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3 Ways to Make the Most of Your Supermarket Advertising Spend

September 9, 2020

Everything marketers knew, thought they knew or predicted about 2020 was wrong. Who could have predicted a pandemic?

Despite the disruption, food retailers have seen their sales, both offline and online, soar, reversing a long-term trend, according to the Food Marketing Institute’s 2020 U.S. Grocery Shopper Trends reporti released in June.

Restaurants and others in the food service sector had been grabbing a bigger and bigger share of food spending dollars since the 1990s, finally eclipsing stores’ share in 2018. But that trend slammed to a stop in March when restaurants were forced to close or go to takeout-only.

Food retailers benefited. In March, retailers’ monthly revenue jumped by more than 25% compared to February, the FMI study reported. By April, their share of food spending climbed to 68%, collapsing more than eight years of dollar growth into a few chaotic weeks.

Higher sales, not budgets

But higher sales have not necessarily meant bigger supermarket advertising budgets. With no certainty about whether these shopping patterns will continue, food retailers remain cautious. For one thing, consumers have economic concerns that could impact shopping budgets.

“FMI’s study found that 20% of shoppers aren’t sure if they will have enough money to pay for food, and half are extremely concerned (25%) or somewhat concerned (25%) about having enough food for their household,” Supermarket News reported.ii

A marketing opportunity and necessity

Other factors at play include how safe consumers feel returning to restaurants as they gradually reopen, how much discretionary income they have and whether supermarkets can step into the restaurant’s void with their own product offerings, FMI maintained.

This makes how food retailers communicate with shoppers more important than ever, placing an extra burden on often limited budgets. To stay competitive, supermarkets must advertise, using the best possible media mix. Even for those being outspent, there are creative ways to stretch supermarket advertising dollars.

Follow the data to develop a solid top & bottom funnel strategy.

Take a close look at customer data, competitive spend and market demographics—market by market. We are nearing a point where grocers will have to start competing with each other for market share (current share gains have primarily come from restaurants.) Grocers who have an integrated mix supported with customer data will be best positioned to maintain the “share of voice” needed to maintain and gain share. In practice that means a strong top-funnel mass media mix for awareness paired with good customer data to refine and personalize bottom of funnel marketing to increase conversions.

Go somewhere new.

Because of its reach, broadcast should never be off the table. It’s becoming a much needed top-funnel channel. Streaming via connected TV and audio gives marketers many more delivery options to tell their story effectively and economically. Cable systems also offer affordable sub-market DMA buys There are almost always niche buys or specialize promotions that can have a big impact. These will reinforce behavioral changes by customers who became become more frequent grocery store shoppers during the pandemic vs. having them revert to patronizing restaurants. It’s important to own your neighborhood, against all the competition.

Test frequently & adjust spend.

Frequent small, focused tests help supermarkets adjust advertising spend throughout the year. Use measurement tools tailored to your situation to find out what’s working and what isn’t so that dollars spent create the biggest effect. These small adjustments deliver results that stack up to a big impact on performance. The more often you learn new things, the quicker you can take action to improve your marketing spend and stretch dollars. Lots of little opportunities to do better add up.

Smaller supermarket advertising budgets don’t have to mean lost opportunities. And in this period of extreme disruption, no one can afford to miss an opportunity to grow sales and market share. Small budgets, managed at a super local level, can be very effective from a performance and learning perspective.