CPG brand marketers still clamor as hard as ever to get “feature and display” at key retailers. And they pay a hefty price for it. IRI’s data shows that CPG spent $34 billion in 2010 on trade marketing. The Food and Beverage category generated all of 0.6% sales growth on that investment— and no change in basket size, no change in household penetration and no increase in trips. Brands spent $34 billion, and nothing really happened. This is the investment at which marketers want to throw more money?!

So we had to ask, “What’s missing?” The answer is in understanding how the economic downturn and online behavior have evolved the shopper’s path to purchase.

These recessionary times have driven the shopper to be savvier than ever in managing her grocery costs. She knows she can’t afford to shop as she used to, but what has she done about it?

• She now uses 7.3 information sources (retailer sites, brand sites, on- and offline coupons, reviews, etc.) every week before she goes shopping—this is DOUBLE the information sources she used just a year ago!
• Her coupon usage has increased 37% since 2008.
• She hardly ever (only 6% of the time) shops without a list.
• She decides what she’s going to buy while she’s still at home (83%).
• She rarely or never goes off list (72%)—even if you have the prized secondary placement at retail.

The “missing link” when it comes to making those huge dollars in trade spend work is to reach the shopper at home and get your brand, especially if its participating in a trade event, on her list. Because if it doesn’t get on her list before she leaves her house, she is highly unlikely to put your brand in her cart—trade event or no trade event. She has disciplined herself not to be impulsive so she can stay on budget.

We’ve identified the problem—$34 billion hasn’t moved the needle—and we’ve identified the solution—reach the shopper at home and get on her list. Now it’s just a question of creating an effective and efficient marketing communications solution. Say “hello” to DATA: Smith Brothers’ Digital Advertising Trade Amplifier.

DATA takes a CPG manufacturer’s trade event calendar and feeds it into an engine that dynamically generates geotargeted digital display ads. These ads carry not only the brand’s core message, but are also customized per retailer and promotion. It brings the voice of the trade-driven messaging back under the brand’s control.

Here’s a DATA ad using Ore-Ida® French Fries (for example purposes only) that a Pittsburgh, PA-based shopper might see when she logs into her Yahoo! mail account in preparation for her busy day.

Note the core brand promise: the low calorie count per serving for Ore-Ida French Fries. This “baseline” brand message resides in the DATAengine and can run “as is” anytime. It’s great for building awareness of the Ore-Ida brand and delivering the good news about Ore-Ida French Fries’ surprisingly low calorie count. However, if Ore-Ida has a trade event running at Giant Eagle supermarkets in Pittsburgh, now DATA can give the target shopper the extra knowledge and impetus for action she needs to put the Ore-Ida brand on her list and in her cart: “Buy any 2 varieties of Ore-Ida potatoes and get 1 FREE! At Giant Eagle. Only through Monday.”

The heart of DATA is the dynamic nature by which it builds the online ads in real time based on the shopper’s location. So while the Pittsburgh-based shopper is viewing the Ore-Ida ad and offer at Giant Eagle, a Columbus-based shopper may be seeing the same Ore-Ida equity message with a different offer at Kroger. Smith Brothers has a patent pending on this unique new way to make expensive trade investments pay out more effectively for CPG brand manufacturers and marketers. Our DATA platform is currently in development, and clients have already signed up to use it in late Spring 2012.

DATA is as cutting edge in its pricing as it is in its design. It is licensed by the agency and priced based on the number of impressions served by the engine. This pricing model is comparable to rich media ads that carry a slight premium over standard flash ads—because they work harder. As a licensed product, it doesn’t require changing your agency relationships in order to put DATAto work for your brand.

If you’d like a demonstration of DATA, please contact Smith Brothers’ Director of Shopper Marketing, Greg Smith, at greg.s@smithbrothersagency.com. Find out what’s been missing from your trade and shopper investments.

We admit that RTB can be intimidating. There are many differing views on the best way to use it, how it compares to publisher-direct buying and ad networks, and how to apply the data layers and retargeting. Even the way we describe RTB at Smith Brothers is evolving. We have used all of the following terms within the recent past: Real Time Bidding, Demand-Side Platforms, Agency Trading Desks and Exchanges. The simplest way to understand RTB is to think of it as a more automated and enlightened version of what we’ve have already been doing with digital display for the past 10 years.

