The consumer packaged goods (CPG) industry spends billions of dollars on traditional advertising such as TV, out-of-home (OOH) and print. But digital advertising is changing the way CPG brands market their products.

However, a lack of transparency into ad effectiveness and uncertainty about digital advertising in general means that many advertisers aren’t able to target as precisely as they would like or spend efficiently. Advertisers with the least data about their customers are most at risk of wasted spend, and that’s a situation many CPG marketers know all too well.

As technology evolves in tandem with changing media consumption habits, digital has become one of the most important channels for advertisers to reach consumers. But because of the retailer intermediary, CPG manufacturers often do not have direct access to the consumer they want to reach, or insight into how their advertising affects sales.

Strategies to Increase Awareness and Engagement

CPG advertisers want to spend more on what’s working and spend efficiently for the best outcomes. While digital’s addressability enables greater ad precision and personalization than ever before, many teams lack expertise in digital and have concerns about ad effectiveness and transparency.

Two critical issues that advertisers need to determine in executing their online advertising are which audiences to target and which sources of data to use to reach those audiences. There is a wide range of data sources available to define and identify audiences, which all come with different costs and are based on varying audience criteria.

Our recent webinar addressed these issues. In Put Your Money Where Your Consumer Is, I presented findings from an analysis of 750 digital advertising campaigns for 31 CPG brands totaling $258 million in online spend using person/household-level media and sales data and multi-touch attribution.

This Nielsen analysis measured the incremental impact of online marketing activities on in-store purchases. The findings revealed how audience targeting data and differences in execution can drive higher results.

6 Recommendations For Marketers

According to the findings, the type of data an advertiser uses for targeting consumers (e.g., first-party data, geographic, behavioral, etc.) has a significant impact on return on investment (ROI). 

Targeting based on purchase-based audiences” (i.e., “people who bought from my competitor in the past three months”) delivered the highest ROI: 3x above the average across all types.

In addition, the report offers six recommendations for how CPG brands can improve their marketing effectiveness through the use of enriched audience data. 

1. Focus on Digital to Improve Performance

Digital performance is substantially tied to the amount of attention advertisers pay to it. Advertisers that are more successful with digital channels have structured their organizations to support digital goals.

This kind of organization can be manifested in many ways, but it requires a multi-functional operating model across analytics, media, technology and third-party suppliers in order to deliver step-change growth in digital marketing outcomes. A clear focus on the consumer is the key unifying principle for these teams.

Takeaway: Build capabilities to enable compelling communication with consumers across digital channels.

2. Invest in Purchase-Based Data for Higher ROI

Using purchase-based audience data (data from those who have purchased from your company or from a competitor) will have a significant positive impact on your results. While this data requires a greater investment than reach-based demographic or geographic data that is relatively easy to obtain, it delivers a much higher return.

Takeaway: Choose a data type that aligns with your business goals. If using reach-based data for targeting, look for ad verification technology that ensures the data is of the highest quality.

3. Use Deterministic Data Before Probabilistic Data

Brands that use data that is based on verified actions instead of implied actions achieve higher returns.

Takeaway: Optimize your performance by basing audience targeting on actions of known individuals before moving to data sets from look-alike or implied models.

4. Break Down Data Silos for Greater Insight and Performance

Managing advertising and marketing channels separately using siloed, channel-specific strategies, tactics and metrics is no longer effective. Brands that have central audience data management have better results. 

A centralized source ensures that targets are managed appropriately and prevents audience over-exposure to the same message or to conflicting messages for different campaigns.

Takeaway: When advertisers and their agencies have access to the same data at the same time, they can work together more efficiently.

5. Mine Data to Find New Audiences

Viewing your data creatively can allow you to uncover audiences that may differ from current or traditional customers.

Takeaway: Test messaging and offers on new data sources and audiences to see if you can drive results with overlooked targets.

6. Choose the Best Attribution Model for Your Objectives

Two common measurement approaches—marketing mix modeling and multi-touch attribution—are built to support different objectives. While marketing mix modeling provides high-level strategic insights for budgeting and long-term planning, marketers seeking tactical insights for short-term optimization should consider multi-touch attribution.

With clarity into which channels and tactics influence a specific audience, marketers can orchestrate the optimal consumer experience across channels and devices and optimize spend to maximize business results.

Takeaway: Measure your marketing to understand your audiences and maximize marketing effectiveness.

To learn more about how audience data can help drive sales, watch our Put Your Money Where Your Consumer Is webinar.