As COVID-19 impacted retail in a multitude of ways, it isn’t surprising that overall marketing spending from consumer goods companies would decrease in 2020.
Ken Harris, managing partner at Cadent Consulting, presented findings from the firm’s 2020 Marketing Spending Survey at PLMA Live! Presents Private Label Week, noting that spending was down $16 billion from CPGs in 2020.
With shoppers making less trips to the store, buying more in hoarding or through e-commerce, retailers and manufacturers didn’t need to spend on marketing, so the result was a dip in overall spend, Harris said. However, a glimpse at 2021, Cadent Consulting estimates marketing spend driving back up again, estimating overall marketing spending to reach $29 billion.
For the report, Cadent surveyed more than 700 retailers, manufacturers and shoppers to look specifically at marketing spending and trends.
The big story, of course, was how quickly e-commerce has taken off, seeing 10 years of e-commerce growth compressed into 10 months, Harris said, adding that e-commerce went from 11% of total sales in 2019 to 19% in 2020.
Digital marketing will take on a continued role going into 2012, as COVID-19 remains a fact of life, Harris said. The study said that among manufacturer respondents, digital spending was up nearly 25% and expects to be up 27.1% in 2021. Fro retailers, digital spending expects to be up 22%. Retailers and store brands will need to keep pace online.
And both retailers and manufacturers know this, as Harris noted in the study that both manufacturers and retailers ranked private label as a top driver for 2021.
“Next to e-commerce, private label is the most important thing to retailers, which bodes well for private label manufacturers,” Harris said.
The study ranked factors that could drive or constrain retail in the months ahead, looking at e-commerce, supply chain, retailer relationships, a reduced assortment and private label. For retailers, e-commerce and private label were one and two by a wide margin.