Taking FMCGS Online
30th of March, 2007
www.mad.co.uk
By failing to wholeheartedly embrace online marketing, FMCG manufacturers are missing a real opportunity not only to reach a wider audience but attain a measurable increase in in-store sales insists Jared Keen, Managing Director, Couponstar Ltd.
As FMCG organisations increasingly look to attain direct consumer to brand interaction, traditional above the line media campaigns are becoming less and less relevant. Yet typical online options – from banner advertising to online competitions – also fail to demonstrate the real link between online activity and in-store behaviour. It is little wonder, therefore, that FMCG companies have yet to shift much spend online.
The only way these organisations will attain real value from online activity is to leverage a solution that is personalised, trackable and efficient and, critically, bridges the gap between online marketing and in store behaviour. As consumer printable coupons attain critical mass, FMCG brand managers finally have a reason for going online.
Trailing Behind
As online marketing breaks the 10% market share barrier, why are FMCG companies still failing to come to the party? New figures from the IAB Online Adspend study, conducted in partnership with PriceWaterhouseCoopers, reveal that in the first six months of 2006, the UK market was worth £917.2 million, up 40.3% of the previous year.
With its market share reaching 10.5%, online continues to demonstrate strong growth in what is an otherwise depressed advertising market. Indeed, with online advertising expenditure heading for the £1 billion mark, it looks set to overtake spending on national press advertising before the end of 2006.
Yet in comparison to industries such as travel and financial services, the FMCG industry is slow to accept the opportunities presented by online marketing. Recruitment and finance remain the highest spending industry categories with automotive and entertainment and media also increasing their spend. Consumer goods, which includes FMCG, did rise to 4.6% of the market share, however, this is a fraction of the offline media spend.
In fairness it is easy to see why FMCG brand managers are not getting excited about the traditional online campaign measures, such as cost per thousand impressions (CPM). Mirroring the traditional newspaper model, CPM provides no direct response mechanism or any way of measuring the impact of offline activity on in-store sales.
As the focus grows on customer relationship management (CRM) activity and the pressure increases for direct consumer/brand contact, banner ads are no more effective than traditional media. While traditional online marketing can deliver a quantifiable return on investment in those industries such as travel and finance with direct consumer interaction and a low volume, high sale value, it has had little appeal for the FMCG brand managers.
Effective Measurement
However, the rising costs of above the line media and diminishing returns from spend on TV promotion, newspapers, magazines and radio are causing concern. As FMCG companies attain increasingly less satisfactory results from campaigns in traditional offline media, the pressure is on to discover an alternative cost effective and efficient form of marketing, a form that supports CRM initiatives and drives direct consumer interaction.
If FMCG organisations are going to shift their significant budgets online they need to be able to measure direct consumer response, not just to the online experience but how that translates to offline sales. Using printable coupons, for example, as part of an email marketing campaign provides unprecedented insight into consumer response. Brand managers can measure at every point - from click through to consumers opting to print a personalised voucher and, via the retail network, those then redeeming that voucher in store.
Unlike the online competition or sweepstake, offering printable coupons online also creates a far more qualified consumer database – individuals will only register if prepared to use their own consumables to print the voucher and then go in store to make the purchase.
With redemption rates running at around 25% - and up to 50% in some campaigns – FMCG companies suddenly have a great motive for driving online traffic in-store and creating a strong database for email marketing. Critically, since the company only pays for those coupons actually printed and redeemed, the return on investment created by increased in store activity is a given.
Furthermore, this provides FMCG companies with a mechanism to support the new range of direct consumer campaigns – whether for an acquisition campaign to a permission based email list or a retention strategy for the existing loyal subscriber base, coupons are proven to drive up response rates. Indeed, those campaigns that have included printable voucher in the email subject line have doubled, even tripled, the click through rates of other email marketing campaigns.
With consumers being constantly bombarded with information and communication via email as organisations leverage the cost benefits, printable coupons enable organisations to stand out from the crowd and deliver instant gratification to the consumer to increase brand interaction.
Mass Market
However, in attaining the direct consumer interaction, FMCGs are limited by the amount of traffic that can be driven to the web site. An alternative is to use the newly launched CouponNET™. Mirroring a successful programme in the US, CouponNET™ is an affiliate programme of online publisher sites in specific categories that include lifestyle, women, food/recipes and TV/broadcast. Coupons created by FMCG organisations can be syndicated to these locations, allowing consumers to browse the ‘coupon gallery’ at their leisure.
This enables FMCG organisations to leverage the vast reach of these sites and get their offers to an estimated 10 million consumers every month. Critically, every coupon printed by a consumer is completely trackable, providing the FMCG organisation with the ability to measure the success of specific offers, compare publisher relevance and iteratively tailor the campaign.
Furthermore, with video coupon capabilities available, organisations can leverage the richness of online media and high broadband penetration rates. This provides brand managers with the ability to engage the online audience for a number of seconds with a FLASH version of their TV commercial before allowing the consumer to print the coupon.
Quantifiable Return
Until now, FMCG companies have had a valid reason or two for eschewing the rapid shift of marketing spend online. But times are changing. In the US, where a similar programme has been running for 18 months, while online coupons still represent a tiny fraction of the 323 billion coupons created in the US annually – 87.9% of which are in Free Standing Inserts [Source: CMS 2006 Trends Report]. Steven Boal, CEO, Coupons, Inc. believes these online coupons will soon represent 10-15% of all coupon redemptions in the US. This demonstrates the very real value of enabling the consumer to select and print the brands in which they are interested. For the first time the use of coupons has moved from a traditional push based approach to the efficient pull based marketing.
In the UK, printable coupons are expected to attain a 15% share of the 4 billion coupons distributed annually by the end of 2007. Critically, this technology finally provides FMCG organisations a valid reason for shifting marketing spend online – a tangible, quantifiable, measurable way of achieving direct consumer to brand interaction.
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