Display advertising remains a key investment area for companies in the retail and FMCG industries. According to E-Marketer, these industries are expected to invest an increasing share of their digital advertising budgets this year and beyond. A primary driver is their focus on top-of-funnel advertising with the main objective of building brand awareness. Display advertising is particularly effective for creating a visual and emotional connection with target audiences, making it very important for consumer products like cosmetics, food, and beverages.

According to E-Marketer and the US CPG Industry Ad Spending 2024 report, investment in the consumer goods industry will grow by 16.6% this year with companies allocating 58% of their budgets to display advertising – slightly above the average of other industries. This means that US investment in digital display advertising in this sector will be around $9 billion higher than spending on search engine advertising.

Why are retailers and FMCG companies increasingly investing in display advertising?

Programmatic display advertising, which uses automated systems and technologies to place ads across digital media, is becoming increasingly important to the retail industry. FMCG companies are using advanced data platforms (such as iPROM Private DMP), leveraging customer targeting tools and harnessing the power of first-party data to manage advertising budgets more effectively and reach their desired customers.

Mobile advertising is taking on a pivotal role in the digital marketing landscape with mobile-first strategies becoming the norm in digitally mature businesses. According to E-Marketer, around 70% of digital advertising budgets in the US retail and FMCG sectors are already being allocated to mobile ads, surpassing the national average.

The role of programmatic platforms and first-party data

Programmatic platforms like the iPROM Programmatic Platform allow companies in this sector to optimise their advertising budgets and target more effectively.
Programmatic advertising allows them to optimise the cost per impression (CPM) of the (right) users and indirectly drive higher quality visits to their content. Companies can also use programmatic advertising in combination with iPROM Private DMP to harness first-party data for more precise targeting, improving the relevance and effectiveness of advertising campaigns. Using data and independent analytics enables them to personalise their advertising messages and ensure greater user engagement.

Challenges and opportunities for the retail and FMCG industries

Despite the strong growth of digital advertising, the retail and FMCG companies are also facing challenges. Inflation, increasing competition from store-brand retailers and fluctuations in consumer confidence rank among the biggest challenges facing the industry. Rising prices are making consumers more cautious in their purchases, leading to greater price sensitivity and frugality. This trend in consumer behaviour was also predicted last year by the Slovenian Consumer Purchasing Journey survey, which we conducted in partnership with Valicon.

For FMCG brands the solution lies in increasing their investment in promotions and focusing on tailored advertising messages that resonate with consumers looking for better value for money.

The growing role of artificial intelligence and data protection technology

Companies in the retail and FMCG industries are realising that they cannot avoid the digitalisation and automation shift. The use of artificial intelligence, the role of first-party data for marketing, the use of technologies to personalise advertising campaigns are becoming increasingly important for effective marketing and optimising advertising investments.

AI-driven tools enable companies to improve the results of their advertising campaigns by automating processes and ad creative design. We have had positive experience with automation, for example using iPROM Spider Ad solutions or iPROM Real-time Creative. These tools showcase the great potential of AI, such as with chatbots for 1-on-1 communication with customers and personalised product recommendations curated by AI.

Companies are increasingly aware that first-party data has become one of their core assets, so they are looking to protect it and not share it with competitors, which is what often happens with platforms owned by Meta and Alphabet. As a result, data strategies that focus on data security and safeguarding the privacy of online media users are becoming a top priority in business strategies.

Despite economic trends, we can expect steady growth in investments in display advertising in the coming years, as it remains the only way to build strong visual brand awareness and strengthen brand positioning in the minds of customers. The use of programmatic platforms, which allow the use of first-person data to buy ad space in digital media, ensures efficiency and accuracy in reaching the target audience. Combining these two approaches allows companies to expand their reach, optimise advertising resources (reducing the cost per user) and increase long-term profitability.