One in five Australians who took up online shopping during the pandemic say they will stay with regular digital buying, according to analysis by ROI agency Zenith.
A national ZenPoll carried out last month shows that, while 29% of Australians started doing more online grocery shopping as a result of the pandemic, 21% say they will continue to do so even when the crisis is over.
Zenith Australia’s head of strategic insights, Kim Xavier: “As restrictions have been eased or removed, the convenience of the online experience is what has kept many new converts online.
“So balancing the benefits of the in-store experience with the convenience of online will be a challenge for retailers.”
Overall, the ZenPoll found there is still a strong preference for in-store grocery shopping among 74% of Australians, versus 24% who prefer to do their groceries online.
However, as supermarket retailers are forced to be more digitally advanced to adapt to the ups and downs of COVID-19 restrictions, many are investing heavily in their eCommerce and click and collect services.
On digital ad spend, Vikki Pearce, head of digital, Zenith Melbourne, says the online nature of these services is increasing supermarket retailers’ focus on digital media investment in what has otherwise been a softening market.
And FMCG (fast-moving consumer goods) brands are following, particularly over-indexing in their online video spend. as they strive to keep top of mind and capture share of wallet.
FMCG ad spend
That’s well ahead of the 4% annual growth forecasts for FMCG ad spend as a whole in the 12 markets -- Australia, Canada, China, France, Germany, India, Italy, Russia, Spain, Switzerland, the UK and the US -- included in the report.
FMCG brands still rely heavily on traditional TV, spending 39% of their budgets on television advertising in 2020, compared to 24% for the average brand.
Excluding China, where FMCG brands have already adopted digital advertising as their main form of commercial communication, FMCG brands spent 52% of their budgets in television, compared to an average of 26%.
Their principal goal is to maximise brand awareness and reach so they are front of mind at the point of purchase for as many consumers as possible. Zenith says this is something that TV has historically excelled at, but its declining reach – particularly among the young – is making it less effective.
FMCG brands are, therefore, following audiences to digital channels.
Zenith forecasts that FMCG digital ad spend will increase to US$14.9 billion in 2023 from US$12.3bn in 2020, and that its market share will rise from 46% to 49%.
After the pandemic, with its FMCG stimulus, brands will look to support and expand ecommerce capabilities.
But the big challenge will lie in using digital to replace television effectively – creating large-scale brand awareness while managing frequency.
Zenith says the rise of Subscription Video on Demand (SVOD), which locks away high-value audiences from direct advertising, will make this even harder, as will the end of third-party cookies.
“FMCG brands need a new comprehensive approach to reach-based planning,” says Ben Lukawski, global chief strategy officer, Zenith.
“That means combining TV, paid advertising in online video, virtual placement in SVOD platforms and perhaps even a presence in gaming, using first-party and second-party data to prevent duplication and optimise incremental reach.”
Out-of-home is the exception to the declining reach of traditional media. As traffic returns to normal after the COVID-19 slump, the spread of digital displays will make it even more effective at reaching consumers with targeted and relevant ads near the point of sale.
FMCG out-of-home advertising is forecast to grow by 9% a year from 2020 to 2023, while its market share rises from 6.1% to 7.0%, slightly ahead of its pre-pandemic share of 6.8% in 2019.
FMCG adspend to track total market growth as it recovers from 11% slump in 2020 ad expenditure by FMCG brands fell more sharply than the ad market as a whole in 2020, shrinking by 10.7% to US$26.7bn.
This was not because of any shortfall in demand. Demand soared as people stopped eating in restaurants, cafes and bars and shifted consumption to the home.
Instead, FMCG companies were faced with the challenge of ramping up production while supply chains were disrupted, and using limited available distribution to get their products onto shelves in stores, or to consumers’ homes.
Many FMCG companies cut back on promotional activity for products they couldn’t get to consumers quickly enough to satisfy demand, and invested in distribution infrastructure instead, especially ecommerce operations and partnerships.
Zenith forecasts that the recovery of FMCG ad spend will roughly track the market as a whole in 2021-2023.
A bounce-back is almost inevitable in 2021 given the comparison with the sharp drop-off in 2020, particularly during Q2, though it will still be 6% below 2019 levels.
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