Below is a step-by-step guide to understanding and practicing Real Time Bidding:

Step 1: As we know, our target audiences are on the web and doing their thing – searching for information on Google, being social on Facebook and Pinterest, reading news on Yahoo! as well as visiting a whole host of other web properties for a multitude of reasons. And we want our ads served to them. How did we do this before RTB? We first profiled our target audience, demographically, psychographically, geographically, behaviorally, etc. We then identified “high-indexing” sites or endemic content that aligned with the target’s profile. The publisher and the page dictated much of our media thinking.  But, RTB changes this.

Step 2:  RTB allows us an alternate solution to buying solely on “sites” or “publishers” and to move on to buying discrete “audiences” within sites and page. That’s right, we are now buying based on the end users’ digital behaviors first and not solely on domain names that align with our audiences. How is this possible? The simple answer is data. We leverage digital behavior tracking data about our audience to filter the targeting of display ads. Each bit of data we garner serves as a lens that helps us see our target more clearly in the digital universe. We then layer all of our audience data together and examine it in the same fashion a patient looks through phoropter at the optometrist (you know… the machine you look through while the optometrist asks, “better 1… or better 2? 1… or 2?”). In this way, we can “see” the audience through different “lenses” (our data views). As a result, our target becomes more precise and wasted impressions are filtered out.

Step 3: The actual “bidding” part of RTB begins when a user navigates to a new page.  Every time a page loads, it is another opportunity to show that user an advertisement. The complex question is, “Who gets to show that ad and what is it worth?” The first right to sell the ad space belongs to the site serving the ad. If you are visiting Yahoo!, or People.com, or ESPN, their internal sales team is entitled to sell that inventory first. However, impressions are a perishable good. If they don’t have someone who wants that impression, they have one of two options: lose it or let someone else sell it.

Before RTB, this is where ad networks would come into play more frequently. When a website could not sell their inventory for their set CPM, ad networks offer to buy that inventory for a reduced rate, guaranteeing that the publishers will at least generate some revenue for that specific inventory. This also provides ad networks their own inventory to re-sell. Networks would then do this across hundreds of sites, allowing smaller advertisers access to huge amounts of inventory with one-stop shopping. Advances in digital media buying technology have provided other options.

It no longer takes an ad network to access this inventory. This “remnant” and “non-guaranteed” inventory is now being piped directly to marketplaces (aka “exchanges”) where the bidder, whoever they might be, wins the right to serve the user an ad. Thus, we have Real Time Bidding on a Demand-Side Platform.

At Smith Brothers, we like to picture the landscape like a conveyor belt. Every page request churns out an opportunity for us, or any other advertiser, to show that user an ad impression. Think of that opportunity as a little box/widget/chocolate headed down a conveyor belt. As the inventory progresses down the belt, each bidder has a chance to buy the inventory – after all, it is an auction system. With each team looking to accomplish their own specific goals, each bidder will decide their bid range or their place in line.

The image seen below is just a sample of what this landscape could look like. The advantage of Real Time Bidding on ad exchanges is that we can always increase or decrease our bid to change our position in line. A mother of 3 comes down the conveyor? Your CPG client might like that impression. Bid higher, move further up in line for her impressions. A young bachelor comes down the line? If nobody else is going to show him an ad, we may bid only a few pennies but take any of this potential inventory that meets the bid. If you have the right profile built and can assign the proper value to each target segment, you can extract tremendous value from an RTB system.

Click once and then again on the next page to enlarge.

Step 4:  Collect your data, analyze, and optimize. Find out the best combination of data layering, inventory filtering, bidding, and even creative executions. And you should continually work to improve the process.

Simple, right? Well, not exactly. I hope you now find Real Time Bidding much more approachable then before you read the post. And as mentioned at the outset, the best way to understand RTB is to jump right in and experiment. Testing and learning is essential. From our own trials with RTB, Smith Brothers is finding more efficient opportunities for our clients on the same sites we’ve run CPM based campaigns in the past. Also, we’re achieving considerable tighter data layers on our targets and up to 80% better digital ad rates. So the results of applying RTB can be considerable. Educating clients on RTB and continuing to simplify the explanation of the practice remain hurdles to mass adoption, but given the savings and efficiencies of Real Time Bidding we anticipate that RTB will be an acronym quickly adopted by CPG brand managers.

Note: Alex Davis, Media Planner and Buyer at Smith Brothers, contributed to this article.

