Despite ongoing economic and labor challenges putting consumers on edge—consumer confidence sank in January, February, and March—CPG advertisers from companies such as Pepsi, Procter & Gamble (P&G), and Mondelēz International spent more than 2b to promote their products. 

Let’s take a closer look. 

The Super Bowl Effect Drives TV Spending in Q1

In Q1, advertisers for nearly 190 CPG companies spent $1.5b on TV ads, up 12% YoY, despite the number of advertisers investing in TV falling by 2% (from 195).

More than 30% of that investment came from advertisers promoting soft drinks, laundry products, chocolate, skincare, and chips, who collectively spent more than $470mm. 

Unsurprisingly, many of those ad dollars went to Super Bowl commercials.

Advertisers for Frito-Lay, for example, teamed up with Jack Harlow, Missy Elliott, and Elton John to promote Doritos. At the same time, Pepsi returned with in-game ads after ending its decade-plus run as the presenting sponsor of the halftime show.

Overall, advertisers for chips and soft drinks boosted their TV budgets by 67% and 16% YoY, respectively (Super Bowl advertising or otherwise).

The Super Bowl wasn’t the only driving force behind Q1’s increase. CPG advertisers also increased their investment in TV leading up to Valentine’s Day.

While advertisers for chocolate decreased spending by a modest 3% YoY, mainly due to declines of 8% and 27% from The Hershey Company (8%) and Mars (27%), they still dished out more than $100mm for one of the year’s biggest consumer holidays.

According to the National Retail Federation (NRT), consumers were expected to spend $25.9b on Valentine’s Day this year, up from $23.9b in 2022. Overall, the NRT predicted the average consumer would spend $192.80, the second-highest figure since 2004.

Other advertisers who increased their investment in TV during the year’s first few months included those promoting laundry (up 3% YoY to nearly $120mm) and skincare products (up 11% YoY to more than $62mm).

L’Oreal and P&G were among the top spenders in the skincare category, accounting for 52% of the category’s investment. That said, L’Oreal’s advertisers decreased their TV budget by 44%, while those for P&G increased theirs by 113%. 

CPG Advertisers Put Their Online Video (OLV) Strategies into Motion

In addition to their significant investments in TV ads, more than 550 CPG advertisers spent $677mm on online video (OLV) in Q1, representing a 66% YoY increase from Q1 2022.  

Almost half of the OLV investment ($320mm or 47%) came from those promoting chocolate, skincare, crackers, dishwashing detergent, and cookies. 

Although spending on OLV still pales in comparison to TV, the strategies in Q1 lend light to the role OLV will play in media mixes moving forward.

Hint: It’ll play a big one.

Despite decreasing their investment in TV, advertisers for chocolate increased spending on OLV to more than $109mm (up from around $40mm in Q1 2022). In particular, advertisers for Lindt Lindor (Chocoladefabriken Lindt & Spruengli) and Kinder Beuno (Ferrero International) each increased OLV spending by at least 100% to more than $15mm.

Interestingly, The Hershey Company increased OLV spending by just 7% YoY to promote names like Hershey’s Bars & Minis, and its brand name.

The increase in OLV spending from chocolate advertisers undoubtedly comes amid advertisers’ efforts to get in front of digital-first generations, but also taking into account that more than a third (35%) of Valentine’s Day purchases still come via online channels. The remaining sales come from department stores (34%), discount stores (31%), and specialty stores (18%), according to the NRF.

Meanwhile, skincare advertisers increased their investment in OLV by 122% YoY to more than $93mm thanks to growth from Johnson & Johnson Services (J&J), L’Oreal, and P&G, who accounted for $76mm or 81% of the OLV investment from skincare advertisers.

A level deeper, advertisers for J&J increased their investment by over 715% YoY to promote Aveeno and Neutrogena, while advertisers for L’Oreal increased their investment by 384% YoY to promote Garnier, La Roche, and SkinCeuticals.

The triple-digital increases from skincare advertisers—P&G also increased its investment by 205% YoY—come during a period of growth for the industry, especially via online channels. Anti-aging products are growing particularly fast, which could spur spending from advertisers who promote these products. 

CPG advertisers take a bite out of OLV

Outside of the personal care sector, advertisers for crackers and cookies also increased spending in OLV.

