Everyone knows the business end of a tornado is the narrowest part of the funnel. That’s the part that sucked up Dorothy and Toto in Kansas and spat them out in the wonderful world of Oz.
The purchase funnel is not unlike that twister. Using this model to aim shopper marketing campaigns at different stages of the customer journey, it’s generally assumed that the wide opening at the top is the point of capture for large numbers of people. Lately though, marketing spend is going farther down the funnel, closer to the point of purchase. It’s proved to be a wizardly way to connect shoppers with ruby-red slippers, courage, new hearts and brains, or whatever else they’re in the market for that you happen to be selling. It’s potentially the quickest way from capture to conversion.
Marketing Dollars Shift to Digital
Moving more dollars farther down the purchase funnel means spending less on traditional broadcast media and more on digital and mobile. Marketing dollars and strategies have shifted toward digital in general and mobile in particular because this year, according to “Forrester’s 2018 Retail Best Practices: Mobile Web Study,” smartphones will be used in over one-third of total U.S. retail sales at some point in the process of buying something, including research, price comparisons, and actual purchases.
With the rise of digital, mobile, and e-commerce, CPG marketers are trying to figure out how to allocate marketing spend to reach the right shoppers at the right time with the right message. If you follow the money, it seems marketers are confident that digital has the reaching power of Dorothy and Toto’s twister if harnessed effectively. CPG companies are projected to spend $10 billion on digital advertising by 2020, according to eMarketer. And the CMO Survey shows a 15% increase in spend on digital marketing over a 12-month period while traditional ad spend has dropped nearly 2%.
Analyzing shopper marketing specifically, Foresight ROI saw an 18.7% increase in digital spend last year, bringing the total percentage of shopper marketing dollars spent on digital to 32%. That’s double the amount spent four years ago.
During this sharp rise in digital spend from 2013 to 2017, Foresight ROI industry benchmarks show mobile spend surpassing social in 2016, and it now accounts for 21% of digital spend compared to 18% for social.
Advantages of Digital and Mobile
Mobile spend is increasing because it works and yields a higher return on investment. While it costs more to reach a thousand shoppers via mobile than social, the conversion rate—the number of incremental purchases per 1,000 shoppers reached—and returns are higher for mobile. On average, events with a digital component bring 30% higher returns, which incidentally, is a 10-point improvement since 2012.
Compared to traditional marketing aimed higher up the purchase funnel, digital marketing costs less, can be more engaging, and allows for hyper-targeting. Increasingly, consumers use mobile devices for day-to-day decisions and tasks, and mobile marketing allows for the delivery of personalized, in-the-moment messaging to influence those decisions. That’s why fully 64% of all shopper marketing programs have a digital element integrated into it, according to Foresight ROI benchmarks. That’s also why new digital marketing vendors and capabilities are fast emerging, including contextual communication tactics like geo-targeted or personalized ads. Retailers are also getting in on the action, using their vast shopper databases to their advantage. Retailers’ own media are capturing more and more digital marketing dollars as they monetize those databases and leverage their online traffic. All major retailers now offer a full suite of digital marketing capabilities including social media, blogs, display ads, enhanced circulars, digital coupons, emails, and brand showcases.
Unfortunately, as digital advertising increases, so do the methods that scammers use to commit ad fraud, particularly with programmatic and pay-per-impression advertising. Nonetheless, shifting shopper marketing dollars to digital and mobile is a wise move, enabling marketers to reach shoppers nearest to the point of purchase while capitalizing on the data these interactions produce. That’s where Foresight ROI comes in, with our ability to break out and measure the effectiveness of the digital elements of shopper marketing events, as well as benchmark them against our industry database. While you must have a more complex media plan as digital increases in the mix, there’s no reason the digital realm should feel as foreign as Oz.
To learn more about the practices that maximize shopper marketing returns, join us at the ANA Shopper Marketing Committee meeting on Sept. 6 in New York City, where Foresight ROI Founder and CEO, Rick Abens will present at 10 a.m. Session 1, “Continuous Improvement: How to Maximize Your Shopper Marketing Investment.”