There’s an ongoing discussion of whether massive societal changes will follow from some kind of (admittedly debatable) Singularity. Whether or not such a fundamental turning point is imminent, there are plenty of interesting things occurring right now which indicate bigger shifts … if we know where to look. A recent article in Fast Company related to these topics caught my attention. One interesting section:

This is the moment for an explosion of opportunity, there for the taking by those prepared to embrace the change. At the turn of the 20th century… those accustomed to the agrarian clock of sunrise-sunset and the pace of the growing season were forced to learn the faster ways of the urban-manufacturing world. There was widespread uneasiness about the future, about what a job would be, about what a community would be. Yet from those days of ambiguity emerged a century of tremendous progress.

The main theme of the article is that agility matters. It’s probably more important to be agile now than at any time in history. But this situation is not only, or even necessarily, negative or threatening. It’s more about being able to make the absolute most/best of any given scenario. I would argue that this holds not just at a macro level for technology, economics and culture. It’s also time to start thinking about what this means for marketing.

The opportunities of the coming years won’t just happen, however, through some magical technological pixie dust. As analysts, media experts and marketers, we need to lay the groundwork to be able to move quickly.

Here are some rules-of-thumb, derived from our own trial-and-error at SBA, for becoming more agile every day:

• Digital helps, but it’s not everything. Digital marketing allows very quick observation and analysis of the performance of our media and other tactics. However, that actually turns out to be the easier part. What is more challenging is the regular old workflow. Collectively, as agencies, clients and partners, we need to be flexible and accountable when it comes to team scheduling, approval and inter-agency coordination in order to capitalize on the speed that digital marketing affords us. Let me illustrate with a simple example: if agencies can revise and re-traffic digital creative in a matter of hours, what good is it if days or weeks of approvals and other bureaucracy stand between that optimization and the consumer?

• A little legwork up front goes a long way. Invest some time in building your analytical frameworks beforehand. Know what you want to measure and how you are going to measure it, certainly. But also create scenario evaluation triggers and contingency plans, so that when the data comes in you can quickly analyze, compare to baselines and models, and move, because…

• …opportunities have an expiration date, so learn quickly and act even quicker. Once a campaign, promotion or media flight is set in motion, the clock starts ticking. For short media flights and promotions, the turnaround time to capitalize on optimization opportunities will be measured in days and hours, not months and weeks.

• Save your clients money and/or create real financial value and they will happily share with the agency. We’re betting on this as we move into emerging spaces such as Real Time Bidding and e-commerce. The same-old same-old won’t cut it. We have to demonstrate a real (positive) financial impact. Being agile is one key ingredient to capturing the most value.

• Set aside the agile portion of the budget. And use it. Given that many clients have multi-month planning calendars for next year’s activity, you might think that means talking about being “agile” is more or less moot. Not so. Agencies need to help clients understand that what consumers are going to find meaningful by this time next year might not even exist today. Set aside a portion of next year’s budget so that the client is in the position to capitalize on what is going to be relevant and interesting to the consumer at that time.

We’ve learned these guiding principles not because we’re smarter or harder-working than anyone else, but because we’ve seen enough missed opportunities to know that technology alone isn’t enough. Being agile is more of a mindset that’s comfortable with a certain amount of ambiguity: 70% confidence coupled with great execution beats 100% confidence executed too late every time.

PS. If you find these concepts – the changing economy, the evolution of employment and the continuing contributions of technology to the changing of culture – interesting, I’d highly recommend a near-future novella (originally serialized as “Themepunks”, then released as a standalone called Makers) from 2005 by Cory Doctorow. While it is fiction, it seems to me that his 2005 vision of 2010-2020 becomes more real every day.

Face Painters

You know Face Painters – those super passionate sports fans who artistically apply cosmetic “paint” to their faces to celebrate their favorite team. A practice made even more famous when it was lampooned on the NBC sitcom Seinfeld in the mid-1990’s in an episode called “The Face Painter”. Go to any sporting event and maybe, maybe, 1% of the fans in the stands have their faces painted. In a social media sense, Face Painters are your uber fans who engage in dialogue with the brand and go above and beyond to advocate on behalf of your brand.

