Adapt your CPG advertising campaign with inflation in mind

August 22, 2023 | 4 minute read
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Key takeaways for digital advertisers to work with on their CPG holiday campaign:

  1. Private labels and lower priced brands are eating into premium profits by producing quality products at lower price. Advertisers must tout differentiators to win a spot on the holiday shopping list. 
  2. Younger generations are willing to spend more during the holidays than their parents' generation. Target these holiday hosts with demographic and CPG audiences or by surrounding trending content online.
  3. E-grocery is growing, and with it, the need to target consumers across the three+ channels they utilize to complete their holiday meal purchase journey. Utilize digital audiences that are portable across channels for unified messaging.

 

With traditions in family feasts, fantastic parades, and deliciously festive market outings, the holiday season is rightfully centered around food. Unfortunately, inflation has driven up the grocery bill, potentially cutting into the budget for glutinously delicious dinners and celebratory sparkling beverages. Let's dive deeper into inflation and how it's led consumers to change their grocery purchase habits. 

First, what has caused the inflation of grocery products? Is it just the post-covid downturn? Or does global warming contribute to sky-high prices? 

Next, we pulled together McKinsey's CPG research to give you a comprehensive view of how the effects of inflation have hit the globe, now weighing on both high- and low-income households this holiday season. 

Prices have increased for a variety of reasons. 

Inflation has affected every industry, from cars to clothes, but why has CPG grocery spiked in price specifically? Let's dive in: 

There are two different types of inflation, demand-pull inflation, and cost-push inflation. 

Demand-pull inflation occurs when the demand for goods in the economy exceeds the ability to produce them. For example, when consumers were first locked down, we saw many CPG products fly off the shelf faster than manufacturers could replace them - think hand sanitizer, toilet paper, and baker's yeast.

Cost-push inflation occurs when the rising cost of producing goods increases the price of the final product. For example, prices rose when the demand for eggs and chicken collided with the avian flu. This type of inflation has had the most lasting impact we're seeing today, with many factors contributing to increased prices. Beginning with supply chain disruptions during COVID, when workers became sick, transportation bottlenecked, and the production of goods decreased - raising prices across all industries. To get consumers back to work post-lockdown, increased wages also led to an inflated price of food. Outside of the pandemic, global warming's impact on severe weather has caused farms to see a decrease in final goods due to floods, droughts, and fires. And now, with the war in Ukraine, the global supply of wheat, corn, sunflower oil, and fertilizer has been impacted, in addition to rising energy costs. 

Consumers are cutting back!

While optimism is increasing, consumers still favor less expensive brands over premium products. According to McKinsey, 80% of US consumers said they're changing their shopping behavior by trading down, while 8 in 10 European consumers say they are taking action to alleviate the ongoing pressure on household income. While consumers find ways to save, private labels boosted in performance, with 84% of Europeans saying the quality of private labels is similar to the quality of branded products. 

To regain your staple status on the dining table, you must tout your brand differentiators and personalize offers to inspire festive purchases. Work with media influencers to craft your message in a native environment centered around holiday meal planning, then amplify your work by surrounding relevant food, home, and mommy blogs with Oracle Advertising Contextual Intelligence

Who is still spending the big bucks? 

If you're selling something new or indulgent this holiday season, look no further than Millennials and Gen Z. Younger consumers are not only 60% more interested in splurging on ingredients but are also 5x more likely to believe that new brands are better and more innovative than their older counterparts. 

To target likely holiday hosts across the open web, surround trending content with Oracle Contextual Predicts categories, or test into Oracle Content Affinity Targeting to appear against articles that are popular with younger generations. 

To reach these decadent holiday consumers everywhere they engage online, utilize demographic audiences to home in on generational targeting and CPG audiences to go after past buyers. Oracle Advertising has a wealth of syndicated audiences to choose from, and options to create custom CPG audiences based on category, brand, item, timeframe, spend and more.  

E-grocery is growing! 

COVID has had a lasting effect on the consumer mindset, including online grocery shopping. Over 60% of US and Asian countries have continued behaviors such as click-to-collect and grocery delivery, while 17% of Mexican consumers stated that they still do most of their shopping online post-lockdown. Outside of eCommerce growth, 81% of all consumers research and browse across multiple channels before a single in-store or online transaction is made, making it vital to follow your customer across web. 

To make the coveted holiday shopping list, leverage Oracle Advertising past-purchase audiences – like Online Grocery Store Shoppers - to target likely buyers with a unified message across CTV, social, streaming audio, open web and more.

Download our Holiday CPG and Thanksgiving guides for additional insights, or request a consultation to build a bespoke targeting plan 

Samantha Dietz

Samantha manages sales and marketing materials for all products across
Oracle Advertising. Her background includes 9+ years of experience in the
digital advertising landscape, excelling in collaborating with cross-functional
teams and nurturing customer relationships, helping to deliver compelling
presentations and sales materials. Samantha’s dedication to content creation
stems from a genuine passion for captivating and inspiring customers at
every step of their purchase journey.


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