The retail industry has changed tremendously over the past decade, with 2021 being a tipping point. Case in point: Amazon officially became the world’s top retailer, edging out Walmart.
Online retail is today’s true driver of growth, with sales on retail media platforms leading the way.
As ad inventory on retailer-owned platforms skyrockets, search engines are adding more slots for display ads. This richer, large-scale retail media landscape means more growth opportunities for consumer packaged goods (CPG) brands — but these opportunities mean nothing if CPG brands don’t treat them like another brand marketing channel.
The solution? Performance marketing.
The Importance of Performance Marketing
Branding and storytelling have always been integral components of marketing. To succeed in the modern marketing landscape, though, you need to use data and analytics to be more effective.
Performance marketing is a digital marketing strategy focused on achieving specific, measurable business goals, where advertisers pay only for users who take a desired action (click, sale, lead, etc.). Unlike traditional, brand-focused marketing, performance marketing prioritizes driving immediate, measurable actions.
Performance marketing helps you generate a lot of valuable data on your customers’ behavior. This way, you can create hyper-targeted ad campaigns and marketing plans to engage consumers as their buying behaviors evolve.
For example, instead of targeting a potential customer who is a male aged between 34 and 55, you can now target a male on Instacart with two kids who shops for organic groceries. With that specificity of target audience segmentation, you can convert more leads.
Balance Broad Reach and Customized Campaigns
This marketing strategy also helps expand your reach and enables you to deliver personalized messages to your target customers at the appropriate time. Instead of guessing which content type or push strategy might work best, you can track every click — no need to depend on vague estimates. You can see all the data, assess the effectiveness of your marketing campaigns and determine ROAS quickly.
Improve Marketing Efficiency
With this type of digital marketing, you pay when your target customer completes a specific “action” or when you meet certain business goals like generating a lead. In the context of retail media channels like Amazon, performance marketing revolves around the idea that every ad campaign must deliver measurable results.
Data-driven marketing can help you grow your net sales by 3-5% and improve your marketing efficiency by 10-20%. It can help you decide what’s worth investing in and what’s not. If you’re a large brand, embracing a data-driven approach can help you compete with smaller digital-native brands.
Unlike traditional marketing techniques, performance marketing enables your CPG brand to:
- Personalize a message at scale
- Monitor performance in real-time
- Optimize campaigns with data-driven insights
You’ll benefit from using performance marketing as part of your overall marketing push, and it’s an excellent tool to achieve tangible results.
3 Things to Consider When Creating a Digital Retail Strategy
Consumer packaged goods have a short shelf life, and consumers purchase them frequently without spending too much time researching all the products out there. Another challenge? As a CPG brand, you have stiff competition both in-store and online.
For these reasons, a good marketing strategy is essential for attracting attention to your CPG brand and being able to stay ahead of the competition. Here are three things to keep in mind when creating a performance marketing strategy.
#1. Data Acquisition Strategy
A data-driven marketing approach is integral in the CPG industry, allowing your brand to analyze customer and sales data to create targeted marketing campaigns. However, CPG companies don’t have direct interactions with consumers the way Netflix and other subscription-based services do. You might rely on third-party cookies and other external data sources to fill this void.
Sadly, Google announced it’s phasing out cookies in 2023. Without third-party cookies, you’ll lose valuable data about your target customers, including demographic information and browsing behavior.
So, how can your CPG brand survive this cookie-less world?
You must now rethink your data-acquisition strategy and focus on acquiring “zero-party” data — data you get directly from the customer, not from a third party. Some companies have begun stitching together information from their existing databases like sales data, social media platforms and consumer sentiment.
You could also work with established retail media networks like Walmart Connect and Roundel, which already have huge reservoirs of consumer data.
#2. Reach vs. Personalization
In today’s increasingly digital world, you can’t ignore personalization when it comes to your CPG brand’s success. Personal ads cut through the noise and catch your customers’ eyes. However, it can be challenging to create personalized campaigns while also reaching as many customers as possible.
So, how do you strike the right balance between reach and personalization?
You can try to disseminate campaigns widely while using a dynamic creative optimization ad-tech solution. This technique leverages machine learning to select the most relevant messages and visual components to display for each consumer.
If you aren’t sure how to start using data-driven insights to adjust brand messaging at scale, a reliable performance marketing partner like Cliffedge Marketing can help by creating a customized media strategy.
#3. Use the Scientific Method
Applying the scientific method to your performance marketing efforts can help deliver data-driven, objective results. Approaching all types of performance marketing as experiments enables you to make more accurate predictions about what might work and what might not. You’ll also be able to know why your efforts have worked.
The basic steps of the scientific method are:
- Ask a question
- Perform a background search
- Create your hypothesis
- Test the hypothesis with an experiment
- Analyze the results of the experiment
- Draw conclusions and decide the next course of action
The success of your marketing will depend on how you implement what you’ve learned from analyzing KPIs in your subsequent campaigns. You can set up two ad campaigns and compare which performs better (A/B testing). Include a control group in the experiment and have measurable variables.
A well-conducted experiment will help you answer critical questions like, “Which customers are best for your CPG product?” and “Which consumer behaviors indicate buying intent?”
Cliffedge Marketing: Your Partner in Performance Marketing
Forget outdated “spray and pray” marketing! Performance marketing empowers your CPG brand to reach the right customers with laser precision, track every ad like a hawk and pay only for the actions that drive sales. Ditch the guesswork and embrace data-driven campaigns that convert curious shoppers into loyal fans.
If you need more information about how performance marketing works or how you can leverage performance marketing to build your CPG brand, talk to the professionals at Cliffedge Marketing. Schedule your free consultation today!