Jersey Folks

Then there is what we call Jersey Folks. I personally have a saying that grown men don’t where game jerseys. But, I speculate that on average 2 to 4% of sports fans buy and wear one of those expensive game jerseys, the ones with their favorite player’s name and number stitched to the front and back. And they sport those jerseys selectively, perhaps only for special games. When it comes to brands and social media, Jersey Folks are fans that like your brand, but only engage with you and/or advocate for you on singular occasions.

The “Just a Logo” Crowd

Lastly, the majority of sports fans, 95 to 99%, are what we call Just a Logo. Yeah, they like their team. They enjoy the games. They’ll don a polo, sweatshirt or cap with a logo, but they’re not going to wear a game jersey and they think face painters are crazy people. The Just a Logo crowd are also the vast majority of your brand’s fans in social media. They like your brand. They’re part of the community, but similar to Dumenco’s chief point they’re just happy to passively consume content. And if they do engage with your brand or advocate on its behalf, their effort won’t be more than a single click.

Below is quick-hit summary chart:

Now, you can’t escape sports when your agency is headquartered in Pittsburgh. We have the storied franchises of the Steelers and the Penguins, a love-hate relationship with the Pirates and the formidable University of Pittsburgh football and basketball programs. Pittsburgh is a sports town, the ultimate sports town according to Sporting News and the Bleacher Report. But even so, only 1% of our fans are Face Painters. Similarly, the biggest brands on Facebook such as Coca-Cola only have 1% of their fans engaging the brand.[i]  So when you’re developing your brand’s social media strategy, you might be looking at the Face Painters, but remember it’s Just a Logo crowd.

But regularly rolling out new product forms and flavors can be costly and a risk that most brands don’t have the stomach for.

I’ve recently noticed a few brands have been able to innovate, without changing their product at all.

Bless You

For years, the biggest facial tissue manufacturers have counted on new designs and photos printed on their boxes to attract consumers at shelf. The challenge for them was always printing an endless variety of trendy colors and patterns in the hopes that they’d match the décor of the room in which they’d be placed. “Will this one match my couch in the living room? Will this one blend in in the bathroom?”

But in 2009, Kleenex brand tissues issued an innovative new box that is nothing to, um, sneeze at. First they changed the shape of the box, from a rectangle with six sides to a triangular five sided wedge. They then went a step further and printed replicated slices of fruit on each one – including watermelon, lime, and orange “flavors”.

And to top it all off they introduced the entire line in the season that tissue is consumed the least – summer.

In making these simple changes to the product packaging they were able to transform the tissue box from something consumers hid under a cover or hoped blended in with their surroundings to a product that was displayed with pride and indeed became a topic of conversation (and blog posts). The new themed line of tissues also helped boost sales during a typically slow sales period.

All this without touching the contents of the box.

Taking a Cue From Popcorn

Nabisco recently made a similarly innovative change to its Triscuit brand Thin Crisps packaging. Thin Crisps were introduced a few years ago in the same rectangular shaped box as original Triscuits. In theory, the triangular “eat-‘em-plain” flavored snack crackers are intended to be an alternative to tortilla or potato chips. Although the shallow depth package was fine for pouring crackers onto a cheese plate, it was not conducive to repeatedly reaching in and out the box to grab one Thin Crisp at a time.

The new “snack box” was introduced a few months ago, and will likely breathe new life into the product’s trial. It is deeper front to back to accommodate hands reaching in, but also wider at the top like a popcorn box – which supports the product’s snack positioning. The face, sides, and back of the box are also scored (creased) down the middle, so that when the top is unfastened, the rectangular opening transforms into an octagon, making it even wider.

And at shelf (the moment of truth), the new box shape telegraphs that this Triscuit is different than the original.

You Don’t Need Wholesale Change to Innovate

There’s a lot you can do to catch the attention of consumers without a whole lot of R&D into breakthrough product forms and exotic new flavors. Although it’s not free, changing your packaging is a great place to start.

Other areas to consider might be product pairings (Jif peanut butter tastes even better on Wonder bread), meal solutions (Fresh Express salad coupon on a Campbell’s soup can), limited editions (Doritos retro taco), and seasonal offerings (McDonalds McRib sandwich).

We have a similar philosophy permeating our agency: “Technology is not an idea… but ideas can no longer survive without technology.” This builds on what Pete said. We’ve found that social media, as a technology, has the power to transform an ad into something much more powerful.  We believe that social media needs to be intertwined with all other creative elements normally found in TV, print, outdoor, and digital ads. This extends all the way through formerly static owned media such as packaging, in-store display, and delivery trucks. Social media needs to be considered an “ingredient” in the “creative recipe” the same as copy and visual design.

