeneration, mobile messaging (SMS, MMS and P2P messaging) and searchSource: eMarketer, Aug 2013162107 www.eMarketer.com

Total=$3.51


DISPLAY EVOLVES BEYOND THE BANNER The bulk of CPG and consumer products ad spending continues to be aimed at bolstering company image and building favorable brand awareness. KPMG and The Consumer Goods Forum’s study found that “building the company brand” was the top marketing strategy priority of consumer goods executives worldwide.

% of respondents

Marketing Strategy Priorities of Consumer GoodsExecutives Worldwide, April 2013

Building the company brand35%

Pricing32%

Consumer data analytics31%

Identifying emerging trends26%

Online/mobile sales23%

Social media22%

Loyalty programs22%

Adapting to changing demographics20%

Targeted and location-based advertising17%

In-store technologies16%

Creating new apps12%

Note: for this year; respondents selected up to three strategiesSource: KPMG and The Consumer Goods Forum, "Consumer Executive Topof Mind Survey 2013," June 14, 2013161771 www.eMarketer.com

Digitally, brands are accomplishing this with various forms of online and mobile display advertising. comScore Ad Metrix reported that the consumer goods industry delivered more than 255 billion online display ads in 2012.

billions

Number of Online Display Ad Impressions Deliveredin the US for Select Industries, 2012

Online media 453.24

Retail 433.28

Finance 421.62

Telecom 294.25

Consumer goods 255.66

Note: read chart as saying 433.28 billion impressions delivered were fromadvertisers belonging to the retail industrySource: comScore Ad Metrix as cited in "US Digital Future in Focus 2013,"Feb 14, 2013152562 www.eMarketer.com

A large portion of display advertising is intended to drive traffic to brand-owned or retailer dot-com sites. For example, the study by Millennial Media and comScore found that mobile ads worldwide for the CPG industry were significantly more likely than all mobile ads to have “brand awareness” and “site traffic” as a campaign goal.

% of total

Primary Campaign Goal of CPG Industry vs. TotalMobile Ads Worldwide, 2012

Total mobile ads

Brand awareness 14%

Site traffic 14%

Sustained in-market presence 38%

Registrations 12%

Increased foot traffic 10%

Product launch/release

CPG industry

46%

29%

11%

7%

5%

3% 12%

Note: on Millennial Media's network; numbers may not add up to 100% dueto roundingSource: Millennial Media and comScore Inc., "Mobile Intel Series:Consumer Goods," April 16, 2013155987 www.eMarketer.com


Similarly, L2 Think Tank’s July 2013 analysis of advertising for personal care brands found that “learn more” was the most prevalent call to action in display ads for the brands studied.

% of ads studied

Display Advertising Calls to Action of US PersonalCare Brands, July 2013

Learn more27%

Shop now19%

Coupon18%

Social media campaign8%

Retailer co-branding7%

Enter contest6%

Site tool6%

Ratings & reviews5%

Sample5%

Watch video4%

Note: n=1,133 ads across 64 brandsSource: L2 Think Tank, "Digital IQ Index: Personal Care," Sep 3, 2013163230 www.eMarketer.com

Display advertising is also among the many components used in shopper marketing programs, which are often cooperatively funded with retailers (known as co-op advertising) to drive shopper awareness and interest at the point of purchase. In the Path to Purchase Institute/Shopper Marketing magazine survey, 70% of US CPG executives reported using display advertising in their shopper marketing programs.

% of respondents

Types of Digital Marketing Content Used for DigitalShopper Marketing Programs According to US CPGExecutives, March 2013

Coupons 89%

Images 72%

Posts 70%

Display advertising 70%

Sweepstakes 63%

Microsites 59%

Tweets 52%

Videos 52%

Educational 35%

Blogs 33%

Apps 33%

Online article 30%

Entertainment/games26%

Other*6%

Note: *includes podcasts, in-app advertising and otherSource: Path to Purchase Institute and Shopper Marketing, "Digital ShopperMarketers Survey 2013," April 29, 2013157842 www.eMarketer.com

Digital Video Creates Personal Connections Even as CPG and consumer products companies continue to invest in static and rich media display, industry marketers report that today’s brand advertising mix is rapidly evolving from standard banner units—for which investment is expected to remain flat—to more engaging and interactive units, such as video, paid social placements, content sponsorships and retargeted ads.

