A shopper walks into a brick and mortar store or scrolls through an e-commerce site while being confronted with displays, coupons, gifts or other incentives designed to influence a purchase decision that will be made in a split second. Whether it be soda, toothpaste, diapers or soap – consumer promotions and engagement (CPE) tactics can significantly nudge a brand’s sales.
Despite this, CPE is a relatively overlooked area of marketing spend for many consumer goods manufacturers. A recent McKinsey article cites that for one consumer goods company, investment in CPE activities totaled 25% of its marketing spend.
CPE may present itself in a variety of forms – both in-store, out-of-store and through digital channels – which leads to challenges in its allocation and measurement.
Why CPE is Undervalued and Underreported
From my experience, there are two key reasons why CPE does not get the right level of focus – fragmentation across various activities and fractured responsibility across multiple functional teams. For example, sampling could be run by field sales, coupons could be organized through a customer marketing team and PR via both the brand and customer marketing team. Compare this to TV media investments that are typically owned by brand managers. TV investments may be informed by others in the organization; however, brand managers are ultimately accountable for them.
As a result of this fragmentation, CPE activities can often get lost in the mix. In my earlier experiences building marketing mix models for consumer packaged goods companies, we could work with brand managers for up to six weeks on data collection for digital impressions, video views, TV GRPs (Gross Ratings Points), and more. In the final days of this process, we would still be chasing down CPE activities from various business owners. The final stage of our data collection process would go something like this: TV – check, digital – check, video – check, social – check, trade – check…and, oh I think there was some Ibotta, Free-Standing-Inserts (FSIs), Superfridge, some sampling, and maybe some PR in July or November last year…
CPE activities could originate from brand, field sales, trade marketing, shopper/customer marketing or other digital teams across the organization. Such activities had the ability to significantly impact the outcomes of marketing mix models. In some cases, even when the investments were small, they could account for large spikes in sales in a given week proving that large spend wasn’t necessarily required to drive effectiveness.
CPE, being the most difficult activity to track, could often be left out of the models. This led to doubts in terms of what remained unaccounted for and whether other, more expensive, media vehicles such as TV and paid digital were being overstated in their attribution.
At best, this inability to cleanly account for CPE activities could lead to inaccuracies in performance reporting, and at worst – drive the allocation of future investments towards counter-productive, and expensive channels.
Consumer Promotions Matter Even More as Marketing Investment Shifts Downstream Toward the Point of Sale
Now, more than ever, the environment calls for the ability to shift all marketing, trade and CPE investments fluidly between vehicles depending on what is driving the strongest business results. Advances in technology and the digitization of the path to purchase are pushing marketing investments closer to the point of sale while the pursuit of top-line growth is more cut-throat than ever.
In this new world, CPE activities only increase in their importance, as they can be used to drive both awareness and sales with shoppers in the most relevant context – at the point of purchase. Nevertheless, as this shift continues to unfold, inefficiency in the allocation and measurement of CPE investments continues to persist.
Enable Transformation in CPE
Here are three actions that leading consumer goods companies are taking to ensure satisfied shoppers and the highest return on their CPE investments:
1. Shift reliance away from backward looking analysis toward forward-looking experimentation
Data limitations, collinearity, bias and a myriad of other complexities undermine the ability of econometric models to accurately inform upon what happened in the past – let alone inform on what shoppers want in the future. As a result, leading consumer goods companies are implementing rapid experimentation capabilities. These approaches unlock the ability to quickly and cost-effectively identify concepts and offers that resonate with shoppers – now, rather than inform on what resonated yesterday.
Furthermore, when powered through AI and automation, these capabilities can inform far more than e-commerce alone. Such technology underscores a more granular, efficient and less labor-intensive approach to measurement across all marketing, trade and CPE investments.
2. Treat the shelf as a media channel
Leading brands meticulously ensure that messaging, creative and offer structure are on-point with shoppers. If it matters for a TV commercial – it matters even more at the shelf. In the same way that great advertisers recognize that emotion is the most significant factor in driving resonance with a campaign, emotion is also extremely important when it comes to driving high-frequency, low-risk purchase decisions of consumer goods products.
Planning and allocation of CPE activities should not be an afterthought. These tactics can significantly pay-back when executed in the most compelling way for shoppers and that involves getting the details right – creative, offer structure, messaging, and more.
3. Deploy innovative platforms to enable collaboration and coordination
Shoppers expect a consistent experience no matter where they are or what platform they are on. The only way to achieve this is to drive collaboration between marketing, trade and CPE activity planning to ensure aligned execution. This is easier said than done, especially in a large organization. As McKinsey asserts, having one common leader that can unite these activities is important.
In addition, it is also necessary to deploy technologies that unlock the ability for cross-functional teams to actually coordinate with one another. Having a common platform serves to alleviate the day-to-day inefficiencies that inevitably arise when sharing information across different functions.
To learn more about how AI and Experimentation are enabling the above transformation for top consumer goods companies continue reading here.
Eversight leverages AI and experimentation to create and deliver smart, dynamic pricing and targeted promotions. The Eversight platform has tested and optimized offers across more than 1,500 product groups on 50 retailers and digital platforms. Global brands and retailers rely on the Eversight platform to optimize pricing and respond to market conditions, deliver higher ROI on promotional spend, and enable data-driven collaboration on investments. Eversight is generating 10-25% improvement in sales volume at leading customers such as Coca-Cola, Mars, and Molson Coors. Founded in 2013, Eversight is headquartered in Palo Alto, California.