Storytelling is a big part of what we do as marketers.  We make consumers feel something. That’s crucial in communicating to consumers what brands stand for, but only PART of the recipe for marketing success. But technology is different and uniquely powerful. Integrating social media and other interactivity into all marketing touch-points instantly gets consumers involved and places them at the center of the marketing experience. Technology is the one ingredient in a piece of creative (not the copy… not the visual look & feel) that infuses the consumer into the actual brand. Sure, it works hand-in-hand with the copy and visual to build the brand story. But it moves beyond making consumers understand something, feel something, or even encouraging them to do something.  It makes consumers part of something.

Think of it this way… as a consumer, once you comment on a brand, rate it, like it, share it, post a photo including it, check into it, submit a video incorporating it, or enter a contest and tell your friends about it, you have become part of the brand. In essence, you are now inside the brand’s story and vice versa. Inseparable. Technology in the form of social media affords us the ability to weave our life stories together with brand stories. That is amazingly potent and why marketers are continuing to push forward in the social space, even as it is hard to measure success.

Our advice to clients is to make all your media interactive and social. Everything… a print ad… a TV spot… even the sign in front of your corporate headquarters… should have social/interactivity baked in (yes, another food pun).  Each and every tactic should do more than one thing.  It must carry the necessary messaging and branding, but it must also drive action in a social manner. QR codes, augmented reality, and hashtags are revolutionizing the call-to-action, bringing immediate satisfaction, deeper brand experiences, and most importantly, the ability to insert the consumer into the brand story through social sharing technologies.

This isn’t always easy. Options are evolving quickly with regard to technologies that provide good social integration. That’s why the creative teams at Smith Brothers are no longer just a copy writer and art director. Several years ago, we added a digital strategist as the third teammate.  This fosters creative thinking across all the key elements of copy, visual design, and interactivity (with a focus on social).

So, I’d like to thank Pete Blackshaw for the analogy that efficiently and effectively explains our philosophy that social media is an essential ingredient in the creative and marketing recipes we try to cook up over here at Smith Brothers.  We continually try to make consumers part of something bigger than themselves – the brand stories that intertwine in their lives every day.

Now, flawless execution is a pretty mighty declaration. It’s highfalutin, haughty – a concept that seems, well, unattainable. Do we ever reach it? Yes, in fact we do. Do we miss it sometimes? Yes, and we strive to always learn and get better. My colleague, Craig Seder, Creative Director at Smith Brothers, uses this to define what we mean by flawless execution:

“In a world of ‘that’s not my job’ and ‘I don’t know’, our agency requires a commitment from each team member to make certain that the projects we work on are not simply passed off, but shepherded through the agency by a devoted staff of designers, writers, coders, producers and account people. As a result, the work that leaves this agency is not simply what was asked for, but the best example of our capabilities as a concise and agile team. There must be a drive and passion for the work and a promise to deliver – on time and on budget – the best work our clients deserve and we are all capable of doing.”

With this lofty goal in mind, we work diligently within our process to avoid simply going on autopilot on tasks and instead approach every job phase thoughtfully and thoroughly. We challenge ourselves to sometimes rethink approaches to what “done looks like”. Our producers work to anticipate client changes-of-mind within our established schedules and budgets, and strive to keep every project profitable. And finally, we constantly put ourselves in consumers’ shoes throughout a project’s “flow” evaluating and reevaluating the quality of our creative deliverables.

Flawless execution is an evolving, never-ending quest – an achievement only possible in an agency where every team member is committed to not just pushing a task through production, but shepherding the Big Idea through the agency, preserving and usually improving it at every turn.

A very abbreviated snapshot of SBA's process

Along the way I’ve made more mistakes than I care to acknowledge. But have also managed to do a lot of things right.  After thousands of meetings, hundreds of campaigns and more than a quarter century of trying to do the best creative I could for my clients, I’ve come to believe in certain things.  I’ve come to hold onto certain truths that I believe are critical to being successful in this crazy, ever-evolving business.

The list below is admittedly simplistic. And many of these thoughts were collected from early in my career.  But I think they still hold true and hope you might find a thought of two that might be helpful to you in your pursuit of great work.

