FMCG Brands are Fast-tracking Their Success With CTV Advertising 

FMCG companies have tackled a number of unexpected obstacles in the ever-evolving world of advertising. The year 2020 witnessed a sharp drop in FMCG advertising spending, totaling $26.7 billion, a 10.7% drop that beat the overall advertising sector recession. However, there is reason to be positive, as FMCG companies are predicted to raise their digital advertising spending by 7% per year within the year 2023.

Digital Advertising: A New Beginning

For FMCG companies, it's not just about the budget; it's about optimizing every advertising dollar invested. In an industry brimming with brands and products, achieving brand visibility and recognition becomes of paramount importance. This is where selecting the right advertising approach proves to be critical. Yet, the changing landscape of consumer behavior makes the task of building a strong brand image an increasingly challenging one.

Empowered Consumers in the Digital Realm

Today's consumers seek control over the content they encounter, particularly in the digital realm. A revealing study shows that 72% of individuals believe that their online activities are closely monitored, while a staggering 81% perceive the risks associated with data collection to outweigh the potential benefits.

Traditional advertising methods have sometimes led to negative consequences due to misplaced ads, causing harm to brand reputation and resulting in a waste of advertising budgets.

Brand Awareness and Loyalty

The overarching goal for FMCG companies has long been to achieve widespread brand awareness and, even more critically, brand loyalty. Consider well-known pain relievers; consumers are often willing to pay a premium for a recognized brand over a generic alternative. Brand awareness and affinity play a pivotal role in influencing purchasing decisions, effectively reducing price sensitivity and ultimately leading to increased sales and revenue.

What's less known is that FMCG advertisers can enhance their top-of-the-funnel performance by embracing a multi-channel approach. This strategy revolves around consolidated planning, with a particular emphasis on incorporating Connected TV (CTV) and digital advertising into the mix.

Rise of Online Shopping and Shifting Behavior

The FMCG market witnessed a surge in consumer spending during the pandemic. As lockdowns and panic buying became the norm, consumer spending on FMCG products soared by 11% to reach a 20-year high of $173 billion. However, advertising spending in 2020 did not keep pace, registering a 5% decline. The good news is that FMCG ad spending is expected to rebound by 9% in 2023, surpassing pre-pandemic levels. Furthermore, the FMCG sector globally is predicted to experience a 7% annual growth in digital ad spending through 2023.

Balancing Traditional and Digital Advertising

FMCG companies have traditionally relied on linear TV as a means to efficiently reach a mass audience. However, FMCG advertisers are increasingly turning to digital advertising for its precise targeting capabilities.

To reach their entire target audience, FMCG brands need to harness both linear and digital sources. The growth of Streaming Video on Demand (SVOD), Broadcaster Video on Demand (BVOD), and Premium Video on Demand (PVOD) services, as well as the 3.3% growth of internet advertising to $9.3 billion in 2020, underscores the growing importance of digital channels.

The Role of CTV

While traditional TV still commands significant viewership, digital TV, including CTV, is becoming increasingly vital for accessing hard-to-reach audiences in key demographics.

The Need for Unified Reporting

Achieving unity between linear and digital advertising necessitates technology platforms capable of reducing workflow friction. Integrated reporting, which consolidates the outcomes of all spending, rather than segregating it by channel type, can enable marketers to make informed decisions.

The Digital Transformation Continues

Many leading marketers are reevaluating how to derive maximum value from their advertising budgets amidst rising inflation, recession concerns, and the enduring impacts of the pandemic.

For example, the world's largest advertiser, Procter & Gamble (P&G), recently shifted 50% of its media spending to digital channels, specifically programmatic and digital advertising. This shift provides a higher level of precision in terms of reach, targeting, and cost-effectiveness.

Experts believe that this trend will continue in 2023 and beyond, driven by consumer demand, a growing number of new programming and platform possibilities, and the necessity for a major return on investment. According to Insider Intelligence, US marketers spent $21.16 billion on CTV in 2022, a 23% rise from 2021, with this figure expected to reach $43.59 billion by 2026.

Follow the Eyeballs: Adapting to Consumer Behavior

As consumers shift their viewing habits, advertisers and marketers must adapt. Streaming is on the rise, and the shift away from linear TV towards streaming has only accelerated. In July, audiences spent more time streaming CTV than watching cable, marking a significant turning point.

Evolving Upfront Strategy

With digital video taking a larger share of TV advertising budgets, brands and media agencies are evolving their upfront ad commitments. Some agencies, like Initiative, are moving towards a balanced approach that leans more heavily on digital channels.

In conclusion, FMCG companies are navigating a dynamic advertising landscape that demands a balance between traditional and digital channels. The key to success lies in a holistic approach that unifies planning, execution, and reporting, driven by the understanding of shifting consumer behavior and the need to adapt to the digital age. As the digital transformation continues, businesses that follow the evolving consumer landscape are more likely to thrive in the new era of advertising.

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