Outlook 2006: CPG Marketers Find Web Is Place to Build RelationshipsConsumer packaged goods marketers have been rumored to "not need the Internet." And by the paltry 1 percent to 2 percent of their media budget they allocate to the channel, it appears that they are ignoring interactive.
However, CPG marketers are waking up. Procter & Gamble Co. - a client, for full disclosure - has a much publicized and documented motto: "The Consumer is Boss." And it's this boss who is convincing CPG marketers of the value of interactive.
I'm not just talking about the presence of consumers online. Consumers are leading CPG manufacturers online because this is where they forge relationships with brands nowadays. It's where they do their research and where they make their decisions. But those moments of truth aren't the story for CPG companies.
Awareness and trial tactics don't drive CPG sales, except for product launches. The economics don't work: The brands are too low involvement, the purchase frequency and dollar ring are too small and the margins too slim to focus on driving purchase once. Instead, CPG is driven by focusing on loyalty, by creating and sustaining a relationship with consumers. But classic customer relationship marketing hasn't worked for CPG because of the cost of tracking small, high-volume purchases and the lack of a simple way to begin the dialogue with consumers.
However, leveraging interactive in a relationship marketing program provides for a lower-cost entry point and a simpler means to sustain the dialogue. And if CPG companies don't take advantage of this, the consumer will exercise her "boss ability" and vote with her wallet. Then someone else will dominate the relationship with that consumer.
Beyond the economics, interactive is a great hub for this new relationship because it enables two main criteria: the relationship must put the consumer in control, and it must base the relationship on something beyond the product.
Interactive is the ultimate control medium for consumers. They decide what, when, where and how they engage with a brand. Innovations such as podcasting or RSS help enable this control. Other forms of control include instantaneous segmentation applications that let a consumer self-diagnose his need and provide solutions immediately. An example of this is P&G's Mr. Clean Bathroom Explorer. This rich media application lets consumers see a demo customized to their particular unmet need, all the while tracking the respondent's path as a form of market research.
Finally, control of the brand is ultimately in consumers' hands via advocacy enablers. Though gaining unpaid product mentions in blogs or message boards and seeing homemade TV spots circulate the Web may scare the new brand manager, empowering consumers helps build the relationship by providing them a feeling of ownership of the brand, thereby creating long-term loyalty.
Interactive also lets the brand elevate beyond the product by basing the relationship on a higher-order platform. Successful relationship programs leverage content as a component for increasing the level of involvement of traditionally lower-order consumer packaged goods. And interactive facilitates this easier than the old soap opera model, allowing for frequent, customized one-to-one communication. Also, interactive lets brands team up around a consumer interest area, creating cohort marketing programs. An instance of this is P&G's megabrand program HealthExpressions. Content such as articles, podcasts and healthy recipes elevate lower-involvement personal healthcare brands such as PeptoBismol, Metamucil, Vicks, Pur and Thermacare into "inspired health solutions."
By providing for depth of sale and long-form information, the interactive hub of this program can offer a relationship that is much deeper than a 30-second TV spot. And by continuing a program such as this month after month, consumers respond with a measurable increase in loyalty. So while interactive is enabling different aspects of relationship marketing programs, it's the consumer who is pulling CPG manufacturers online.