I believe…

1. A great ad stands out by first standing apart. It leaves you a little smarter, a little changed once you’ve seen it.
2. The best ads are a wake-up call. But you don’t shake someone from their sleep unless you’re sure they’d want to hear what you have to say.
3. There is no monopoly on creativity. Brilliant ideas can come from anywhere (and anyone). All it takes is an environment where everyone’s encouraged to contribute.
4. Too many ads underestimate people’s intelligence. The surest way to undershoot your audience is to plan to appeal to the so-called “least common denominator.”
5. Every ad has a responsibility to give back to consumers who “pay” attention. For their time, we owe consumers a little information, a compelling thought or just a smile.
6. Great advertising starts a relationship between your product and your audience. It makes them root for you. We don’t believe in conning consumers, but converting, commiserating, co-conspiring with them.
7. While it’s the responsibility of every ad to create results, there is no one specific formula for achieving them.
8. Great creative doesn’t necessarily stop the audience in their tracks, but makes them step comfortably into step with your product and all it stands for. The best advertising doesn’t simply grab attention, it earns a following.
9. Clutter is real, but overrated. A crowded field makes for better competitors. Good stuff is no longer good enough, but great stuff always cuts through.
10. To create great advertising you have to love the work so much, it’s never a job.
11. Passion is a prerequisite in our profession – the price of entry. And passion doesn’t punch the clock.
12. It’s smart to ask dumb questions. Having the courage to look a little foolish in the beginning usually makes you look smarter in the end.
13. You can find a “unique truth”, a compelling story, in every product or service. You may have to beat it out into the open or tickle it free, but look harder – it’s there.
14. There’s no such thing as a “parity product” in the eyes of consumers. Products might share functional attributes, but every brand is different in the minds of consumers.
15. Only creative strategies with teeth can yield bold, single-minded ideas. Hitting the consumer over the head with a catalog of copy points is the surest way to give them amnesia.
16. The way you say something is as important as what you are saying. I, for one, am tired of cut-n-paste creative briefs with tone statements that inevitably read: fun, upbeat, contemporary.
17. Selling work to clients is also the creatives’ responsibility. And no amount of conviction can work without anticipation. Know the client, expect his/her questions if you want to convince them you’ve got the Big Idea.
18. Politics are for politicians, and when required, are to be suffered, not embraced. I believe in teamwork, encouraging and empowering – in acknowledging the contributions of others, not in miserly internal campaigns to claim all the credit.
19. Crafting the best advertising requires follow-through. Creating attention-getting ads requires constant attention, from conception to pre-production to post. I’ve seen too many ideas executed by their execution. While you might feel relief in finally selling a board, you can’t afford to relax.
20. Compromise can be a killer. That preserving a powerful idea requires passion and perseverance, not negotiation. I believe in respectfully starting from scratch. You can’t bend an idea until it breaks and expect to break through.
21. “Know-it-alls” and “smarty pants” have no place in our business. Our industry changes so fast, it’s for learners not teachers. If you think you know it all, you’re already a dinosaur.
22. The best ads are created by agencies who’ve earned their clients’ trust. By those who don’t simply do as they’re told, but tell clients what to do. It’s easy to complain about clients killing work, but easier still to ignore the agency’s own lack of backbone.
23. The “good old days” of advertising are ahead of us. There are still plenty of agencies where loyalty thrives, where clients defer to agency “expertise”, where relationships are built on respect. You can’t surrender to negativism and cynicism.
24. We have little right to complain about how clients treat us like vendors, how they think they can do our jobs better than us. Clients didn’t start acting like agencies until agencies started merging and going public and bowing to the bottom line- until we started acting like them.
25. Common sense, common courtesy and the appreciation of our common experience don’t seem that common today.

Background

CPG marketers know that retailers have realized tremendous success in developing private label brands and that it is a real threat. Among the facts illustrating private label success, Mintel reports:

• Since 2008, the number of premium-positioned private label product introductions has outpaced new premium-positioned products introduced by brand marketers.
• Seven of ten shoppers say they perceive the store-brand food products they buy to be the same or better quality than name brands.
• Over half of shoppers say they will shop a specific retailer because it has good store brands.

What CPG marketers may not wish to acknowledge is the hostile nature of many private label marketing campaigns and their own role in funding them.

