Amazon’s purchase of Whole Foods in late 2017 marked the start of a watershed year for omnichannel CPG marketing. Earlier, CPG manufacturers and retailers seemed content to dip a toe in ecommerce, but then, with the Whole Foods buyout, Amazon plunged a tentacle into their own pond. Amazon’s making such a big splash in traditional retail meant CPG marketers, in turn, needed to beef up their omnichannel strategies or there would be blood in the water.
Many CPGs responded by starting or enhancing their own organizations to manage ecommerce. Most of the big retailers started testing their own home delivery services in an effort to protect their market share (We evaluate their services here). In the long run, the CPGs and retailers that succeed most at omnichannel will be the ones that work together in a truly collaborative way.
Collaborate to Win
In 2019, both CPGs and retailers are evolving their omnichannel capabilities from the current test-and-learn approach to more mature capabilities. We see already that the most successful CPGs are collaborating with retailers on omnichannel strategies using a full path-to-purchase toolset to create effective programs. To make these efforts truly collaborative, CPG marketers are demanding that retailers bring more to the table.
A collaborative omnichannel media and sales strategy enables retailers to compete with pure-play ecommerce retailers. Retailers use digital and in-store media synergistically, increasing sales in both the physical store and their ecommerce website. Especially when integrated with in-store media, digital shopper marketing ads benefit both sales channels. In addition to driving online purchases, digital ads, by reaching shoppers at home, bring traffic to stores and drive category growth. Retailers are also advertising their ecommerce site with in-store media.
Quid Pro Quo
CPG brands fund retailers’ marketing efforts and are demanding greater transparency in return. Too often, retailers are not fully transparent about the digital marketing cost per thousand or the number of shoppers reached in the media packages they sell to CPG brands. This creates a dilemma for CGP brands and, in so doing, threatens the collaborative relationship. That’s because CPG brands must ask themselves whether they stand to gain most by buying digital media from the retailer in hopes of getting display support (which would offset the unknowns) or buy from a third-party media vendor with whom cost, and number of impressions are clear.
It’s not an either-or proposition, however. When buying digital media from retailers, CPGs now demand greater transparency. This sets off a chain reaction of benefits for both parties. Retailers are more transparent about the digital media they sell; the CPGs can then be accountable to their stakeholders with regards to spend, which helps them secure greater investments in the future.
What we’ve seen at Foresight ROI since Amazon’s acquisition of Whole Foods is an increasing awareness among retailers that their CPG vendors require transparency in order to secure shopper marketing funds. After all, those funds are what retailers need to create synergies by combining multimedia integration with omnichannel strategies. Made possible by collaboration, those synergies are traditional retailers’ best answer to Amazon’s relentless expansion.
Transparency and collaboration help everyone win. CPGs get proof that shopper marketing is working so that they can secure adequate funding. Retailers then get increased shopper funds and marketing to drive traffic and basket size. Shoppers get relevant information and offers to make good purchase decisions for products that enrich their lives.
Foresight ROI helps CPG marketers like you collaborate with retailers for win-win results. Contact us to learn more.