CPG ad spend is still high after huge pandemic wins

During the pandemic, CPG ad spend exploded—increasing $19 billion in just two years—and it shows no signs of stopping. According to eMarketer, CPG ad spend is expected to increase this year to $36 billion dollars, up from $30.5 billion in 2021, and will grow even more in 2023.

And experts are attributing this, in part, to changes in consumer behaviors due to the pandemic. As communities across the country went into lockdown, CPG sales boomed: With more people eating at home, and an increased need for things like cleaning supplies and home health items, brands were gaining new customers in droves.

Many marketers expected CPG spend to return to pre-pandemic levels, but as brands now embrace an omnichannel shopping experience—which includes e-commerce and retail media networks—data shows digital marketing is stronger than ever. This year, CPG brands are on track to spend upwards of $36 billion, a $6 billion increase from 2021 and a $13 billion increase from 2020.

While retail ad spending remains king at an estimated $57 billion for 2022, CPG is creeping up behind. It will continue to grow, too, as more CPG companies invest in data strategies, shift their linear TV budgets to encompass CTV spend, and as digital strategies drive more results. Dan Perez, vice president of CPG solutions at Epsilon, says CPG brands are really starting to dive into omnichannel marketing, especially when it comes to CTV.

“The world is changing,” he says. “With so much shifting to digital, it’s no surprise. The money for CPG ad spend has always been there, but it’s always been just in linear TV. Now with retail media networks, CTV and mobile—those are driving significant investment.”

Consumer behavior goes omnichannel

This is especially important, too, as brands see a continued increase in overall CPG spending among consumers. A recent survey done by Catalina analyzed the way the pandemic fundamentally changed the way people shop and eat.

According to the survey, overall spending per trip to the store has risen an average of 22% compared to pre-pandemic levels, and consumers are spending more on groceries overall. Home health categories have exponentially increased too, well beyond initial COVID lockdowns.

The pandemic exacerbated e-commerce growth, with some experts saying it condensed about five years of growth into three months. It also established the importance of retail media networks for both retailers and the brands they serve.

A recent survey from MediaRadar shows that CPG brands made up 17% of retail media network ad buys among giants like Amazon, Target and Walmart between May 2021 to January 2022. That’s approximately $500 million, with CPG heavy hitters like Reckitt Benckiser, Kellogg and Mondelez leading the charge. Todd Krizelman, CEO and co-founder of MediaRadar, told Marketing Dive that this type of shift in spending is proof of accelerated change thanks to COVID-19.

“Companies are advertising on e-commerce sites in hopes that their products will be seen by the right buyer,” he said.

As the digital marketing ecosystem changes, CPG marketers need to focus on identity resolution

So, what to do in an ever-shifting environment? Long gone are the days of blanket market strategies. CPG marketers are looking critically at their digital investments to figure out how to better connect across channels with cross-device identity.

CPG brands should think about what their identity resolution solution will be in the future, says Perez. Without a comprehensive picture of connected identity, marketers won’t be able to accurately reach customers, leaving their marketing spend vulnerable to waste. And as that only continues to grow, bigger investments will be more susceptible.

Another big concern for CPG brands is the deprecation of third-party cookies. Google—the last browser holding out with third-party cookies—is expected to get rid of them in 2023. This is forcing marketers to change their ad targeting tactics. According to an Epsilon survey, only 48% of CPG brand marketers feel “somewhat” prepared for the shift away from third-party cookies.

CPG brands, like Kimberly Clark and Unilever, are building first-party data strategies to offer personalization and to reach the right customers with the right messages. A great complement to those first-party data strategies is a connected identity strategy around digital media, which offers an avenue for CPG brands to pursue data-rich insights.

At Epsilon, our CORE ID solution allows marketers to have an accurate, stable and scalable identity solution that reaches millions of consumers in a privacy-safe way.

“That’s why CORE ID is so important,” Perez says. “Now that you’re investing money in all these channels, how do you make sure you’re getting smarter about it and making them work all together?”