What marketing agencies get wrong about grocery and CPG

The grocery and consumer packaged goods (CPG) industries are undergoing a profound transformation, and yet many traditional marketing agencies fail to adapt to this changing landscape. Victor Lee, the president of Advantage Unified Commerce, highlights some critical mistakes agencies are still making when marketing to grocery and CPG brands.

Common Mistakes Agencies Make

1. Misunderstanding the Complex Dynamics of CPG and Grocery Industries
   Marketing agencies often oversimplify the grocery and CPG sector. It’s not just about pricing, shelf space, or sales metrics anymore. The sector today is shaped by a range of factors including consumer behavior, technological innovation, and supply chain dynamics, all of which must be considered holistically when crafting effective marketing strategies.
2. Over-analysis and Data Paralysis
   Many CPG brands and grocers already have enough data to make informed decisions. However, agencies tend to over-analyze the data, which can result in wasted time and resources. In the fast-moving digital world, where platforms like Amazon and Shopify enable quick storefront launches, agencies need to move quickly and not get bogged down by excessive data analysis.
3. The “Commerce Victim Mentality”
   While global challenges, including post-pandemic disruptions, continue to affect business, relying on them as excuses hampers growth. The constant state of change in the market, which COVID highlighted, demands businesses to be agile and adaptable, rather than feeling victimized by circumstances. Agencies must evolve their mindset to embrace change and look for innovative solutions.

Shifting Mindsets for Effective Marketing

1. Organizational Design Shift
   Traditionally, digital marketing has been seen as a separate division from the rest of marketing. Victor Lee advocates for a shift where digital and commerce are integrated into the core marketing structure, rather than existing as separate groups with siloed decision-making. This will create a more unified approach to tackling consumer demands across various channels and platforms.
2. Understanding Consumer Behavior in a Multi-Channel World
   Agencies still rely on outdated profiling techniques, assuming consumers fit into neat personas. However, the path to purchase is much more dynamic today. With so many touchpoints, the traditional top-down sales funnel is no longer relevant. Consumers interact with brands in multiple ways, and agencies need to understand the “why” behind shopping habits across various channels, whether in-store or online.
3. Retail Media Networks as a Strategic Asset
   Retail media networks should not be viewed solely as a revenue-generating tool for retailers but as a means to transform the shopping experience. By seeing each retail location as its own media platform, marketers can optimize in-store efforts, improving customer experiences and generating more meaningful engagement with shoppers.
4. Advanced Measurement
   Marketers need to go beyond superficial metrics like impressions. Victor Lee emphasizes the importance of accurate measurement to understand attributable revenue growth and not just the visibility or reach of a campaign. By incorporating multiple factors and assessing them against baselines, agencies can provide more meaningful insights that directly contribute to the business’s growth.
5. Automation with a Human Touch
   Automation is essential for aggregating and analyzing data at scale, but it must be complemented by human insight. While data aggregation tools are crucial, human ingenuity is necessary for testing hypotheses and deriving actionable insights. Agencies must strike a balance between technology and human analysis to refine strategies and improve marketing effectiveness.

Best Practices for Agencies in the Grocery and CPG Sector

• Reimagine Retail Media Networks: View them not just as a source of incremental revenue but as a way to optimize in-store experiences and boost customer engagement.
• Embrace Advanced Metrics: Go beyond soft metrics like impressions to incorporate more comprehensive and actionable data that measures true business impact.
• Combine Automation with Human Insight: Use automation to aggregate data, but ensure human input is used to interpret the data, refine hypotheses, and make strategic decisions.

Conclusion

Agencies must adapt to the rapidly evolving grocery and CPG landscape, embracing innovation, agility, and a holistic view of consumer behavior. Traditional, rinse-and-repeat strategies are no longer sufficient in 2023. By rethinking their approach to organizational design, data analysis, and consumer behavior, agencies can help brands thrive in an increasingly complex and competitive market.