Nothing Private About It

In developing their private label brands, retailers show no mercy toward their CPG supplier partners, tapping sophisticated and aggressive marketing methods. A few noteworthy examples include:

Texas Showdown

At HEB, they feature their private label brand, Made For The Love of Texas, in a regularly occurring promotion known as the Texas Showdown, a promotion that is plainly a frontal assault on CPG brands. For the promotion, HEB makes an irrefusable offer – you buy the CPG brand and we’ll give you the private label clone for free just to compare.

Not stopping there, HEB shoppers are then encouraged to go online and rank their preference after trying each version. A $4,000 grand prize sweepstakes entry is the incentive to cast a vote.

Chip Off the Old Block

Last October, Giant Eagle launched its self-named brand of potato chips as if Frito-Lay brand marketing had drawn up the strategy. Dedicated media support included TV, digital display and blogger outreach. Somehow, the product line-up managed to earn an extended stay in primo, custom end-cap, space too.

TV Spot:

Digital Display Ad:

End Cap:

Friendly Fire

No supplier is safe regardless of their size or history. Kroger recently publicly floated a plan that puts hometown buddy P&G further on the backburner. BzzAgent, a social outreach consultancy, purchased by Kroger-owned ad agency, Dunnhumby, in 2011, will tap store loyalty card data to identify the top users of Kroger Comforts baby care products (diapers, food and more). The idea is to turn these shoppers into advocates for the Kroger private label brand. Through BzzAgent, these top users will receive free samples and then will be urged to blog, Facebook post and Tweet about their product experience with the private label.

Funding the Boom

As retailers introduce and ratchet-up aggressive private label marketing tactics at the expense of CPG brands, CPG marketers continue to increase their marketing spending with retailers.

In its 2012 Trends Report surveying CPG marketers, the Path To Purchase Institute reported:

• 74% intend to maintain or increase trade promotions spending in 2012
• 90% will maintain or increase shopper-marketing spending

The siphoning of marketing dollars toward retailer-based programming has been ongoing for the better part of the last decade – paralleling the private label boom. Huge percentages of brand marketing dollars are now placed against investments in which retailers have approval rights on the strategy, control the message, and profit by selling the media and participation rights to their branded goods suppliers.

With brands continuing to pour dollars into this cycle, it’s little wonder that retailers have the resources, strategic framework, and control to develop and fund private label brands with incredibly low-risk and significant upside.

Regaining Control

It’s bad business and unrealistic to expect cold-turkey change by CPG brands when distribution threats are the trump card in play for retailers. But, there is real opportunity, right now, for brands to reverse trend, reassert themselves and drive results.

Shoppers write more detailed shopping lists today and stick to these lists more than ever before. Pre-store planning drives what gets in the shopping cart. To help build their shopping lists, consumers are tapping digital resources – even with presumed low-engagement CPG items. It is here, in the digital path-to-purchase, where brand marketers can focus initiatives without simultaneously giving up control and money to the retailer. And there is definitive proof behind our theory.

In October 2011, comScore and Dunnhumby released results from an analysis of multiple CPG online ad campaigns. The study revealed median in-store sales lift of 21%. Along with this, 70% of campaigns generated at least a double-digit sales lift. Study findings went further to show that digital campaigns executed with more rigorous behavior-based targeting posted even better results.

By putting focus on the digital path-to-purchase in lieu of pay-to-play retailer programming, brands can get real results without financing their private label rivals.

Sources:

Mintel, Path To Purchase Institute, comScore Inc./dunnhumbyUSA

What are QR codes?

QR codes were created in 1994 by a Toyota subsidiary to track vehicles in the production process. And now they seem to be just about everywhere — in print ads, outdoor advertising — you may even have seen them on the walls in your local bar.

Users with a camera phone equipped with the correct reader application can scan the image of the QR code (in advertising or on the brand’s packaging, for example) to display text, contact information, connect to a wireless network or open a web page in the telephone’s browser. Marketers from a variety of industries use the codes to send consumers to view videos, download apps, promote a sweepstakes and more.

But are QR codes right for your brand? Below are some considerations and research to help you with the decision.

Who’s Using Them?

A recent comScore study found that 14 million mobile users in the U.S. — 6.2% of the total mobile audience — scanned a QR code on their mobile device. While still a niche, we believe they still represent a real opportunity for CPG brands.

