In US CPG Industry, Programmatic's Becoming an Automatic Buy - eMarketer

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In US CPG Industry, Programmatic's Becoming an Automatic Buy

Nearly two-thirds of CPG digital ad budgets will be spent programmatically this year

May 29, 2015

The US consumer packed goods (CPG) industry isn’t the biggest spender online, but its digital ad spend is growing more quickly over eMarketer’s forecast period than that of most other verticals. We estimate the CPG and consumer products industry will increase digital ad spending by a compound annual rate of 14.0% between 2014 and 2019, below only the entertainment industry (14.3%) and the automotive industry (14.2%), according to a new eMarketer report, “The US CPG and Consumer Products Industry 2015: Digital Ad Spending Forecast and Trends,” part of our new report series, “Digital Ad Spending Benchmarks by Industry.”

US CPG & Consumer Products Industry Digital Ad Spending, 2013-2019 (billions, % of total digital ad spending and % change)

This year, CPG firms will spend just shy of $5 billion on digital ads in the US, including all ad formats served to PCs, mobile phones, tablets and other internet-connected devices. That translates to 8.5% of US digital ad spending this year, and the industry will gain share to account for 9.0% of the total, or $8.17 billion, by 2019.

Some of the biggest CPG advertisers around—which include some of the largest advertisers around, period—have cut paid media budgets recently. Kantar Media reported that Procter & Gamble spent 14.4% less on advertising in 2014 than 2013, while L’Oréal cut spending by 8.3%. But even as these advertising giants spend less, they expect their ad campaigns to accomplish more. To do that, they are leveraging immense stores of data—both third-party and their own—to determine how and where to spend ad dollars.

US CPG & Consumer Products Industry Digital Display Ad Spending, by Transaction Method, 2015 (billions and % of total)

They’re also looking to programmatic and mobile advertising.

Nearly two-thirds of CPG and consumer products digital display ad budgets this year will be spent programmatically, eMarketer estimates. Data, of course, is the driving force in programmatic. For CPG brands, which have been able to amass client data from third-party sources such as retailers and loyalty programs, the challenge is to corral that data and make it useful.

CPG’s share of spending on mobile continues to be on the low end in relation to other industries, including retail, financial services and automotive.

But within the vertical, spending on mobile is rapidly increasing. In 2015, eMarketer forecasts, mobile will account for 47% of digital ad spending—$2.33 billion—in the industry. That is up from 33.5% of spending, or $1.41 billion, in 2014.

eMarketer’s forecasts and estimates are based on an analysis of quantitative and qualitative data from research firms, government agencies, media firms and public companies, plus interviews with top executives at publishers, ad buyers and agencies. Data is weighted based on methodology and soundness. Each eMarketer forecast fits within the larger matrix of all its forecasts, with the same assumptions and general framework used to project figures in a wide variety of areas. Regular re-evaluation of available data means the forecasts reflect the latest business developments, technology trends and economic changes.

Download the executive summary of the report here.

eMarketer corporate subscription clients can view the full report here.

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