Why FMCG brands need to diversify their marketing

Targeted messaging represents the future for brands operating in the FMCG space in Australia.

This is the conclusion that can be drawn from figures released by Standard Media Index, as they show a significant drop in ad spending in 2014 as companies scale back their TV budgets in favour of more in-store advertising.

Despite FMCG remaining the third biggest area of spending, there was a 7.6 per cent year-on-year decrease in ad spending to A$538.5 million (£275 million).

Dr Gary Mortimer, senior lecturer at QUT's Business School, told Mumbrella that brands have recognised that broadcast advertising is less effective than targeted messaging, adding: "The shift seems to be away from traditional broadcast and pushing it into social networking, their own databases and their own in-store media."

Producing inspiring video content

This does not mean that video is no longer seen as a core marketing tool, however, but rather that FMCG brands are pursuing different methods in order to create engaging content in this field.

A new report by eYeka has found that the FMCG sector increased crowdsourcing investment by 48 per cent between 2013 and 2014, with the ten leading FMCG companies using crowdsourcing to develop their video content. The top three crowdsourcing brands in 2014 were Procter & Gamble, Unilever and Nestle.

These businesses are also relying on the process for idea generation, up 16 per cent in 2014. The best global brands are developing a host of competitions to interact with customers, with video contests (45 per cent) the most popular, followed by idea contests (23 per cent) and design contests (10 per cent).

Standing out from the competition

Australia has one of the most concentrated grocery sectors in the world, with Woolworths and Coles holding around an 80 per cent market share. This means FMCG brands have to work hard to impress and convince these groups they deserve shelf space at one of their stores.

The situation is being compounded even further by the growth in own brand products - Nielsen estimates that house brands are going to account for four out of every ten grocery sales within four years.
So what can FMCG brands do to stay at the head of the queue?

  • Develop a successful TV plan - While overall spend is reducing, brands still have to create an engaging campaign to capture consumer attention - Nielsen states that Australians watch around 24 hours of TV a week. By optimising media spend under a unifying proposition that can be represented through regular spots, brands can maximise their return on investment.

  • Brands have to get the right balance with marketing investment - As a rule, media investment should be no more than one-third the size of trade investment if long-term sales success is to be achieved.

  • Build market equity - The ideal situation is that FMCG brands increase their product prices without seeing a fall-off in sales. Well-placed marketing investment can ensure that price increases can be phased in without alienating customers.