But currently, the industry research isn’t exactly conclusive on who’s scanning:

• A recent comScore report states that scanners are more likely to be male (60.5%), skew ages 18-34 (53.4%) and have a HH income of $100k or above (36.1%).
• According to a report by Mobio though, the gender break is 68% women, 32% men, with higher usage in the 25-44 age skew (47%).
• • Another survey shows that this number is more balanced (50%/50%) between men and women.

Our perspective is that as scanning technology adoption increases and stabilizes over the next few years, the audience that utilizes QR codes will be more easily identified.

Why do people scan?

According to a survey by MGH (an advertising agency), the motivation behind scanning codes includes:

1. To get a coupon or discount (53%)
2. Access additional information (52%)
3. Enter sweepstakes (33%)
4. Sign up to receive more information (26%)
5. Access video content (24%)
6. Make a purchase (23%)

To encourage scanning though, marketers have to raise the bar in terms of the content delivered. The experience must be compelling for people to continue to scan.

Lots of Choices

One of the most confusing aspects of the QR code marketplace for brand managers is the number of vendors and providers. A simple Google search yields thousands of websites where codes may be created, scans may be tracked, etc.

To help resolve the confusion, the following is a list of the top QR creation and analytics companies according to eMarketer:

• Microsoft
• Bee Tagg
• EZcode
• JAGTAG
• QuickMark
• Trillcode
• UpCode

An important distinction is that the above firms utilize proprietary codes–meaning a consumer must download the vendor’s app before they’re able to snap the code with their camera.

To avoid limiting themselves to a proprietary code and special vendors, many marketers use open source formats – such as QR codes, Data Matrix codes and Aztec codes.

These codes may be created with free online tools and tracked with open source analytics software like Google Analytics.

As a general rule, SBA recommends the use of open source technologies when it comes to the QR space. Ensuring that as many people can scan your code as possible is advantageous. Closed systems require consumers to download an app, install it and then snap the brand’s code. This is a lot to ask for a coupon or a piece of branded content. But each brand must make their own decision based upon their target audience, legacy technologies and the reliability of the QR analytics platform.

CPG Brands Using QR Codes

The retail and travel industries adopted the use of QR codes early on, but a number of CPG companies are using them effectively now too.

• Red Bull: QR code on an outdoor poster to promote an event
• Artisan Lettuce: On-pack QR code linking to healthy salad recipes and product information
• Reach Toothbrush: QR code campaign providing users $1 off coupon and previews of new brushes
• Kellogg’s: QR codes giving users an opportunity to experience breakfast in another part of the world via video
• Pedigree: Every mobile bar code scanned represents a bowl of Pedigree dog food that the company will donate to an animal shelter

Each of the brands above deliver compelling reasons to snap the QR code, whether it is offering a coupon in the case of Reach or a video with the Kellogg’s example.

Your Brand and QR Codes

So what’s right for your product? A few points to consider:

1. What are your brand’s goals (engagement, driving trial)?
2. What is your target audience’s smartphone usage (would they scan)?
3. Can you deliver a captivating experience after a consumer scans the code (video content, recipes, etc.)?
4. Do you have a mobile-ready website (this is optimal for the experience on a smartphone)?

Once you and your agency tackle these questions, the decision to utilize QR codes in your marketing communications is easier to make. Understanding your target’s usage and behaviors with smartphones as well as being able to deliver captivating content are vital.

But even if you answer ‘yes’ to the questions above, there is another major consideration — the future.

The Future: Image Recognition

QR codes may only be an interim technology. Companies including Google, Amazon, Kooaba and others are innovating image recognition technologies that could eventually replace the need for QR codes.

Imagine being able to take a photo of a soup can, a print ad or any object and have it connect directly to online content about that product or service. This is one application of image recognition software. In other words, consumers may eventually be able to take a photo of your print ad and be linked automatically to your homepage. Or to drive trial, consumers could take a picture of a product at the grocer and buy it immediately online. No need for any type of code. A database will recognize the image within seconds.

For now though, QR codes can be an effective way to deliver additional content to your target audience and engage them in a more unique way than conventional push advertising practices.

Sources:

1. comScore: 14 Million Americans Scanned QR Codes on their Mobile Phones in June 2011, August 2011
2. comScore: 14 Million Americans Scanned QR Codes on their Mobile Phones in June 2011, August 2011
3. Mobio: The Naked Facts: QR Barcode Scanning in Q1 – 2011, May 2011
4. MGH: MGH’s QR Code Usage and Interest Survey, February 2011