As brand builders, we are constantly fascinated by the changing consumer and media landscape. So, in this edition of FreeFlowing we decided to look ‘under the hood’ to understand the challenges and implications of these changes for brand custodians and marketing leaders in their day-to-day job.
Having worked with P&G and Kimberly-Clark for over 14 years, he comes with rich first-hand experience of steering large FMCG brands through changing times. A thoroughbred FMCG marketer with global experience, he shares some valuable perspectives and insights into the changing world and some watchouts and imperatives for brand marketers.
So here’s the article penned by Arvind, our guest author for the day.
It’s a great time to be an FMCG marketer in India. Retail channel structures are getting disrupted, e-commerce is booming creating new FMCG categories, digital media consumption milestones are being broken every year and consumer propensity to spend is rising.
With all this disruption and transformation, we should officially declare the traditional marketing playbook dead. Right?
Through this post, I would love to share my view on what’s changed in this playbook and what continues to hold true. I am making some conjectures in this post some of which might get proven false in the future. I am happy to be corrected and learn along the way.
For this, I will use a simple 3-step marketing framework that spans the full innovation or planning cycle.
1. Insight and Strategy
Within the marketing framework, this section has stayed pretty stable for the FMCG industry. For developing a growth strategy, FMCG marketers sift through multiple data points to develop their strategy, commonly articulated as ‘Where to Play’. There will be conflicting and changing trends that need to be considered – ‘Consumers are choosing more natural options in our category, e-commerce has increased entry of challenger brands, Growth is driven by both low unit packs [+12%] as well as bigger packs [+9%]’.
So, as an FMCG marketer, whether you are building a nascent category (let’s say Quick Cook Oats) or playing in a well-entrenched category (Laundry detergent), you will always have a constraint on investment funding, delivering speed to market and people capacity. Using trustworthy data is critical to drive right business decisions. That’s what allows even a junior Brand Manager to challenge assumptions and influence the senior leadership to prioritize some innovation and investments.
In this context, what’s changed in the past few years is the rapid rise of e-commerce which has muddled data quality. Over past decades agencies like Nielsen have provided robust, neutral & aggregated offline sales data for the total category. This helps understand and benchmark your brand’s growth vs. category on multiple metrics. However, for e-commerce we can currently only rely on internal sales data for Amazon, Flipkart and other platforms. Nielsen or any similar partners have not yet built a reliable data source for this. When e-commerce was a smaller channel, the impact was inconsequential. Now category size, growth, and market share conversations have become bifurcated between Offline and Online.
So, what are the implications?
If your category has a higher fondness for e-commerce, be prepared to stitch together a surrogate ‘Blended” category picture for strategy discussions. Your data assumption WILL get challenged when the number looks too high or too low depending on your organization’s mindset. When pushed too far to justify your e-commerce charts, you can quote Bryan Cranston from the movie Argo “This is the best bad idea we have, Sir, by far”.
Driving clarity on the growth bets is crucial. If your Insight & Strategy is defined clearly, it will make the actions on ‘Marketing Mix Development’ and ‘In Market Execution and Evaluation’ a lot easier.
2. Marketing Mix Development
FMCG brands need to get their marketing mix right before driving scaled distribution & awareness investments. Iterations and in-market fixes are slow and expensive. Hence, FMCG marketers are likely to invest in consumer research on concept, packaging, product, and communication to reduce uncertainty on their growth bets.
There have been 2 interesting developments on this front.
First, through innovation trigged by Covid restrictions, we now have the agency capability to conduct research with quick turnaround times via Zoom, even in remote towns. For brand teams, participating in these researches in the pre-Covid era would have meant a 4-day process and additional travel. Now we are able to execute faster and conduct more representative market research.
The second development over a longer period is that research agencies have shown promising innovation bringing in new market-relevant methodologies.
Traditionally FMCG marketers have tested potential launch ideas through what’s called a white paper concept – exposing the idea to the consumer as a simplified write-up. When an idea was chosen through this method, the marketing mix was built according to it – for example, translated through a 30-second TV commercial.
The concept white paper writeup usually consists of the issue currently being faced (‘Insight’), the promise from your brand (‘Benefit’) and some features or claims to convince the consumer (‘Reason to Believe’ (RTB)). The responses to these abstract ideas are then compared for decision-making. Here’s an example:
But consumers are now exposed to launches in very fragmented ways – she may just see the YouTube 6 seconder ad which can barely just carry the key benefit message. Or she may only notice the new pack on the shelf, completely bypassing any media exposure. So, from a practitioner’s perspective, the old research method seems outdated. I am increasingly in favour of some newer research methods that reflect what the consumers will experience in the market.
For instance with Metrixlab Pact screener or Nielsen Bases Pack Survey, we can get research feedback through the potential shopper. After mocking up the new product within a realistic category shelf, it helps answer some critical questions: Will the product get noticed in the shopping aisle? Does it deliver the key promise? Will it persuade her to buy the new product?
Example: Metrixlab pack testing within category shelving
Packaging design development is another fascinating touchpoint – Limitations of space give rise to the classic FMCG marketer’s dilemma – wanting to say a lot and having too little space to communicate it. We have good tools now that help solve hard packaging decisions. These machine learning-based tools predict consumer response to packaging. This is better than the noisy feedback brand teams would collect from a Focus Group Discussion (FGD) research.
Example: the 3M VAS (Visual Attention Software) tool uses machine learning to predict consumer response to new pack designs – which elements are noticeable, and what’s the predicted order of eye gaze? The tool helps cut through subjective debates and forces pack simplification.
