[This article was originally published in ExchangeWire on March 21, 2017]
Digital advertising has long promised accountability, but for most FMCG advertisers, tying digital adverts to product sales has been elusive. Writing exclusively for ExchangeWire, Michael Greene, VP of product strategy, AudienceScience (pictured below) asks, what impact does digital advertising really have on the sales performance of FMCG brands?
There is no doubt FMCG marketers face unique challenges in tying marketing efforts to sales results. Unlike verticals as distinct as apparel, electronics, and financial services, FMCG product purchases still largely occur offline, where store placement and attractive product packaging matter as much – if not more – than advertising. Moreover, FMCG advertisers typically rely on third-party retailers like Tesco, Boots, and Costco to get their products to consumers. This means the retailer, not the FMCG manufacturer, owns the direct relationship with the customer and granular product purchase data that comes with it.
In the end, while marketers in other verticals worry about the sophistication of their sales-based attribution models, FMCG marketers are still stuck measuring campaign success via proxies, such as demographic reach, viewability, and video completion rate. Consequently, marketing planning, execution, and optimisation are also based on proxies, rather than insight into what actually drove product sales.
Moreover, the need for a real-world purchase-based approach to measurement and targeting has never been so urgent. For many major FMCGs, demographic-based targeting and measurement methodologies (i.e. GRPs) remain grounded in 1950s-era gender stereotypes that are at best woefully outdated. Meanwhile, upstart digital brands are building direct consumer relationships and disrupting traditional product distribution models.
Route to an FMCG revolution
If brands can find a way to link marketing activities with sales results, we will see a massive evolution in FMCG marketing. Targeting will evolve, moving from broad demographics to personalising creative to individual consumers based upon their likelihood to purchase and what they have bought in the past. By measuring what drives purchases, rather than using proxies, ad campaigns become fully accountable and brand impact can be tracked over time. Finally, campaign optimisation and budget allocation will move beyond the manual changing of the media mix post-campaign to making in-flight, automated decisions at impression level.
A number of companies have launched solutions to plug the gap in availability of FMCG purchase data, but these have limitations. Some provide only small consumer samples because data is collected at a single store. Others provide scale by collecting data from larger retailers, but there is often a geographical concentration of data based on retail store distribution. This can mean huge holes in coverage, or a heavy reliance on opaque modelling and assumptions – and you cannot assume that the purchase behaviour of someone in Edinburgh will be the same as someone in London.
FMCG brands need vast amounts of data in order to slice it to gain actionable insights that help them make better business decisions. They also need to be able to work at an individual customer level to create personalised experiences. Unfortunately, the data sets available simply don’t provide the granularity and magnitude to do either.
This means FMCG brands need to take direct steps themselves to make consumer-level purchase data actionable at scale. So, what should FMCG marketers be doing today?
First, FMCG marketers need to take greater ownership over UPC (Universal Product Code) level sales data. While utilising third-party FMCG sales attribution services, like those from Datalogix and Nielsen, are a great starting point. FMCG marketers will be best served by moving beyond heavily modelled data sets and black box attribution methodologies.
Instead, FMCG marketers should be building up their own sets of consumer-level purchase data and, ideally, storing this data within their DMP of choice. Data strategies can mirror those successfully deployed by marketers in aggregating behavioural data, starting with first-party data (brand loyalty programs and ecommerce) and filling in gaps with data from retailer partners and third-party providers that can provide un-modelled user-level purchase data, such as mobile couponing applications.
The data should be distributed geographically and provide holistic coverage across all of a brand’s various retail channels. This can be first-party retail channels (i.e. a brand’s own stores) and/or third-party retailers. Different retail categories need to be identified too (e.g. grocery, convenience, pharmacy etc.) as consumer purchasing behaviour varies according to retail type. Importantly, especially in the UK where online is a fast-growing part of FMCG sales, data needs to span both offline and online sales.
Second, marketers should focus on translating data into action. Sales-based measurement shouldn’t be an academic exercise, it should be a fundamental input into the media planning, buying, and optimisation processes. Marketers shouldn’t repeat the same mistakes many made when acquiring DMP technologies – buying an expensive machine with no idea how to use it. This requires close coordination between advertisers, data owners, agencies, and technology providers, like DSPs, in order to ensure data sets are actionable and campaigns are setup appropriately for purchase-based optimisation.
As audiences continue to fragment across screens and digital, data-savvy upstarts disrupt FMCG product categories, major FMCG marketers can no longer sit idle and plan, buy, and measure media like its 1955 (or even 2016). As is the case in most other verticals today, FMCG marketing will increasingly be judged by its ability to drive proven sales outcomes at the individual consumer-level, not just hit obtuse, overly broad GRP or media-mix model figures. In order to ensure competitive advantage, FMCG marketers can’t wait for the broader industry to find a solution. Instead, they must take action now.