Only 41 percent of CPG brands adopted Instagram in 2016: L2 report


L2?s report benchmarks the digital performance of 78 Home Care brands operating in the U.S. across the air care, dish care, food storage, home insecticides, laundry care, paper products, pet care and surface care categories. The report indicates serious stagnation in digital growth for the sector, and also references its dominance by large conglomerates such as Procter & Gamble, a circumstance that may have a serious effect on the pace of digital development in CPG.

?(In 2016) large conglomerates investments in digital came as a direct response to smaller, independent brands like The Honest Company, Seventh Generation or Method,? said Nicolas Bureau, Research Lead, CPG at L2. ?These digital savvy, eco-friendly disruptors have managed to threaten legacy players by getting a disproportionate share of voice on digital media, and a disproportionate share of shelf on e-tailer platforms like Amazon, relative to their offline market share. 

?It ends up being the disruptors who can only afford those emerging tactics to push larger enterprises to use them as well. Brand managers explain their slow transition to digital by arguing that e-commerce only represents a small fraction of their sales ? and fail to recognize that online interactions heavily influence in-store sales.?

Consumer packaged goods
The Digital IQ Index methodology examined different brands? strengths and weaknesses across the four digital dimensions of site and e-commerce, digital marketing, social, and mobile, and classified them as either Genius, Gifted, Average, Challenged, or Feeble.

The report found that 85 percent of index brands outsourced ecommerce to a third party platform, a year over year increase of 15 percent. Sixty-one percent of brands use features such as "shop now" and "buy now" buttons to send consumers directly to a third-party product page, up from 48 percent in 2015, but still a ways away from being able to compete in numbers with online retailers who have integrated sophisticated frictionless ecommerce experiences. 

Mr. Clean put released a much-talked about Super Bowl commercial this year

Some of the most significant findings from L2?s report pertain to the CPG industry?s relationship with social media, with the sector being one of the most lucrative marketing arenas. Unfortunately, social media adoption for Home Care brands was stagnant between 2015 and 2016: index brands with Facebook accounts remained the same at 89 percent year over year, while adoption of YouTube fell 2 points from 84 to 82 percent. 

The Index Home Care brands also proved slow to adopt Instagram, climbing from just 34 percent in 2015 to 41 percent in 2016.

?Marketers are hesitant to spend money on Instagram because it hasn't shown a direct tie to sales,? said Benjamin Zeidler, research director, CPG at L2. ?The ?Buy? button has really only been in use for a few months and lends itself better to Retail than CPG, where purchases are usually made as part of a larger cart/basket. 

?Home Care just isn't suited well for low-funnel purchase influence, but marketers can find utility when looking to drive awareness or engender loyalty. Honest Company has shown the potential for reach, with 3.5 million post interactions during our year of data collection.?

Sterling creative
CPG brands tend towards splashier displays of creative than the mobile platform generally hosts, a phenomenon that could contribute to the lack of social adoption. Procter & Gamble?s latest high-profile creative, a titillating Super Bowl commercial for Mr. Clean, largely gained traction through traditional outlets (see story). 

Old Spice's Hydro Wash campaign

P&G was more forward-thinking in handling its Old Spice property, heralding a new Hydro Wash soap line with a digital-first multichannel campaign (see story).  

?Many brands still aren't getting the mobile basics right,? Mr. Zeidler said. ?Despite 92 percent having mobile optimized sites, most don't offer coupons (just 43 percent in food storage, 38 percent in pet care), which is table stakes for mobile in this category. 

?So for home care brands, I'd recommend focusing on basics (couponing, price checking) rather than delving into more advanced features.?