3M VAS example – % probability of noticing elements on the packaging
So overall, methods have improved, and we have a wider range of research options. But marketers cannot eliminate all uncertainty. We will still need to deal with imprecise information:
- 3M testing will give you eye tracking prediction, but not if your shopper dislikes the red colour. Or if she can comprehend your new icon.
- You can conduct an even higher number of consumer FGD in Tier 2/3/4 towns and gather responses. But consumers will still play back their existing category perceptions and to break that away, you’ll still need to take a risky bet.
- The new tools collecting neuro-eye tracking and predicting consumer reactions are still in the early stages. We need to learn over time how to map this information with other actively used business segmentation like demographic (18-34 old users) or brand usage (Rin Users, Ariel Users).
3. In-Market Commercial Execution & Evaluation
In-Market Execution covers a wide spectrum of activities, many of which are shouldered by the trade marketing and sales teams. But for this discussion, we will focus on scaled paid media which forms the bulk of marketing investments. Of the 3 sections in the marketing framework, I think this one has faced major playbook changes and has room for improvement.
There are 2 proven maxims regarding media: First, maximizing reach within your potential category buyers is the primary media objective. Second, creative quality is the primary driver of advertising effectiveness.
So, for their brand-building campaigns marketers need to find a way to improve all 3 factors – advertising sufficiency (am I spending enough?), efficiency (is this low cost per impression?), and effectiveness (did it impact the consumer?). In the current landscape, there are 3 challenges which feel unresolved:
Challenge 1- Planning for media sufficiency is complicated
There is compelling research led by stalwarts Peter Field and Les Binet that shows “Excess Share of Voice” delivers share growth. Share of voice is nothing but the percentage of media spending by a company compared to the total media expenditure for the category.
For example, a brand with 20% market share is better equipped to deliver share growth by investing in media weight more than fair share (for example 30% share of voice would be +10% more than the market fair share). For pure TV media, this was feasible. While the primary metric was reach, TV panel aggregated data on SOV helped guide whether you were investing above fair share.
Now marketers have sizeable investments across Meta and Google platforms across a very fragmented set of creative executions. As of now, there is no metric that provides Share of Voice (SOV) – either for individual platforms (YouTube, FB) or as scaled multi-platform planning.
The metric media agencies will recommend are corollaries of reach (impression, views). But media spends often feel like a bottomless pit – media plans can be created for $10k USD, $100k USD, $1 Million USD with very unclear guardrails on sufficiency. And hence media sufficiency decisions are driven by budget, with some proxies to allocate and past spend trends.
Lacking this information, agencies will likely state that i) the Objective should be our campaign’s internal goals ii) We should instead aim to maximize critical media parameters that affect reach and efficient spends.
Practitioner’s perspective – Let’s take a hypothetical example of a well-funded launch project – New Ponds Men Anti-Pollution Face Wash. The brand team splurges on a rich media mix:
- YT Masthead for campaign launch live for 1 day to all YT active users
- TV support with 30/15sec video for 6 weeks using typical Prime / Non-Prime time mix
- Facebook & YT 15sec skippable ads served for 8 weeks to a broad 18-34 male segment
- YT Bumper ads served later as phase 2 for 12 weeks as a sustain campaign
- KOL or Influencer engagement with Varun Dhawan in 2 bursts over the launch period
Since there is no aggregated category media data available, it is very hard to judge the sufficiency of the plan above.
Challenge 2 - Assessing media efficiency is complicated - metrics frequently differ between the big online platforms and over time
Your agency will aim to optimize media investments basis the KPI (for example the impression cost CPM). However, as you dig deeper, the questions get more complicated:
- If it’s a video creative should you optimize for CPM or CPCV (cost per completed view)?
- The definition for completed view varies across YouTube and Facebook – which one should you use?
- Should you treat non-skippable ads the same across platforms or have a unique evaluation for each?
I prefer to have a media performance discussion with the agency using metrics that are comparable and platform agnostic. But it is a persistent challenge.
Challenge 3 – Digital media can deliver rapid feedback, but measuring campaign effectiveness requires good old patience
We saw in the hypothetical Ponds example above that the media plan is fragmented across platforms and multiple creative assets. After a campaign goes live, both Google and Meta can provide you with quick in-platform test results (Brand Lift Study) which compares consumer scores for those who saw the ad vs. those who didn’t. They then provide analytics on multiple metrics related to campaign awareness, consideration etc. So, if you get a BLS verdict within 15 days of the campaign live date should you make decisions basis that?
It really is an FMCG marketer’s dilemma!
If your campaign has multiple execution elements, I’d recommend driving business focus on the long-term annual metrics (brand Top of Mind Awareness*, share growth, equity measures). Calling success/failure based on one touchpoint report can be misleading. If the team has conviction on the strategy and marketing mix, you should continue investing in making corrections for efficiency and message delivery. It is ineffective and noisy to reduce this impact cycle to a shorter timeframe (for example 4 weeks into launch).
* TOMA or Top of Mind Awareness is the % of respondents who name a specific brand unprompted when asked to list all the ads they recall seeing in a certain time period, usually 30 days.
To summarize the In-Market execution implications:
1. Getting the right proposition and creative will continue to have the largest impact on your campaign effectiveness. Ensure sufficient effort goes into getting a strong idea first.
2. Ask your agency for channel or platform agnostic metrics so it is easier to understand and influence the media plan performance on reach and efficiency.
3. While you track media delivery closely short term, focus on the long-term metrics for overall campaign development.
Is there anything else you can do to improve your marketing playbook?
Yes! Read widely.
There is rich discussion from the marketing bigwigs available online: Byron Sharp, Mark Ritson, Les Binet. In addition, I would definitely recommend this newsletter from WinnerBrands. The previous posts have been very insightful.
Do share your comments and thoughts below.