Video is the rising star among these newer digital display formats. More than many other verticals, CPG and consumer products manufacturers are upping their investment in digital video advertising as targeted inventory becomes available. Not only does video give them more and lower-cost opportunities to repurpose existing TV campaigns and create original programming, it helps them forge and strengthen personal connections with desired audiences through sight, sound and motion.


Advertiser Perceptions’ June 2012 survey of US CPG ad/marketing executives found that nearly three-quarters of respondents were planning to increase digital video ad spending. This was higher than for any other tactic.

% of respondents

US CPG Ad/Marketing Executives Who Plan toIncrease Their Ad Spending, by Media, June 2012

Digital video 74%

Mobile 65%

Digital total 63%

Digital search 59%

Digital display 55%

Advanced/interactive TV 50%

Cable TV 33%

Radio 31%

TV 28%

Magazines 24%

Print 20%

National newspapers18%

Broadcast TV 16%

Local newspapers6%

Outdoor6%

Overall 37%

Note: in the next 12 monthsSource: Advertiser Perceptions, "Advertiser Intelligence Reports (AIR) Wave17," Aug 8, 2012149727 www.eMarketer.com

During roughly the same time period, YuMe reported that the CPG industry was its top online video spender in Q2 2012, making up almost one in four dollars invested in online video ads.

YouTube and online video ad networks have clearly benefitted from last year’s investments and continue to see growth in this area. A more recent analysis by Videology showed that CPG was still at the head of the pack. In Q2 2013, consumer goods advertisers represented more than one-third of video advertisers on its network, the highest percentage by far. This was up from 22.2% in Q1 2013.

% of total

US Digital Video Advertiser Share, by Industry, Q2 2013

Consumer goods35%

Automotive13%

Restaurants9%

Retail9%

Healthcare services6%

Financial services5%

Travel5%

Educational services4%

Entertainment4%

Pharmaceuticals3%

Telecom3%

Business products1%

Other3%

Source: Videology, "US Video Market at a Glance Q2 2013," Aug 2013162262 www.eMarketer.com


Though CPG and consumer products video ad metrics vary by product advertised and ad format, pre-roll and in-stream video ads for this industry generally have favorable completion rates. And Nielsen research commissioned by the IAB showed favorable metrics for online video when it was compared with television. Online video ads for two categories that include consumer products—food and beverage, and health and beauty—outscored TV commercials by a large margin for general recall, brand recall and message recall.

% of respondents

Ad Recall of US TV vs. Online Video Advertising, by Industry, Jan 2011-March 2012

General recall Brand recall Message recall

Finance

Retail

Restaurants

Hospitality

Pharmaceuticals

Telecom

Food & beverage

Health & beauty

Technology

Automotive

71%

67%

65%

65%

63%

62%

61%

61%

60%

60%

50%

47%

47%

45%

45%

51%

46%

37%

46%

44%

53%

53%

53%

55%

49%

44%

50%

45%

44%

42%

30%

30%

32%

26%

26%

26%

30%

19%

24%

23%

43%

44%

45%

44%

36%

36%

40%

35%

32%

34%

21%

23%

24%

19%

18%

21%

23%

13%

18%

17%

Note: ages 18+; online and TV data based on responses up to 1 day post-adstream; limited to the same brands that streamed online and aired on TVduring the same periodSource: Nielsen, "A Comprehensive Picture of Digital Video and TV Advertising: Viewing, Budget Share Shift and Effectiveness" commissioned by Interactive Advertising Bureau (IAB), Feb 25, 2013153982 www.eMarketer.com

Online video ads in full-episode players

TV commercials (broadcast & cable)

Mobile video is another growth area that is starting to see increased investment, according to Jim Lecinski, vice president of sales for the Americas at Google. Millennial Media and comScore’s study reported that CPG companies were indeed using mobile ads to drive audiences to mobile video, as well as to social media presences. In addition, the analysis found that CPG companies were also much more likely than average to offer video or social media as a post-click action.

