Consumer packaged goods (CPG), retail and financial services dominate digital ad spending in the US. eMarketer anticipates the CPG industry alone is set to spend over $30 billion in 2021: about $7 billion more than in 2020. The only other industry that outpaces CPG in digital ad spending is retail, which spent $20 billion in 2018 and is projected to spend $57.2 billion by the end of 2022, according to the firm.
Overall digital ad spending in the US increased by $19.79 billion between 2019 and 2020 as ad spending in traditional formats (e.g., TV, radio and print) decreased by 18.1 percent. eMarketer predicts that digital ad spending will reach $191.09 billion this year, $38.83 billion more than 2020.
Mobile advertising is the preferred destination for digital ad spending in the US and globally, followed by connected TV. CPG, entertainment, computing products and consumer electronics, financial services and telecom will spend more than 70 percent of digital ad budgets on mobile, which is greater than the national average.
For its latest Industry Insights: Spotlight on CPG report, eMarketer spoke with CPG leaders from White Castle, The Vitamin Shoppe and Spice Cafe to understand how they’re pivoting their marketing strategies to keep up with current challenges including waning brand loyalty, rising prices and stocking problems.
Lynn Blashford, White Castle Chief Marketing Officer
Blashford tells eMarketer she seeks to optimize consumer loyalty by curating products specifically for fans of the brand who choose to celebrate it in different ways. The Harold & Kumar Go to White Castle film, for example, was written by New Jersey natives who were themselves White Castle fans.
The brand’s foray into the freezer section of grocery stores in 1987 followed consumers’ frequent requests for large amounts of sliders to take on cross-country road trips to freeze and reheat. White Castle’s third-generation president Bill Ingram was rejected by several prominent CPG manufacturers when he requested that they sell White Castle sliders in the freezer section. So the company took matters into its own hands. The majority of White Castle consumers have never been to a restaurant—a testament to the product’s merit.
White Castle has recently made changes to its CPG retail model. For example, to grow awareness and become more tactical, the company hired a shopper marketing agency. New customers who shopped in the freezer section but were not selecting White Castle emerged, especially as consumers stocked up their freezers during the pandemic. The company can now barely keep up with demand and has even had to reduce shopper marketing, according to Blashford.
White Castle continues to use traditional channels for the restaurant side of the business given that it is a regional chain. It engages with almost every channel, which means it has access to an abundance of customer data. One interesting insight the company discovered leveraging social listening is that its CPG product is regularly eaten in bed. The company took this information and depicted a couple eating sliders while kicking back at the end of the day in its recent round of campaigns for “Long Live Sliders.”
Nadina Guglielmetti, The Vitamin Shoppe Vice President And General Manager Of Marketing
eMarketer spoke with Guglielmetti to find out how The Vitamin Shoppe is balancing the needs of IRL shoppers with a growing online customer base and how social media, loyalty programs and partnerships are advancing growth as vitamin and supplements sales grew 24 percent last year.
The company’s target audience online is younger and more value-oriented than its retail audience, according to Guglielmetti. Online, customers seek promotions and shop across every vendor whereas in-store, the individual has already committed and decides between brands as opposed to between platforms or retailers. The Vitamin Shoppe has attempted to make shopping between its stores and website seamless by improving its in-store pickup and curbside capabilities. It also communicated its value message of being quality-driven and that it holds expertise in health and wellness, while also offering more competitive pricing and promotions. Sales increased with very little disruption.
The Vitamin Shoppe seeks to convey its credibility by working with micro-influencers who are passionate about health, wellness and fitness. It also works with mid-tier athletes and quality-focused Olympians. Last year, it partnered with Instacart, which boosted brand awareness.
Guglielmetti measures the success of the company’s content marketing by looking at how people engage with it and asking whether it’s driving people to the website’s blog, inspiring conversation, inspiring customers toward becoming healthier, and whether it’s presenting itself as one that cares about quality and innovation.
The company’s loyalty program has been critical in customer retention. Ninety percent of its customers engage with its loyalty program. As a result, it has acquired plenty of first-party data, including frequency of shopping and products purchased, that it uses to tailor how it communicates with customers and surfaces promotions or content to help customers.
Guglielmetti isn’t concerned with new marketing strategies or partnerships, but rather how the company can improve its communication across the channels it currently has and how it will operate in a cookie-less arena. It’s in the process of launching SMS and learning about TikTok, a sign that it doesn’t try to be everywhere at once.
Sameer Malhotra, Cafe Spice Chief Executive Officer And Co-Founder
Cafe Spice produces ready-to-eat meals sold at grocery stores around the US after starting as a family-run restaurant in New York City. The shift occurred when Whole Foods opened a market in Columbus Circle, tried Malhotra’s food and began selling his products at several of its locations. Malhotra recognized his desire to expand the business as a wholesaler rather than as a retailer. So, instead of supplying college campuses with grab-and-go meals, he supplied Whole Foods with them.
Since 2018, the company has been selling through Amazon Fresh. What started out as a slow source of customers has blown up in the last year as people began working and eating at home more often. Cafe Spice’s marketing strategy shifted to include more social ads and keyword searches through Amazon.
The company leveraged a large keyword marketing campaign through Instacart. It also launched with Kroger and its online platform. Additionally, Hungryroot recently began selling Cafe Spice chicken burritos and potato samosa small bites.
Given that one of Cafe Spice’s core pillars is a healthy lifestyle, the company says it uses as many fresh and Hudson Valley-grown ingredients as possible. And in order to build brand awareness, the company has engaged direct-to-consumer more than any other channel. Malhotra says Cafe Spice is inundated with questions about where to find its products and has seen its grab-and-go sales triple.
