2020 marketing spend study says private label driving where CPGs put their dollars

Cadent Consulting's marketing spending report shows annual increases in marketing spend by CPGs.

Consumer goods companies put more than 21% of their earnings toward marketing, up 1.3% from a year ago and totaling $225 billion in annual marketing spending. The numbers come from Wilton, Conn.-based Cadent Consulting and its "2020 Marketing Spending Industry Study," which also cites the growth of private label as a leading influential factor in how brands are adjusting their spend.

Within those marketing dollars, the online survey found manufacturers are boosting their spend toward “everyday price” versus programs tied to brand building or equity building. The study found that spending on price and coupons incentives has increased by 8% over the last five years.

Part of this shift is the quality and strength of private brands, according to the report, adding that private label market shares total 25-30% across many categories and retailers.

Last year the consulting group released a study called “The Branding of Private Label” that called on the industry to look at store brands as simply brands, noting that many private label products have elevated their status and deliver a “true promise” to consumers and garner shopper loyalty — two elements that define a traditional brand. The study noted that the private label industry as a whole grew by 4.1% last year compared to national brands at 1.4%, according to its syndicated data.

Keys to that private label growth were increased interest in private label products by millennials, the survey found, with more than half of respondents in that demographic saying they choose a retailer based on its store brand assortment.

Other interesting results from the 2020 Marketing Spending Industry Study include: Dollars spent on digital marketing make up 22% of marketing spend, with just over 13% of dollars going to traditional advertising. The money attributed to digital marketing is nearly triple that of what it was in 2012, according to the study. Also, not surprisingly, trade promotion continues to eat up the bulk of marketing spending, representing 62% of total trade, the report states.