% of campaigns

Post-Click Actions Offered by CPG Industry vs. TotalMobile Ad Campaigns Worldwide, 2012

CPG industry Total mobile ads

Watch video 44% 16%

Social media 34% 18%

Site search 26% 29%

Store locator/view map 21% 21%

Enroll/join/subscribe 21% 19%

Mcommerce 20% 16%

Retail promotion 20% 9%

App download 15% 37%

Place call 9% 9%

Note: on Millennial Media's networkSource: Millennial Media and comScore Inc., "Mobile Intel Series:Consumer Goods," April 16, 2013155906 www.eMarketer.com

Paid Social Boosts Owned and Earned Content CPG and consumer products marketers were quick to embrace YouTube, Facebook, Twitter and other social venues as hubs of brand and product information as well as other owned and earned content. As a result, they are responsible for a high percentage of socially enabled ads—those that appear outside social networks but encourage consumers to visit social sites and engage with brands there. comScore Ad Metrix reported that consumer goods accounted for 22% of socially enabled US ad impressions in 2012, more than any other sector studied.

% of total

Socially Enabled Ad Impressions Delivered in the USfor Select Industries, by Share, 2012

Consumer goods22%

Retail19%

Online media17%

Media &entertainment10%

Finance4%

Other28%

Source: comScore Ad Metrix as cited in "US Digital Future in Focus 2013,"Feb 14, 2013152563 www.eMarketer.com


Industry marketers have racked up impressive numbers of fans and followers. A November 2012 study by BrandSpark and Better Homes and Gardens found that manufacturers of food and beverages, beauty products and cosmetics, personal care and grooming products, and household care products were among the top company types that US internet users followed on Facebook.

% of total

Types of Companies Followed on Facebook by USInternet Users, Nov 2012

Manufacturers of food or beverages65%

Restaurants55%

Manufacturers of beauty products or cosmetics52%

Grocery retailers40%

Manufacturers of personal care or grooming products39%

Manufacturers of household care products36%

Electronics manufacturers28%

Automobile manufacturers14%

Airlines13%

Other17%

Note: n=703 ages 18+; among those involved in their household shoppingfor food, household care, or health and personal care/beauty productsSource: BrandSpark and Better Homes and Gardens, "2013 AmericanShopper Study," Jan 24, 2013153113 www.eMarketer.com

Despite these high numbers—or perhaps because of them—CPG and consumer products companies have only recently begun to fully embrace paid social network advertising in a big way.

eMarketer estimates that companies in this industry collectively spend about 10% to 15% of their US digital ad budget on paid social media placements, with the majority going to Facebook and YouTube. This level of investment is rising as more marketers seek to grow their communities, increase interaction with target audiences and draw attention to trending owned and earned content. For example, Dan Skinner, public relations and social media manager at ConAgra Foods, told eMarketer that his team looks for opportunities to boost its owned social content with paid advertising. “[We pay close attention to] a particular piece of content in its first couple of hours to assess if we’re going to put more [paid] support behind it,” he said.

Google’s Lecinski noted that this type of “priming the pump”—putting paid ad dollars behind owned content—is also proving effective in kindling views of YouTube videos. “If you have good content, you need to at least tip over the first couple of dominos,” he added. “Then, maybe the last end of the domino chain is free views that it earns, but you’ve got to tip the first couple over yourself.”

Consumer products marketers are devoting more budget and effort to real-time ads on social networks, as well as retargeted ads on Facebook Exchange. They also see future advertising potential in other social venues, including Twitter, Pinterest, Instagram and Google+.

For this reason, several top social networks have rolled out programs to aggressively court CPG and consumer products advertisers. In late 2012, Facebook hired Erin Hunter, a veteran of Procter & Gamble and comScore, as its first global head of CPG marketing. In January 2013, the social network held its first “CPG Summit,” with the hope of making headway with marketers and showing them how they might use Facebook products—such as Facebook Exchange, Graph Search, and its Custom Audiences program—in more strategic and coordinated ways.

