By Kate DuBois, General Manager of Market Intelligence at Skai
The most valuable asset that consumer brands have is their brand identity. Those that get it right - as Apple did with Airpods and Google did with search - can redefine the market and make their brand synonymous with their category. Advertising is key to building the brand equity required to reach that level. So it’s no surprise that CPG and FMCG brands spend more on marketing than other industries; 24% of their overall annual budget is spent on marketing, which represents 21% of their $4T in yearly sales. The upheaval caused by the COVID-19 pandemic has given marketers new data and insights while highlighting just how essential it is to be agile when it comes to brand marketing.
Brand strategy as a driver of success
In Gartner’s 2020 Annual CMO Spend survey, 33% of CMOs cited brand strategy as their primary and most vital strategic capability, even above marketing analytics. This represents a huge shift compared to the previous year, when only 16% cited brand strategy in their top three priorities. Societal changes associated with the COVID-19 pandemic accelerated this renewed focus, demonstrating how important it is to react quickly to evolving consumer needs and match messaging to consumer sentiment. In times of uncertainty, customers are less interested and able to experiment based on price or novelty and turn instead to the reputable, trustworthy brands with which they have a deep connection.
Many successful brands focused on building trust, human connections, and likeability during a crisis; Reckitt, the health and hygiene family of brands, is a great example. They knew that consumers would turn to tried-and-true health and cleaning products during a global pandemic, so the brand ramped up its emphasis on its mission: to protect, heal, and nurture in the relentless pursuit of a cleaner, healthier world. Other brands changed the tone of marketing messages early on in the pandemic to match the global mood.
KFC, for example, killed its “Finger Lickin’ Good” slogan to stay in step with public health messages. But KFC did it in a humorous way, helping the brand to stand out against a dismal landscape of joyless “we’re all in this together” messaging and building up new brand equity to stand in temporarily for their world-famous slogan.
Brand strategy drivers that were in play before the pandemic became even more important amongst the changes wrought by COVID-19. Purpose-centered direct-to-consumer (DTC) brands have long captured market share due to their brand identities’ alignment with popular causes; the Black Lives Matter protests of 2020 forced even traditional brands to balance profit and purpose in order to appeal to consumers. Private labels and store brands, once considered a lower-cost, lower-quality compromise, have evolved into their own distinct brand identities that can rival those of the bigger CPG players. Private labels enjoyed a lift during the pandemic that hasn’t slowed down since, with 33% more consumers now trying private label brands due to supply shortages and cost consciousness.
Gartner research suggests that the most successful brands take action authentically connected to their brand strategy and value proposition. The definition of success has shifted in the COVID-19 era. Today, CMOs are focused on brand health, or what consumers think and know about their brands. This is a big shift from 2019, when most CMOs were more focused on brand awareness. The change has played out publicly for Amazon, which has historically avoided brand advertising. Over the last year, Amazon invested in TV advertising to directly inform consumers about its COVID-19 response.
Data analytics for a new era
The tactics most CMOs use to measure brand health and other benchmarks are varied: NPS, brand recall, SEO rankings, social sentiment, website traffic, online impressions and clicks, search volumes, and more. These measures haven’t diversified much over the last decade—likely because instituting new tactics and data sources can be slow, resource-intensive and expensive, and thus difficult to scale. Traditional marketing analytics, another treasure trove of intel, are useful in gauging customer reactions, but limited to showing what happened—without the context of why. And much of the data is centered around the one brand, not the broader market ecosystem, so a CMO relying on them is missing out on valuable information about competitors and untapped market share. In a marketing world that’s changing rapidly, timely and holistic, 360-degree brand insights are the key to a nimble brand strategy.
Purchasing behavior has changed so radically in the past five years that the traditional marketing funnel no longer applies. Today, consumer behavior is subject to many touchpoints of influence, including misinformation, and consumer sentiment changes much more quickly than it used to. Real-time insights built upon broad datasets are essential to capturing a thorough understanding of how brands are perceived in the market and what should be done to protect and grow brand equity. CPG leaders recognize that they can arrive at the “aha” moments that inform new strategies much faster by connecting more data sources and extracting more context from those sources.
Connected data and contextualized intelligence can predict trends that can’t be identified through marketing analytics or internal data while brand and competitive benchmarks track all players in the market. Health and fitness tech is a good example of the potential impact of this principle. When Apple first launched the Apple Watch it was marketed as smart jewelry. The brand quickly realized that a shift in brand messaging to focus on health would appeal more broadly - no expensive, time-consuming product development changes required.
Building a beloved brand creates opportunity
Marketing leaders are moving beyond traditional marketing metrics and toward full-circle market intelligence in order to:
- Monitor consumer sentiment and attitudes towards all brands in an ecosystem
- Align their brand with consumer sentiment and social culture
- Assess brand positioning relative to the market
- Inform brand purpose, messaging, and marketing strategies
- Detect emerging market situations that pose a threat to their brand
There’s also a revolutionary tactic that the most successful CPG and FMCG brands are now using to fuel go-to-market success: fully integrating data-driven brand strategy into both marketing and product development. A leading beauty company has realized incredible success by embedding data and insights experts into brand teams at both the category and consumer level. These experts continuously integrate the latest data-driven insights into all aspects of the brand, including packaging, retailers, and other big decisions that are, at their core, intrinsic to brand equity.
The success of a brand depends on getting it all right. Consider the impressive agility of Purple Innovations, makers of the Purple Mattress. Early in the pandemic, Purple recognized an opportunity to better connect with a customer base that was suddenly spending more time at home. They moved quickly to adapt their brand strategy, moving from a retailer to a digital-first sales model, developing a seat cushion for those who were now working from home, and garnering goodwill by partnering with the Precious Dreams Foundation to donate sleep products to children in shelters and foster care. The moves paid off. Mattress sales were up 30% year over year in 2020 and Purple Innovations enjoyed a major slice of that increased business, with sales up 52.3% in Q1 2020 compared to Q1 2019.
Today, any industry-leading or first-mover brand must have insights into the next big trends and current consumer sentiments before anyone else. That advantage comes from access to a wider range of internal and external data sources and the technologies that connect and contextualize it with the speed of AI. With always-on access to validated insights about consumers and markets, better brand strategy that can keep pace with consumers is well within reach today.
About Skai
Skai is a go-to-market engine that powers brand decisions and execution with actionable intelligence for accuracy, speed and agility in making customer connections. Skai's platform includes a suite of data-driven products for market intelligence, omnichannel media activation, testing and measurement, enabling product developers, consumer and market insights teams, brand managers and marketers to make predictions, plan strategies and benefit from connected omnichannel launches. Skai merges the former Kenshoo and Signals Analytics capabilities and for more than a decade, has been trusted by an impressive roster of global brands including Procter & Gamble, Nestle, Johnson & Johnson, Mars and others. With its expanded product suite, Skai is unifying data and helping companies better understand their consumers in real-time. It has seven international locations and is backed by Sequoia Capital, Arts Alliance, Tenaya Capital, and Bain Capital Ventures. For more information visit https://skai.io.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.