CPG and digital just don’t get along. Well, they haven’t yet found a rhythm. All things “digital” have been disrupting numerous retail categories for more than a decade, but one category that is only recently joining the fun is consumer packaged goods (CPG). Due to the fast-turning nature of the category and unfavorable weight-to-price ratios (among other reasons), CPG products have been slow to shift to eCommerce. While categories like electronics and and fashion have reached 77% and 76% of respondents saying they have bought goods online in the past three months, groceries and household items lag behind at just 45%.
Digital does not equal eCommerce alone though. What about digital marketing? With such a critical part of the value chain effectively unable to go digital, the demand side of the business has also been slower to evolve.
With this slower pace of transformation, CPG does not offer us many winners in the world of digital. However, there is one major player that stands out far in front of the rest. That player is the same company that brings you Gillette razors, Tide detergent and Crest toothpaste. Procter & Gamble (P&G) has been the fastest and most successful because of its willingness to disrupt itself while staying true to the fundamental ideals that made it successful.
P&G’s commitment to leveraging new channels offered by digital advertising has set it apart from other CPG giants. Look at the #LikeAGirl campaign for Always.
Marc Pritchard, P&G’s Global Brand Officer, recently said “You still need a great consumer insight and a great brand idea to connect with consumers emotionally”. In the span of 3 minutes and 18 seconds, P&G takes the viewer on an emotional journey that builds a bond and starts a conversation. The video posted by Always has received close to 60 million views as of this writing (who knows how many viewed other versions of it). That’s 60 million bonds. That’s 60 million conversations. Buying three and a half minutes of television time for such an ad makes no sense. Only with the advent of YouTube does something like this become possible. The ad won the Internet Advertising Competition’s Best Consumer Goods Online Video award and solidified P&G as a digital advertising player.
#LikeAGirl has only been the most recent (albeit prominent) example of P&G digital advertising muscle. Febreze and Gillette have won similar awards in both 2014 and 2015 as well as Downy in 2015.
P&G’s commitment goes beyond creative and includes how they are buying media as well. In a recent announcement, P&G stated it would buy 70% of its digital media programmatically. This commitment signals progress in the ability to automate procedures and harness the full power of rich data from digital media.
Simply beefing up digital advertising would not be enough to be deemed a winner. Someone could see my #LikeAGirl and raise me a Dove Real Beauty. P&G is the undeniable winner in digital because it is lapping competitors when it comes to fulfillment and eCommerce.
This conversation starts and ends with P&G’s online store. While other companies are busy fighting about profit margin hurdles, P&G has recognized that eCommerce will be a journey. In a separate interview, Pritchard said “We will never master all of these technologies. We need to lose our obsession with the technology in the machine, and turn our attention to what really matters – the consumer experience”.
P&G views its online store as a digital lab to learn about its consumers. The website features rich media and the latest eGrocery shopping features including product recommendations within search and dynamic “My List” functionality. There is a shared realization that the direct-to-consumer channel will not make money in the near-term. More importantly, it can drive essential learnings that will drive the rest of the business. P&G has half of Cincinnati (P&G’s headquarters) working on this effort and continues to lead the industry in consumer insights because of it. Most other firms would never entertain this because they are unwilling to disrupt themselves.
Offering the lowest prices in the market and crunching margins for suppliers everywhere, Amazon (nope, not Walmart) has created challenges for every new category it has entered. P&G’s answer? Come on in! There are few bolder moves in the world of retailer management than letting a disruptive player set up shop within your factory but P&G did it. If that’s not a willingness to disrupt itself, I don’t know what is.
The digital race is far from over, but round 1 goes clearly to P&G. Let’s see what the next round brings.