Advertisers for crackers, including those from Mondelēz International (Ritz and Triscuit) and Kellogg Company (Cheez-It-Snap’d, Kellogg’s Club Crackers, etc.), collectively increased their investment by 275% YoY in Q1.

At the same time, advertisers promoting cookies increased spending on OLV by more than 1,000%, including the busy advertisers at Mondelēz International, who pushed core products such as Chips Ahoy! and Oreo. In Q1, almost all of the ads for Chips Ahoy! were 10 seconds or less.  

Advertisers for Pepsi also increased their investment in TV as part of their ongoing effort to rebrand Sierra Mist to Starry, a new lemon-lime soda aimed at Generation Z’s hearts and taste buds.

Greg Lyons, chief marketing officer at PepsiCo Beverages North America, said in a statement, “With one product dominating the category, consumers deserve another option . . . one that hits different.” He continued, “Starry is bright, optimistic, and rooted in culture and fun.”

The generation-Z-focused soft drink will also push ad dollars to channels embraced by younger consumers, including OTT and social media.

CPG Advertisers Shift to Digital

The one-billion-dollar-plus investment in TV indicates that CPG advertisers aren’t ready to ditch the traditional format just yet. Marquee events like the Super Bowl, March Madness, and big consumer holidays will still warrant spend.

However, the near-universal increases in OLV spending tell us that CPG advertisers are changing course—and where their budgets will likely go for the rest of 2023.

For more insights, sign up for MediaRadar’s blog here.

Consumer packaged goods (CPG) companies experienced unprecedented stress during the pandemic as supply-chain challenges and industry volatility left their bottom lines in limbo.  

Still, many of the industry’s biggest names grew. 

Procter & Gamble (P&G), for example, increased its annual revenue in 2021 by 7.28%, thanks in part to increased demand for cleaning products.

The Hershey Company grew as well ($2.3M in sales, an increase of 6.4%). 

Despite the pandemic making way for a recession, the industry’s resilience during the former could point to how it’ll weather this storm; L’Oréal experienced double-digit growth in H1 2022. 

Is this growth extending to advertisers, or are they taking a reserved approach given the uncertainty? 

MediaRadar Insights on CPG Advertising in 2022

The market volatility appears to be weighing on advertisers, with spending flat through November, although they’ve still spent $8.5b or an average of $773mm per month.

A level deeper, nearly $3.7b (43%) went to digital ad formats, while 49% ($4.1b) and 8% ($686mm) went to T.V. and print, respectively. 

How CPG advertisers spent on digital formats

CPG advertisers mostly divided their dollars between YouTube, retail media, and social media platforms.

• YouTube: Advertisers spent ~$1.5b on YouTube channels related to music (20%), society & culture (13%), gaming (10%), entertainment & movies (7%), and beauty (7%). L’Oreal, P&G, and Unilever were responsible for more than a third of the investment. 
• Retail media: Advertisers invested nearly $912mm in retail media, including Amazon, Kroger, Target, and Walmart. L’Oreal, P&G, and Reckitt were responsible for 12% of the investment.
• Social: Advertisers spent around $845mm on Facebook, Instagram, Snapchat, and Twitter.

While spending in 2022 was mostly flat, it could be on the up and up.

In October, spending increased by 11% YoY, followed by a 20% YoY spike in November, which is likely the result of several factors, including the start of several major sports seasons, return-to-work policies, and in-person schooling beginning in the fall. 

Top CPG Advertising Categories & Advertisers in 2022

Through November, five categories accounted for 76% ($6.4b) of the spending: snacks & desserts, household products, skincare, cosmetics, and hair care.

Snacks & desserts

Advertisers for snacks & desserts, who accounted for 24% of the industry’s investment, increased spending by 1% YoY to ~$2b. That said, they followed the greater industry trend by increasing budgets by 11% YoY in October and 10% MoM in November. 

Mars, Mondelēz, and The Hershey Company accounted for 37% of the investment, collectively spending $752mm. 

Mondelēz, in particular, is in a unique situation. 

While spending is up—Q3 by 15% QoQ and November by 93% MoM—change may be coming. 

In December, the company announced the sale of its gum business, including Trident, which received significant ad dollars in 2022. (Oreo, Ritz, and Trident received 58% of its ad dollars.)

