There’s no question that digital marketing’s role has changed the way we advertise and communicate for so many industries. For food and beverage, we have traditionally purchased our needs from traditional brick and mortar outlets. What does this really mean to the industry? I first began to discuss digital marketing from a retailer’s perspective when our team at 7-Eleven was evaluating the marketing spend for 2006 Slurpee media. We discovered at that time there were somewhere in the millions of individuals who had created their own “Slurpee” websites. Incredible. While I can’t recall the reported levels of digital media consumption in 2006, it led to several discussions internally as to whether our consumer would respond to digital. Ultimately, we spent less for digital marketing and more on in-store and tie-in promotional vehicles. Most recently, a “Share of Platform Study Time Spent by Demographics” reported that mobile already accounts for 40% of total media time for younger audiences 18-34. This knowledge can be huge for the convenience retailer as it’s an immediate consumption environment and a drive-up experience.
Fast forward to 2011, I was the CEO of a natural energy shot company where we were making decisions around how we would compete with the media spend of our very large competitor who was spending about $100MM on television. We worked with Recrue Media who presented to us the idea of “claiming our hill” and focusing almost exclusively on digital marketing. While I recognized the incremental growth in digital consumption since 2006, I was still leery that “actual consumption” was really happening. I could understand the level of internet usage but did the consumer really read the ads on-line like they might watch a television commercial. In working with Recrue and their partner, Open X, we could reach highly targeted audiences at one fifth the cost of previous media campaigns. This is clearly a great case study for what digital marketing can do today. As we speak to entrepreneurs about their marketing strategies and where they should spend their money, we can say that today’s environment and the variety and exposure of digital marketing gives us an ability to spend minimally at the same time be much more effective than our predecessor brands were just ten years ago.
In addition, the purchasing of on-line food and beverage versus traditional brick and mortar has continued to increase. Not only are we able to market our brands digitally to drive consumers to stores to purchase, we can advertise to them digitally and then make the sale immediately. There are many success stories with brands who have built businesses on-line. Advertising and the monthly auto-ship approach is especially successful for brands that need to educate the consumer about their product and should be consumed daily (or regularly) for best results. From functional beverages to nutritional bars, this holds true. According to a Harris Poll of nearly 2,000 consumers, 31% of U.S. consumers purchased food on-line in the first half of 2016. Most likely purchasers being 18-34-year-old. Snacks were the most common to have been purchased on line followed by non-alcoholic beverages.
To some degree, it is easy to understand how we can market and sell brands digitally. But, how are brick and mortar retail grocery and other food outlets taking advantage of digital? For the retailer, a lot is dependent on whether they are equipped to support a click and deliver model. These have been tried for years with lackluster success due to profitability. Retailers need to continue to review the models and consider that their best way to address the needs of the consumer may be to embrace “click and collect”; buying on-line but picking up at the store.
In summary, Digital Strategy Consulting published a report of 2016 year in review with the 16 biggest trends in digital. “This is the year video content went live; chat apps grew up, and YouTube ads earned better ROI than TV.” They’ve also accompanied this report with an action plan for 2017. How should we approach 2017? As brands and retailers continue to struggle product development and addressing the needs of the ever-changing consumer, digital becomes even more important.