If there were any doubts that the age of digital marketing has fully arrived for packaged-goods companies, the Consumer Analyst Group of New York conference in Boca Raton, Fla., last week should put them to rest.
One after one, executives of top players talked about how big digital had gotten for them -- and how they were still expanding it. It was a contrast to only three or four years ago, when the executives were also touting digital, but spending was in the low-single digits of CPG media budgets, so even double-digit growth remained pretty insubstantial.
No more. For many top consumer products companies digital either already has or is heading toward eclipsing magazines as their No. 2 spending category behind TV. And for some it may soon be No. 1.
Executives of Procter & Gamble Co. and Mondelez International both said their companies now spend about a quarter of their U.S. media budgets on digital and plan to keep growing that share as they see improving return on investment.
Mondelez President-North America Mark Clouse said the company wants more than half its spending to be digital by 2016, because it's getting twice the return on investment from digital that it is from other media.
Jean-Paul Agon, Chairman-CEO of L'Oreal, the world's third-biggest ad spender behind P&G and Unilever, said digital is now 12% of the beauty giant's global spending and trending upward because of its efficiency and synergy with fast-growing e-commerce in beauty. E-commerce sales grew more than 20% for L'Oreal last year, about quadruple the rate for the rest of the company.
General Mills CEO Ken Powell said his company has increased the digital share of its ad budget from 8% of spending in 2008 to 17% in fiscal 2013 and expects the shift to continue, even if 79% of its budget today is spent on TV.
P&G is looking at hiking digital to help lower the share of sales it spends on advertising without hurting effectiveness. "The beauty of the digital, search, mobile, social media worlds is they're fundamentally more efficient," said Chairman-CEO A.G. Lafley in a CAGNY presentation. "So if you really know which consumer matters most to you, and that's our job ...then you can run a mix that gets a lot more efficient."
2015 is a banner year for moviegoing and cinema advertising. North American box office sales are well on the way to topping the $10.9 billion record set in 2013. Even so, some analysts question whether the silver screen can continue to deliver a golden opportunity for marketers who want to advertise at the movies. Here are seven top myths about moviegoing and why savvy marketers know to ignore them. Brought to you by NCM -- America’s Movie Network.Learn more
But digital isn't just for cutting marketing. Clorox Co. Chairman-CEO Don Knauss said in an interview he's wants to cut costs in overhead and supply chain in the long run to free more funds so Clorox can go from spending 9% to 10% of sales on advertising today to as much as 11%.
Burt's Bees "certainly has led the way" for Clorox as it looks to shift more funds to digital, particularly mobile, Mr. Knauss said. But Clorox is also using analytics on Twitter to track mention of cold and flu by Zip Code, then "make sure stores in those Zip Codes have adequate supplies of Clorox Disinfecting Wipes." Walmart, he said, has been particularly open to that idea.
One factor likely to fuel more CPG digital spending is new research indicating the marketing-mix models most of the companies use to measure ROI have been under-counting the impact of digital ads. P&G and Mondelez are among seven CPG companies to participate in the Digital Media Consortium along with Nielsen, which recently issued a report to that effect focused on Facebook display and Google search.
One reason CPG companies may be getting so much efficiency: They're getting more than they pay for. While much digital media is still largely bought based on clicks, the study found digital impresssions, not clicks, are what drive offline purchase of packaged goods products.
But marketers have the option of buying either clicks or impressions on Facebook, and Google search is sold entirely through bids on clicks. Marketers can thus try to game the system by paying only for clicks and designing ads that get few of them while trying to get as many free impressions as possible.
Brad Smallwood, VP-measurements, insights and monetization analytics of Facebook, however, said it's virtually impossible for consumer products marketers to buy all the impressions they need simply by bidding on clicks in the social network.
A spokeswoman for Google said in an email that her company has acknowledged several times that search ad impressions have value not reflected in pay-per-click but that Google also sells other types of ads that can be bought based on cost-per-impression.
Contributing: E.J. Schultz