The sale comes a few years after CEO Dirk Van de Put announced the company was turning to a strategy in which “90% of the company’s revenue would come from chocolate and biscuits.” 

The sale of its gum business and acquisition of Clif Bar & Company shows that he’s still committed to that promise.  

As we move into 2023, Mondelēz’s ad strategy will almost certainly mirror these changes, as will its investment in first-party data in preparation for the cookieless world.

Although advertisers for Mars reduced spending for much of the year, they could be in a position to launch campaigns for Extra Gum to fill the void left by Mondelēz. Through November, Extra Gum, M&M’s, and Snickers accounted for 48% of the company’s spend.

Household products

Advertisers for household products (20% of CPG ad spend) decreased spending by 6% YoY despite the spike in the usage of cleaning products. That said, following a Q3 decrease of 4% YoY, spending in November increased by 11% YoY and MoM. 

While the dip in spending seems counterintuitive to market demand, it could speak to these companies’ greater strategies—ones that prioritize other products, including air fresheners/home fragrances, dishwashing detergent, and laundry products. 

Through November, advertisers spent more than $1b to promote these products.  

Henkel, for example, leaned into T.V. to promote Stainlifters, Persil ProClean, and Snuggle, which accounted for 74% of its investment. Although Henkel decreased spending in Q3, November saw a 49% MoM increase from October.

Meanwhile, advertisers for Reckitt, who promoted Air Wick, Finish, and Lysol Laundry Sanitizers (59% of spend) across TV, native, and retail media, decreased spending by 23% YoY in Q3.  

That said, not all advertisers spent less in 2022.

Despite announcing a reduction in marketing, advertisers for P&G increased spending by 6% QoQ in Q3. November was also up by 16% MoM as it launched campaigns for brands like Febreze, Downy, and Downy Liquid Fabric Conditioner. 

Some of these campaigns entered the OTT and CTV world, which is becoming common for industry advertisers. The move to the streaming ecosystem shows advertisers still want a presence in peoples’ living rooms—as does an upcoming push during Super Bowl LVII—but their entry point is changing.  

The mixed signals from P&G also point to the complex nature of these companies. While spending may be down, there are likely products that’ll warrant millions in ad dollars. 

Skincare

Skincare advertisers, who accounted for 19% of spending ($1.6b), increased their investment by 8% YoY. Three industry mainstays—Johnson & Johnson, L’Oreal, and Unilever—were responsible for almost a third of the investment.

For L’Oreal, which increased spending by 32% MoM in November, the spike comes at an interesting time. 

On the one hand, advertisers are innovating by charting their course in the metaverse. Their willingness to invest in channels with limited proof of ROI speaks to what they may do in 2023.  

On the other hand, advertising is putting pressure on its stock; calls from the Board and investors would almost certainly put a damper on spending moving forward. 

Additionally, L’Oreal recently awarded its media account to OMG. The big shift for the world’s third-largest advertiser leaves its budget in limbo. While ad dollars will surely flow, Q1 could be relatively slow as the partnership forms. 

Although industry giants have historically dominated spending across all categories, new entrants are making waves, including Hims & Hers Health, Inc. (previously Hims Inc.). 

Founded in 2017, the company has grown its revenue to more than $400mm. The explosive growth has understandably translated to a booming ad budget.

Through November, advertisers increased spending by nearly 80% YoY. As they continue their attack on once-unencumbered grounds, ads will follow even as the recession limits consumers’ discretionary income.

CEO Andrew Dudum said that the company’s in a position to “not only thrive in a recessionary dynamic but also to take meaningful market share.” He continued, “We leaned in aggressively to efficient marketing where it was working as others were pulling back.”

A Tale of Two Tapes

Ad spending is typically a function of company revenue. 

Despite many CPG companies growing during the pandemic and the onset of the recession, ad spending remained flat. Many companies decreased spending—some more than others. 

Advertisers for cosmetics and hair care, who each accounted for 7% of spending, decreased budgets in November by 177% and 140% YoY, respectively. For cosmetics advertisers, the decrease comes despite the lipstick effect, which often provides immunity to beauty brands. 

While the mixed signals make it difficult to predict how CPG advertisers will approach the new year, it seems likely that spending will remain steady and lack any significant ebbs and flows (although they’re still in a position to spend billions). 

For more insights, sign up for MediaRadar’s blog here.