Twitter also sees untapped CPG potential and is undertaking efforts to show marketers how effective its ad products can be. According to a recent announcement on the social platform’s blog, Twitter partnered with Datalogix, a firm that measures the relationship between online ads and offline sales, to help marketers understand the connection between tweets and products purchased. Twitter said it could “now quantify the impact of Promoted and organic Tweets on offline sales for CPG businesses in the US.”


Programmatic Buying Increases Efficiency CPG and consumer products companies already buy a significant amount of context- and audience-based display ads via ad networks and across exchanges. Often, they use these venues to test targeting capabilities, new data sets, different segments, and the latest platforms or capabilities within those platforms.

To keep CPMs low, CPG and consumer products companies are turning to programmatic buying and premium programmatic buying (automated buying of premium remnant inventory). “There’s a lot more interest by CPG brand marketers thinking about automated programmatic buying, real-time bidding (RTB), data-appending—those kinds of things,” said Google’s Lecinski. “They want to know how these things can help them reach their target audience in a more effective and more efficient way.”

Quarterly breakouts of ads purchased on Casale Media’s Index ad serving platform showed that the number of RTB impressions purchased by one CPG category, US food and drink, jumped from 3.8% to 6.2% of the total between Q1 2012 and Q4 2012.

Top 10 US Industries, Ranked by Share of Real-TimeBidding (RTB) Impressions Purchased, Q1 2012-Q4 2012

Q1 2012

Retail

Financial

Telecom

Travel

Automotive

Computers

Food & drink

Consumerelectronics

Media

Business

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

26.6%

14.1%

11.3%

11.1%

8.4%

8.2%

3.8%

3.7%

2.8%

2.0%

Q2 2012

Retail

Telecom

Financial

Automotive

Travel

Computers

Food & drink

Media

Business

Fashion

24.6%

14.3%

12.0%

11.1%

11.0%

5.0%

4.5%

3.5%

2.3%

2.0%

Q3 2012

Retail

Telecom

Travel

Automotive

Financial

Food & drink

Media

Health

Business

Education

31.6%

16.5%

11.4%

10.5%

9.3%

5.2%

3.0%

2.6%

2.5%

1.8%

Q4 2012

Retail

Telecom

Automotive

Financial

Travel

Food & drink

Media

Health

Entertain-ment

Business

35.9%

13.0%

11.0%

9.7%

7.7%

6.2%

4.0%

3.7%

2.5%

2.3%

Note: data is based on the RTB impressions purchased over the Index ad-serving platformSource: Casale Media, "Index Quarterly Report: Issue 2, Q3-Q4 2012," April 11, 2013155834 www.eMarketer.com

Similarly, the Rubicon Project found that Unilever was the No. 9 RTB spender on its platform, up a significant 453% between Q2 2012 and Q3 2012. This increase likely contributed to a 21% jump in the food and drink category during the same time period.

% change vs. prior quarter

Top 10 US Advertisers and Advertising Categories,Ranked by Real-Time Bidding (RTB) Spending, Q3 2012

Advertisers1. AT&T

2. Toyota

3. Sprint Nextel

4. American Express

5. Southwest Airlines

6. Amazon

7. Chrysler Group

8. Verizon Communications

9. Unilever

10. Ford Motor Co.

Industries1. Technology & computing

2. Personal finance

3. Automotive

4. Travel

5. Shopping

6. Arts & entertainment

7. Business

8. Style & fashion

9. Home & garden

10. Food & drink

% change vs. priorquarter

12%

143%

94%

11%

48%

261%

6%

43%

453%

82%

1%

16%

44%

25%

38%

26%

22%

1%

22%

21%

Change inranking

No change

� 8

� 4

� 1

No change

� 29

� 3

No change

� 66

� 9

No change

No change

� 1

� 1

No change

No change

� 1

� 1

No change

No change

Note: impressions served over the Rubicon Project REVV platform; includesmobile and videoSource: Rubicon Project, "Real Time Trading Marketplace Report Q3 2012,"Oct 23, 2012146927 www.eMarketer.com

The use of automated systems to target and buy ad placements has not only driven US consumer products ad spending dollars to digital media, it has also given marketers a better handle on return on investment (ROI). As RTB technology becomes more sophisticated, the trend toward more programmatic buying is expected to continue.


