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CPG Advertisers Reel in Consumers with Video

CPG Advertisers Reel in Consumers with Video

Consumer confidence continues to trend downward, but you wouldn’t know it by looking at what Consumer Packaged Goods (CPG) companies spent on TV and online video (OLV) in Q1 2023.  

Despite ongoing economic and labor challenges putting consumers on edge—consumer confidence sank in January, February, and March—CPG advertisers from companies such as Pepsi, Procter & Gamble (P&G), and Mondelēz International spent more than 2b to promote their products. 

Let’s take a closer look. 

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The Super Bowl Effect Drives TV Spending in Q1

In Q1, advertisers for nearly 190 CPG companies spent $1.5b on TV ads, up 12% YoY, despite the number of advertisers investing in TV falling by 2% (from 195).

CPG TV advertising chart

More than 30% of that investment came from advertisers promoting soft drinks, laundry products, chocolate, skincare, and chips, who collectively spent more than $470mm. 

CPG drivers in TV advertising chart

Unsurprisingly, many of those ad dollars went to Super Bowl commercials.

Advertisers for Frito-Lay, for example, teamed up with Jack Harlow, Missy Elliott, and Elton John to promote Doritos. At the same time, Pepsi returned with in-game ads after ending its decade-plus run as the presenting sponsor of the halftime show.

Overall, advertisers for chips and soft drinks boosted their TV budgets by 67% and 16% YoY, respectively (Super Bowl advertising or otherwise).

The Super Bowl wasn’t the only driving force behind Q1’s increase. CPG advertisers also increased their investment in TV leading up to Valentine’s Day.

While advertisers for chocolate decreased spending by a modest 3% YoY, mainly due to declines of 8% and 27% from The Hershey Company (8%) and Mars (27%), they still dished out more than $100mm for one of the year’s biggest consumer holidays.

According to the National Retail Federation (NRT), consumers were expected to spend $25.9b on Valentine’s Day this year, up from $23.9b in 2022. Overall, the NRT predicted the average consumer would spend $192.80, the second-highest figure since 2004.

Other advertisers who increased their investment in TV during the year’s first few months included those promoting laundry (up 3% YoY to nearly $120mm) and skincare products (up 11% YoY to more than $62mm).

L’Oreal and P&G were among the top spenders in the skincare category, accounting for 52% of the category’s investment. That said, L’Oreal’s advertisers decreased their TV budget by 44%, while those for P&G increased theirs by 113%. 

CPG Advertisers Put Their Online Video (OLV) Strategies into Motion

In addition to their significant investments in TV ads, more than 550 CPG advertisers spent $677mm on online video (OLV) in Q1, representing a 66% YoY increase from Q1 2022.  

CPG online video advertising chart

Almost half of the OLV investment ($320mm or 47%) came from those promoting chocolate, skincare, crackers, dishwashing detergent, and cookies. 

CPG drivers in online video advertising

Although spending on OLV still pales in comparison to TV, the strategies in Q1 lend light to the role OLV will play in media mixes moving forward.

Hint: It’ll play a big one.

Despite decreasing their investment in TV, advertisers for chocolate increased spending on OLV to more than $109mm (up from around $40mm in Q1 2022). In particular, advertisers for Lindt Lindor (Chocoladefabriken Lindt & Spruengli) and Kinder Beuno (Ferrero International) each increased OLV spending by at least 100% to more than $15mm.

Interestingly, The Hershey Company increased OLV spending by just 7% YoY to promote names like Hershey’s Bars & Minis, and its brand name.

The increase in OLV spending from chocolate advertisers undoubtedly comes amid advertisers’ efforts to get in front of digital-first generations, but also taking into account that more than a third (35%) of Valentine’s Day purchases still come via online channels. The remaining sales come from department stores (34%), discount stores (31%), and specialty stores (18%), according to the NRF.

Meanwhile, skincare advertisers increased their investment in OLV by 122% YoY to more than $93mm thanks to growth from Johnson & Johnson Services (J&J), L’Oreal, and P&G, who accounted for $76mm or 81% of the OLV investment from skincare advertisers.

A level deeper, advertisers for J&J increased their investment by over 715% YoY to promote Aveeno and Neutrogena, while advertisers for L’Oreal increased their investment by 384% YoY to promote Garnier, La Roche, and SkinCeuticals.

The triple-digital increases from skincare advertisers—P&G also increased its investment by 205% YoY—come during a period of growth for the industry, especially via online channels. Anti-aging products are growing particularly fast, which could spur spending from advertisers who promote these products. 

CPG advertisers take a bite out of OLV

Outside of the personal care sector, advertisers for crackers and cookies also increased spending in OLV.

Advertisers for crackers, including those from Mondelēz International (Ritz and Triscuit) and Kellogg Company (Cheez-It-Snap’d, Kellogg’s Club Crackers, etc.), collectively increased their investment by 275% YoY in Q1.

At the same time, advertisers promoting cookies increased spending on OLV by more than 1,000%, including the busy advertisers at Mondelēz International, who pushed core products such as Chips Ahoy! and Oreo. In Q1, almost all of the ads for Chips Ahoy! were 10 seconds or less.  

Chips Ahoy video insights data

Advertisers for Pepsi also increased their investment in TV as part of their ongoing effort to rebrand Sierra Mist to Starry, a new lemon-lime soda aimed at Generation Z’s hearts and taste buds.

Starry video insights data

Greg Lyons, chief marketing officer at PepsiCo Beverages North America, said in a statement, “With one product dominating the category, consumers deserve another option . . . one that hits different.” He continued, “Starry is bright, optimistic, and rooted in culture and fun.”

The generation-Z-focused soft drink will also push ad dollars to channels embraced by younger consumers, including OTT and social media.

CPG Advertisers Shift to Digital

The one-billion-dollar-plus investment in TV indicates that CPG advertisers aren’t ready to ditch the traditional format just yet. Marquee events like the Super Bowl, March Madness, and big consumer holidays will still warrant spend.

However, the near-universal increases in OLV spending tell us that CPG advertisers are changing course—and where their budgets will likely go for the rest of 2023.

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