CPG Advertising Spend: An Affinity for Video Ads

Consumer packaged goods (CPG) advertisers have had a roller coaster of a year — especially when you look at how much they’ve invested in desktop video ads since January.

Desktop video has by far been CPG’s favored ad distribution channel in 2020, and it’s benefitted from two distinct spikes in spend in March and June, per Pathmatics marketing intelligence. Earlier this year, CPG advertisers quickly adapted to an increase in market demand for products as the pandemic began by upping desktop video spend. A similar increase happened again in June as Americans continue to spend more time at home, hosting socially distanced graduations or enjoying warmer weather with products from The Hershey Company, PepsiCo, Molson Coors, Kraft Heinz, Frito-Lay, and many more summer staples.

Let’s follow the money and see exactly how CPG brands are spending ad dollars this year.

Video killed the radio star, but it’s helping CPG advertising

All but one of Pathmatics’ top 50 CPG advertisers, ranked by spend, invested in desktop video ads this year. Across industries, advertisers reported they expected to spend an average of nearly $5 million more in 2019 than the previous year, and the increased investment has continued into 2020 for CPG.

Video ads enable CPG companies to humanize their brands more than a static image does. They also typically appear in less busy ad environments: For example, with desktop display ads, your attention might turn to the banner ad at the top of the page, then dart around to various ads as you scroll the page. Video ads, especially ones done well, can quickly grab viewers’ attention and keep them locked into your content for more than just a few seconds at a time.

This is particularly important on social sites such as Facebook, where users are endlessly scrolling their feeds until they come across a video or post that catches their eye. Nestle, for example, has spent 87 percent ($17.6 million) of their Facebook budget on video posts, and Johnson & Johnson spent 82 percent ($12.2 million) on the year.

Big spenders in CPG

Procter & Gamble ($99.7 million) spent, by far, the most on desktop video advertising in 2020 in comparison to other CPG advertisers, and comes only second to Disney ($105 million) across all advertisers Pathmatics tracks.

The Hershey Company and L’Oreal came in a far-behind second and third, spending $31.2 million and $28.8 million, respectively. The huge investment in desktop video makes sense for these brands give their wide range of products:

• P&G showcased its Ivory cleaning brand, to Oral-B, Olay, Puffs, Bounty, Billie razors, Gillette, Pantene, and many more. Pampers took four of ten top desktop video ads by spend for P&G this year, and the company spent nearly $14 million on ads for the diaper brand.

• The Hershey Company focused on its sweet lineup of chocolate goods, including Reese’s and KitKat this year in desktop video ads. In fact, seven of ten top ads by spend focus on Reese’s products, and all were seen on YouTube specifically.

• L’Oreal took advantage of Americans’ recently ignited interest in skincare and makeup tutorials as non-essential stores were (and still are, in COVID-19 hot spots) closed across the country. L’Oreal invested the most desktop video spend in ads from Skinceuticals, Lancome, Maybelline, and Essie nail polish.

Still on-the-go, but less so: Why mobile ad investment is low

In comparison to desktop ad spend, mobile video spend has remained incredibly low. While CPG desktop video spend hit nearly $592 million this year, mobile video reached just over $19.4 million.

This major discrepancy can be attributed to the sheer number of sites that CPG brands are investing desktop video spend in. For example, YouTube received a whopping 68 percent of site spend share for CPG desktop video advertisers this year.

We also saw an increase in CPG advertiser spend for news sites such as CNN, ABC News, Fox News, CBS, and more. News programming has seen a 64 percent increase in viewership from March to May, and CPG brands have capitalized on sending ads to where their audience is.

Stay tuned for the future of video

Strategic video placements are an easy way that CPG advertisers are connecting with audiences across the US. The trend toward desktop video advertising for the CPG industry speaks to the opportunity for highly customizable video content that can be leveraged across multiple ad formats and channels. Desktop video offers advertisers a unique entrance to their audiences’ screens, and it will undoubtedly remain an as format to be reckoned with for years to come.