Consumers can’t seem to get enough of online grocery shopping. In fact, grocery e-commerce has doubled since 2019 and is the only category that hasn’t returned to its pre-pandemic trendline.
This presents a unique opportunity for consumer packaged goods (CPG) brands to up their digital investments. But is there a secret retail media strategy everyone should know — or is it as simple as mastering the basics of thoughtful content, performance management and goal alignment?
ChannelAdvisor recently partnered with eMarketer for a recent Meet the Analyst webinar, The Digital Shelf for CPG Brands: How to Win Market Share on Top Retail Media Networks, to reveal some intriguing findings about the future of grocery and CPG brands. Here are the key takeaways to keep in mind as you take advantage of the category’s immense growth.
Don’t Lose Sight of the Bigger Picture
Grocery will approach 10% e-commerce penetration this year. And with $1 out of every $10 in a $1.41 trillion category coming from digital, grocery e-commerce is now too large to ignore.
But there’s still another 90% coming from physical shelf sales. That means even though CPG brands have a huge opportunity to double down on digital, their success will still be dependent on seeing the full grocery picture. For instance, mobile and desktop grocery shopping are more than just a sales tool. They are also helpful to consumers for browsing and planning, and they play a role in driving in-store purchases.
Choose RMNs to Achieve Specific Goals, Not Just ROAS
CPG digital ad spend has doubled over the past three years, from $18.61 billion in 2019 to $37.13 billion in 2022. This is due in large part to increased competition from heavyweight aggregators and multinationals such as Thrasio, Perch, P&G, Unilever and Pepsico.
Advertisers have traditionally flocked to retail media networks (RMNs) like Amazon to capture its huge audience — but the marketplace has gotten crowded. Walmart and Instacart are now driving higher return on ad spend (ROAS) than Amazon thanks to unique tactics like improved search algorithms and second-price auctioning, respectively.
With more advertising options, CPG brands can afford to be more mindful of success metrics and goals beyond ROAS alone — especially as ad costs eat into that return. While ROAS is important, it’s not the only KPI to consider. According to eMarketer’s findings, new-to-brand acquisition and share of voice are gaining ground as important metrics among advertisers.
Get Advertising Basics Down First
Instead of going after competitors or attempting advanced advertising strategies right away, CPGs must first build a foundation for successful campaigns that include regular measurement, scorecarding and inventory management.
When ChannelAdvisor builds scorecards with customers, we typically explore anywhere from eight to 16 metrics across four pillars:
- Assortment and availability – selling the right products to the right amount of retailers
- Prices and promotions – selling products at the right price and in consideration of competitors
- Search and digital shelf – ensuring customers can actually find your products
- Content and reviews – providing sufficient detail and social proof for shoppers
Don’t Forget the Importance of Branding and Creative
Branding elements drive consumer choice. Some digitally native brands were even created to stand out on the digital shelf with high-contrast imagery, simple text and bold colors. To win audiences over, it’s important to regularly assess creative and merchandising decisions like:
- Content. Review content quarterly (not annually) to account for seasonality, changing consumer preferences and trending search terms.
- Product descriptions. Write descriptions to include attributes that matter to shoppers and correspond to how modern consumers search.
- Ratings and reviews. eMarketer recommends a threshold of at least 50 ratings and reviews with scores of 4.2 or higher so shoppers have confidence in your product(s).
- Images and video. Make sure you have enough A+ content, including five or more images and one or more videos to tell a complete and interactive brand story.
Take Action on the Changing CPG Landscape
The digital frontier is still largely uncharted territory as e-commerce brands and retailers navigate post-pandemic impacts and changing consumer preferences. Those who thrive will be players that heed analyst recommendations and perfect elementary advertising tactics like product content, fulfilment and regular program assessment.
Watch the full on-demand webinar for more insightful metrics like the effects of inflation on grocery, where future retail media budgets will come from and how to break into e-commerce from offline-only sales.