SEARCH: A DIRECT RESPONSE TO ECOMMERCE EFFORTS Search engine marketing, the backbone of digital spending for many direct-to-consumer (DTC) marketers, has traditionally taken a backseat to brand-focused display in the CPG and consumer products industry. Despite their hefty ad budgets, CPG manufacturers rarely appear on any top 10 lists of search advertisers.

There are a number of reasons for this. First, many low-price, high-volume FMCG staples do not see high numbers of searches. As one industry expert told eMarketer, “There are simply not a lot of people searching on toothpaste.” As a result, many products have a slow and steady hum of search presence but nothing extraordinary in terms of spending. Second, while brands and the retailers that sell their products often seek to collaborate on co-op campaigns, manufacturers often cede complex, big-budget search campaigns to the retailers. A report from Internet Retailer, “Top 500 Guide,” noted that the consumer brand manufacturers that were among the report’s top 500 spent significantly less per company on search than retail chains and web-only retailers did.


US Average Monthly Paid Search Spending per Retailer, by Type, 2011 & 2012

Retail chains

Web-only retailers

Consumer brand manufacturers

Catalog/call center retailers

2011

$1.5

$1.7

$1.0

$0.1

2012

$2.5

$1.9

$1.1

$0.1

%change

62.4%

10.7%

4.9%

-4.7%

# representedin Top 500

158

195

66

81

Source: Internet Retailer, "Top 500 Guide," May 7, 2013157020 www.eMarketer.com

But as more brand manufacturers seek to bypass traditional retailers with their own DTC commerce initiatives, they are investing more in search marketing—bidding more aggressively on their own brand terms in an effort to own the “last mile” before a purchase. In fact, the June 2012 Advertiser Perceptions study found that 59% of US CPG ad and marketing executives planned to increase their spending in digital search advertising.

Investments specifically in mobile search advertising are also rising as a result of exploding consumer use of mobile devices in all phases of the purchase cycle. Research by The Search Agency showed that mobile paid search click share grew from 15.1% in Q1 2012 to 21.1% in Q3 2012. This high percentage of mobile searches is spurring CPG and consumer products companies to further extend and diversify their search campaigns across devices.

% of total

US Consumer Goods Paid Search Click Share, by Device, Q3 2011-Q3 2012

Q1 201284.9% 7.6% 7.5%

Q2 201281.5% 9.2% 9.3%

Q3 201278.9% 11.0% 10.1%

Computer Tablet Smartphone

Source: The Search Agency, "State of Paid Search Report Q3 2012," Oct 30,2012147147 www.eMarketer.com

Q4 201190.1% 4.5%

5.4%

Q3 201195.1% 2.7%

2.2%


Google’s rollout and mandatory use of its Google Enhanced Campaigns as of July 2013 will also likely result in at least a short-term increase in search prices—and spending—as lower-priced mobile costs per click rise to parity with their online counterparts. To prove the value of mobile search advertising, Google published results of an April 2013 study showing 86% of visits from mobile CPG search ads would not otherwise have been clicked on from a business’s organic search listing.

% of total

Incremental Search Traffic from US Mobile SearchAds, by Vertical, April 2013

Classifieds & local 97%

Business & industrial 94%

Education & government 94%

Technology 90%

Finance 87%

Automotive 86%

Consumer packaged goods 86%

Media & entertainment 86%

Retail 86%

Travel 85%

Healthcare 83%

Service in all verticals 82%

Average 88%

Note: n=300; read as 88% of visits from mobile search ads would nototherwise have clicked on the business's organic search listingSource: Google, "Mobile Search Ads Pause" as cited in company blog, July16, 2013162157 www.eMarketer.com

PUTTING DATA TO BETTER USE

Though many CPG and consumer products firms

are quickly shifting money into the digital marketing

column, some studies show they are still struggling

to optimize their spending and coordinate it with

their larger marketing programs.

