It’s a complex time for consumer packaged goods (CPG) advertisers. There are no shortage of factors to juggle: From differentiating products and brands within highly saturated markets, to navigating the private-label goods boom, to determining how emerging media channels like retail media networks fit within a holistic digital media strategy, and lots more. Couple these with the challenges faced across industries—including inflation woes, interest rate hikes, and souring consumer sentiments—and CPG marketers must be nimble and savvy as they adapt to meet customers’ needs.
Amidst this complexity, it’s critical for CPG marketing teams to prepare for what 2024 has in store and take steps to adjust their strategies to set their brands or clients up for success. To that end, let’s dig into some of the key trends that should be top-of-mind as we head into the new year.
The last several years have been a wild ride for consumers—and their spending habits have fluctuated accordingly. Though inflation isn’t as high as it was a year ago, the US consumer sentiment index, which gauges the level of positivity consumers have regarding general economic conditions and their own financial well-being, dropped for the fourth month in a row in November 2023.
With inflation rates still climbing and student loan payments restarting in October, many consumers are still adjusting their spending or abandoning previously go-to brands in favor of cheaper options. But, interestingly, these increased economic pressures aren’t leading to an overall decline in spending. There’s significant variance across demographics, but in general, most consumers are being more thoughtful about how they spend—not necessarily spending less. For example, a millennial shopper might be more apt to “trade down” for a store’s private label of paper towels, but would likely stick with the skincare brand they love even if it means spending a bit more.
In 2024, it will be increasingly important for CPG brands to invest in tracking and understanding the decisions and behaviors of their target consumers, with the goal of better anticipating (or even shaping) that behavior. Amidst this complexity, brands will also benefit from sharpening their value propositions and refining how they communicate them in their marketing.
In 2023, retail media ad spend will reach $45.15 billion. That’s an increase of nearly 20% year-over-year. That said, retail media networks are still in their infancy, and standards and guidelines for their use are still emerging. Until those become solidified, it’s important for CPG marketers to know what they want to achieve through retail media and to evaluate if a specific network can provide it.
If a brand focuses all their efforts on just one network, they’re limiting their dollars to just that audience and no one else. Additionally, retail media networks are essentially walled gardens, offering very little (if any) access to their data. If CPG brands focus only on retail media networks to connect with audiences and don’t build up their own first-party data, they’ll find themselves way behind the curve in the privacy-first future where first-party data will be of utmost importance for marketing teams. Which leads us to our final trend...
Since retail media networks are still emerging and being refined, and since they don’t allow CPG brands to build up their own first-party data, they are best used as part of a holistic digital media approach. For CPG marketers, it’s critical to evaluate where retail media fits within their overall strategy, which part of the customer journey they want to use it for, and how many different retailers/retail media networks they’ll want to focus on.
Pairing retail media with connected TV (CTV) advertising can be particularly impactful. Additionally, CPG marketers might opt to use a mixture of digital out-of-home, digital audio, display, social media, and retail media to reach customers at different points along their buying journeys. By complementing retail media with other digital channels, CPG brands can ensure they’re reaching consumers when and where they’re spending time and make sure they aren’t putting all their eggs in just one basket.
Hungry for more 2024 trends? Check out our 2024 Trends Report for everything digital marketers need to know for next year.