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FMCG marketers predict long-term impacts of Covid-19 on budgets

Covid-19 is set to have long lasting impacts on marketing in the sector, with two-thirds of major brands had marketing budgets cut or frozen, with experiential marketing initiatives put on hold for the long-term.

UK's grocery sales growth slows as lockdown eases (but online soars)

Almost two thirds (63%) of FMCG brands have had their marketing budgets slashed or frozen since the beginning of March, due to Covid-19, as 42% anticipate a negative impact on sales for the second half of 2020, according to a survey by Shopmium, the FMCG mobile app.

  • 63% of FMCG brand marketing budgets cut or frozen

  • 42% anticipate negative impact on sales for duration of 2020

  • 45% of traditional FMCG sales negatively impacted by Covid

  • 77% of D2C brands see positive or no impact on sales

  • 61% of brands have changed marketing messages

  • 85% increase in spend across digital marketing channels

Shopmium, which works with global blue chip brands including Nestle, Nescafe, Mars and Unilever, surveyed 47 FMCG manufacturers, and found that half (45%) of FMCG brands have reported a negative impact on sales in supermarkets and other grocery stores including online since March. In comparison, less than a quarter (23%) of those selling on D2C channels reported a negative impact on sales.

There has been a significant impact on experiential marketing initiatives, such as in-store and out-of-home (OOH) sampling with 93% and 90% of brands respectively saying budgets have decreased or ceased altogether. In-store promotions and point of sale (POS) marketing has also been hit, with two thirds (66%) of brands reporting a decline or halt on these budgets.

Nearly three quarters (72%) of new product development (NPD) launches have been impacted with more than one in 10 (13%) put on hold indefinitely, while 61% of marketing plans have been affected by the cancellation of major events.

On the flipside, digital marketing budgets have been boosted with brands reporting a 36% increase in spend on social media, 31% on online retail media, and 22% on digital display. According to the survey, this upward trend for digital marketing is expected to continue, with 67% predicting an increase in spend on ecommerce in the second half of the year, while 84% expect social media budgets to increase, and 33% predict a rise in digital display budgets.

The activation tools brands plan to use more of in the next six months are also largely digital, with a predicted 64% increase in online retail media, 48% digital media with measurable sales and 36% in mobile promotion platforms. Although over one third (39%) also say they expect to do more in-store promotions.

“Brands had to adapt overnight”

Shopmium’s UK Head, Stuart Sankey, said: “The Covid-19 pandemic has rocked the FMCG sector. The sudden and unprecedented nature of this crisis means brands have had to adapt overnight to major changes in social and consumer habits. Challenges such as the stockpiling of products at the beginning of lockdown, supply chain issues, a pause on NPD, and supermarkets altering product listings based on necessary and in-demand items, have all had a significant impact on brands that have been forced to think on their feet as they try to adjust to this new normal.

“The rise in digital marketing spend and reduction on experiential marketing initiatives is set to continue for the foreseeable. And although many retailers are still in the process of getting online grocery fit for purpose, we don’t anticipate ecommerce slowing down any time soon.

“Rather, FMCG brands are actively seeking new ways to market, so as an alternative to initiatives like sampling, we’re seeing an increase in brands spending on tools such as mobile promotion platforms. We also expect to see more brands either creating or boosting D2C offerings, which have proved increasingly popular during lockdown, likely due to the decreased availability for certain products in-store and on supermarket websites.

“These continue to be challenging times for many FMCG brands, with almost half predicting a negative impact on sales over the rest of the year, but things are looking up. The increase in digital marketing budgets is a clear signal that the industry is on an upwards trajectory, and as we enter 2021, we expect the forecast for most FMCG brands to be much more positive.”

Survey methodology These are the results of a survey completed by marketing members of 47 different FMCG manufacturers.mThe survey featured a range of questions covering the impact that the Covid-19 crisis has had on FMCG businesses.


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