For example, L2 Think Tank’s analysis of digital marketing for personal care products found a general lack of “cohesive strategy” across the category. In fact, more than half of the brands studied were rated “challenged” or “feeble” when it came to their digital marketing. Common issues cited were “anemic site and ecommerce investments, limited DTC data capture, and a fragmented approach to social media.” Brands that ranked higher, L2 Think Tank said, had more sophisticated programs but were still stymied by the lack of “an integrated approach across digital touchpoints.”

Some industry experts believe the key to better digital marketing lies in the more effective and coordinated use of Big Data and technology to both target and measure campaigns. “Verticals that are more steeped in traditional media, including CPG, have lagged in terms of fully capturing the value of online,” said Google’s Robert Dillon, director of global display sales and strategy. “I think this is primarily because we haven’t, as an industry, come forth with the right type of metrics and measurement to demonstrate brand lift.”


CPG and consumer products manufacturers have long seen the value in collecting data. In a 2012 study by 33Across, 55.6% of US CPG brand marketers and agencies strongly agreed that data access and use was very important to their ad spending; the remaining 44.4% agreed with the statement. While strong agreement was lower than in some other industries, CPG was the only industry where no respondents were neutral or disagreed.

% of total

US Brand Marketers and Agencies that Believe DataAccess/Use Is Very Important to Their Ad Spending in 2012, by Industry

Automotive71.5% 14.6% 13.9%

Financial services70.4% 15.3% 14.3%

Travel60.0% 20.0% 20.0%

Consumer packaged goods (CPG)55.6% 44.4%

Entertainment45.5% 36.4% 9.1% 9.1%

Retail44.7% 42.9% 12.4%

Strongly agree Agree Neutral Disagree

Note: numbers may not add up to 100% due to roundingSource: 33Across, "Advertiser & Agency Survey," May 17, 2012141581 www.eMarketer.com

Total60.6% 30.3% 6.1%

3.0%

But at the same time, these marketers and agencies are still grappling with how to best make use of the data they collect. “My biggest pet peeve is how do we get better ROI data, and how do we get a stronger correlation from the dollars we invest in social media and the sales impact,” said Mars Chocolate’s Benin. “I’d love to have a little bit more empirical data against it.”

In its April 2013 publication, “The Data Directive,” the Economist Intelligence Unit reported that just 13.3% of executives at global retail and consumer goods manufacturers had a well-defined data strategy that focused on aggregating and maximizing the use of data. Nearly 38% admitted to gathering a large amount of data but not consistently making the most of its value.

% of respondents

Attitude of Executives Worldwide Toward TheirCompany's Use of Data, by Industry, 2013

We have a well-defined datamanagement strategy that focuses resources on collectingand analyzing the most valuable dataWe understand the value of our data and are marshallingresources to take betteradvantage of them

We collect a large amount ofdata but don't consistentlymaximize their valueWe collect data but they areseverely underutilized

We don't prioritize datacollectionNote: numbers may not add up to 100% due to roundingSource: Economist Intelligence Unit (EIU), "The Data Directive"commissioned by Wipro, April 29, 2013156978 www.eMarketer.com

Professional services

Technology, media and telecom

Financial services

Manufacturing

Retail and consumer goods

40.0%

30.0%

20.0%

6.7%

3.3%

30.4%

45.7%

15.2%

6.5%

2.2%

21.9%

56.3%

12.5%

6.3%

3.1%

15.8%

36.8%

35.1%

8.8%

3.5%

13.3%

40.0%

37.8%

6.7%

2.2%

And an October 2012 study commissioned by Accenture found that more than half of CPG senior executives polled believed they had the technology but lacked the talent to “convert data into a business asset.”

On an optimistic note, CPG and consumer products marketers appear to be fast-tracking programs that focus on better data collection and analytics. In the April 2013 KPMG/The Consumer Goods Forum study, 31% of global consumer goods executives said consumer data analytics was a marketing strategy priority.


“CMOs now have more dollars available to them than they’ve had in the past, and it’s not necessarily a comment on an increase in marketing spend as much as it is a shift in IT budgets moving from CIOs to CMOs, primarily to focus in a few different areas,” said Microsoft’s Jacobson. “One of those areas is leveraging digital to use data more effectively for attribution across physical and digital channels. They want to use Big Data to help them really gain insights into what’s working and what’s not. We’re seeing a renewed focus on things like marketing mix modeling and optimization of marketing spend.”

