Digital Marketing Transformation in the consumer goods industry

“Digital transformation”, no term has caused more frustration and at the same time excitement and curiosity over the last 18 months for me. The reason for that is that the opportunities are massive but at the same time "digital transformation" means many different things for different people and industries. I wanted to share my observations, opinions, thoughts and the things I believe that matter the most in the consumer goods industry with my network. I’m certainly not a digital native but maybe it helps to understand the intersection of digital and the consumer packaged goods industry.

The definition matters:

It appears to be fair to say that the majority of people at the intersection of marketing, business and brands talks in one or way or another about “digital transformation”. Yet, there are a lot of different definitions and perspectives out there depending on the business challenges and industry. The Global Center for Digital Business Transformation defines “digital business transformation” as the “Organizational change through the use of digital technologies and business models to improve performance”. I will use this definition as the starting point for my thoughts with a focus on the consumer marketing operations of a consumer goods operation in so-called low involvement categories.

The industry matters:

A lot of case studies and examples of successful digital transformation efforts are often focused on businesses where the consumer has a direct relationship with the manufacturer or business: banks, travel, software, gyms, fashion, insurance, luxury products, etc. But selling everyday consumer goods on the shelf of a grocery store is very different and poses different challenges but also opportunities.

Here is why: The retailer (no matter if brick & mortar or e-commerce) sits traditionally between the shopper and the manufacturer. The retailers’ actions can have a tremendous impact on the performance of CPG brands especially when it comes to pricing, promotions or the placement on shelf. These actions can easily amplify but also wipe out any major digital efforts. Yes, D2C eliminates that layer but is not always a model that is easy to implement from the perspective of business operations, logistics, finance or trade relationships. Also, consumers usually buy low involvement products as part of their basket, online or offline. They rarely want to manage digital accounts on top of their standard e-commerce accounts or provide their personal information to brands they don’t really care about, unless there is a significant value they can gain from that through the product proposition, the brand experience or the actual perceived monetary value.

The objectives matter:

Digital transformation is not about implementing technology so you transform digitally, it’s about implementing technology and changing the organization to achieve an objective, a business objective.

Is it about media effectiveness and efficiency? Effectiveness and efficiency of media spend plays is important for CPG brands. And yes, the use of digital technology can make your media spend and production significantly more efficient and effective by hyper-targeting and having highly relevant customized messages for these audiences. But also that is not an objective that will allow you to successfully drive your digital transformation agenda because marketing has always looked at making the media investment more efficient. In fact one of the cheapest media investments you can make is probably in non-digital channels.

Is it about recruiting consumers? For many industries (for example those mentioned above) and companies it probably is since recruitment will mean a measurable conversion number. And also in low involvement CPG categories this concept does exist, especially in the e-commerce space. However, in low involvement categories that are shopped at a retailer and where millions of units are sold every year, it’s less about actual recruitment in the sense that you know and follow individual customers because you don’t want to create mass sales each day. What then is interesting though is to understand how these consumers who convert are similar in their insights, demographics and attitudes and to then find look-alikes that you can target.

So what is it about? As said in the above definition, it’s about performance. Very often it can be an objective that you had in your business for a long time even before digital transformation became a word. It could be household penetration growth or increased for a brand or brand segment, it could be about growing market share, it could be about up-trading consumers into more profitable solutions. But in the end it’s about growth. Digital marketing can be an enabler and a significant accelerator to achieve your objective because you can reach and become relevant to consumers who you couldn't target before, or talk to them in a place or at a time that was not possible without digital technology. You build a much closer and more intimate relationship with your consumer.

Another area or objective is innovation, the best way to keep your brand growing, to outperform and to differentiate. Digital experiences, extensions and new business models can generate value that you could not create before which can lead to brand relevance and loyalty. This is probably one of the greatest and most sustainable opportunities for growth and out-performance.

People matter:

This space is so vast, you can’t do it alone and know it all yourself. You have to rely on people and partners to help you on the journey. They should be a mix of internal experts and leaders and external partners. However, when digital transformation is about changing the organization as per the definition above, it has to be led internally with external partners supporting you. Each situation is unique based on the current state, industry and business objective. I don't believe there is a one-size-fits-all partner or person. Your choice of partners and experts on your journey depends on your objectives. Invite those to join your journey that you believe can have the greatest impact. And also learn from your network. While not every case study out there is relevant, they all have interesting nuggets that can help you on your journey.

Data matters:

Very often when talking digital transformation the discussion very quickly goes to 1st party data. However, classic CPG brands in low involvement categories historically have not had data strategies to holistically and consistently collect 1st party consumer data since monetization was not always easy and collecting and managing data was resource intense. With digital technologies this is becoming more realistic. As mentioned above it’s less about actual recruitment in terms of collecting personal information. However, data can help you significantly to drive media effectiveness and efficiency and to measure both, to become a lot more granular and personalized with your media targeting and customized messaging which can hopefully help you achieve your set business objectives. The insights you can generate by looking at audiences, look-alikes and media KPIs can help you find valuable insights to solve your business issue.

The data space where the CPG industry has traditionally been very rich however is in sales data generated from shipment data and also 3rd party scan data. This sometimes extremely granular data if processed correctly can generate very rich models to understand and drive overall media performance, ROI and conversion or sales.

Brands matter:

So far this was about low involvement consumers goods. But can you elevate your brand to make it more meaningful for consumers and hence make your brand less “low involvement”? Define for your brand what you want it to stand for, what problem it can solve for consumers and how you can play a meaningful part in consumers’ lives, not because everybody tries to or says you should but because you truly care about it. What your brand stands for, what problem it tries to solve and the story it tells, defines what you do in terms of innovation, communication but also in the digital space. Only if the definition is meaningful and purposeful will consumers interact with it. Only if your brand is purposeful for consumers and offers a meaningful value exchange online, are consumers actually willing to give their personal information or to interact with your content. Often people think that in our time big brands play less of a role especially in the digital space but we do see in the current crisis that consumers do trust big brands.

Simplicity matters:

In all these efforts simplicity is key in many ways. I’d like to highlight three:

1. Internal communication: It is very easy to lose your internal audience, your team, your managers if you don’t keep it easy and simple when talking about what you’re trying to achieve and how you use digital technology to get there.
2. Consumer facing: In the end it goes back to the basics of marketing when interacting with the consumer. You want to make sure that the consumer understands your messaging which has to be simple and communicate a benefit. Sometimes this simple rule is lost in the sophisticated conversation about technology and data.
3. Tech & business: People with a very strong digital or technological background often do speak a different language than people coming from the business side. This can lead to frustrations on both sides. Ensure you both understand each other, don’t just pretend you do.

Those were just some thoughts and opinions about digital marketing transformation in the consumer s goods industry. Of course, there are a lot more things that matter like the organization, your leadership, infrastructure etc. So this is by no means complete. I’m looking forward to hearing your thoughts and builds.