“The good news about digital technology is that it changes the whole world of ROI,” said Alex Tosolini, vice president of global ebusiness at Procter & Gamble. “Technology will allow the best investments to get a disproportionate amount of funds. Brand building will become more sophisticated because technology will be able to specifically address which activity is returning more money on the investment.”

CONCLUSIONS The biggest spenders in the CPG and consumer products industry have committed to digital. While the industry as a whole is still playing digital marketing catch-up, the heavy hitters have embraced online and mobile channels, using them to establish and nurture direct and personal relationships with consumers. They are cutting the path for smaller manufacturers that are dipping their toes in the water and learning from the heavy hitters.

Branding remains a top priority. Creating brand and product awareness is—and always has been—the primary advertising goal for industry marketers. In addition to traditional print and broadcast formats, they are increasingly adding brand-focused digital video, social media and other dynamic display formats into the mix.

Mobile is critical to the ad spending mix. CPG and consumer products advertisers have ramped up mobile and location-based advertising, mobile couponing, and in-game mobile apps to reach targeted audiences in the “last mile” before a purchase.

Data and technology will help optimize marketing spend. Industry marketers realize the importance of using Big Data and new technology tools to more precisely target and measure their advertising. They are prioritizing programs to create optimal marketing mixes and streamline spending efficiency. This, in turn, will help them manage and fine-tune multichannel campaigns more holistically.


EMARKETER INTERVIEWS

CMO One-to-One: How Mars Uses Social to Jump-Start Initiatives Like M&M’s Ms. Brown

Roy Benin Chief Consumer Officer

Mars Chocolate North America Interview conducted on March 25, 2013

How Lancôme Targets via Tablet

Alessio Rossi Vice President of Digital Marketing, Ecommerce and CRM

Lancôme

Interview conducted on May 3, 2013

ConAgra on Spending Digital Ad Dollars in Real Time

Dan Skinner Public Relations and Social Media Manager

ConAgra Foods Interview conducted on May 28, 2013

Procter & Gamble Applies Lessons From Abroad to CPG Ecommerce in the US

Alex Tosolini Vice President of Global Ebusiness

Procter & Gamble Interview conducted on February 15, 2013

Robert Dillon Director, Global Display Sales and Strategy

Google Interview conducted on February 21, 2013

Mark Jacobson Director of Strategy

Microsoft Advertising Interview conducted on February 13, 2013

Jim Lecinski Vice President of Sales, Americas

Google Interview conducted on February 1, 2013

Jim Norton Senior Vice President, Head of Advertising Sales

AOL Interview conducted on January 18, 2013

RELATED EMARKETER REPORTS

Buying Online Video Advertising: Making the Most of Your Budget

CPG’s Digital Conundrum: Turning Digital Shoppers into Buyers

CPG in Developing Markets: Consumers’ Digital Habits in Emerging Economies

Millennials in Aisle 2.0: Keeping Young Supermarket Shoppers Engaged with Brands

US Ad Spending: Q3 2013 Forecast and Comparative Estimates

The US Retail Industry 2013: Digital Ad Spending Forecast and Key Trends

RELATED LINKS

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Accenture

Advertiser Perceptions

AOL Advertising

Booz & Company

Brand Activation Association (BAA)

BrandSpark

Casale Media

comScore

The Consumer Goods Forum

Economist Intelligence Unit (EIU)

Google Think Insights

GroupM

Interactive Advertising Bureau (IAB)

Internet Retailer

Kantar Media

KPMG

L2 Think Tank

Microsoft Advertising

Millennial Media

Mobile Marketing Association (MMA)

The Search Agency

Tata Consultancy Services

Verve Mobile

Videology

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EDITORIAL AND PRODUCTION CONTRIBUTORS

Cliff Annicelli Senior EditorKaitlin Carlin Copy EditorJoanne DiCamillo Senior Production ArtistStephanie Gehrsitz Senior Production ArtistDana Hill Director of ProductionNicole Perrin Associate Editorial DirectorHeather Price Copy EditorAllie Smith Director of Charts

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