US CPG Industry Digital Advertising Trends for 2024: A Strategic Perspective for Growth Leaders
December 19, 2024Executive Summary
The US Consumer Packaged Goods (CPG) industry is set to spend nearly $50 billion on digital advertising in 2024, reaffirming its position as a leading driver of digital growth. At 16.5% of the digital ad spend pie, CPG brands remain crucial to ad publishers and marketplaces. This remarkable growth highlights opportunities for brands to leverage data-driven strategies, align with emerging trends, and optimize their marketing efforts to capitalize on this expanding digital landscape.
With a robust growth trajectory of 16.6% in 2024, industry leaders need to focus on sustainable strategies as growth is expected to moderate in 2025. By leveraging actionable insights such as mobile-first campaigns, embracing data collaboration, and investing in emerging formats like Connected TV, brands can ensure long-term success. For growth leaders, these metrics are signposts pointing towards emerging opportunities and challenges within the digital advertising ecosystem, emphasizing the importance of agility and foresight.
For growth leaders, these metrics are not just numbers; they are signposts pointing towards emerging opportunities and challenges within the digital advertising ecosystem.
Strategic Opportunities in Digital Advertising Growth
The remarkable growth in CPG digital ad spend during 2023–2024 stems from a rebound after pandemic-induced shifts, showcasing the resilience and adaptability of the industry. This growth, however, brings questions of longevity. As growth moderates in coming years, leaders must pivot to strategies that ensure lasting value while addressing evolving consumer expectations and market challenges.
Preparing for the Slowdown
The deceleration predicted for 2025 demands proactive planning and strategic adjustments. By focusing on data-driven decision-making and diversifying ad formats, leaders can weather these changes effectively. Investments in AI-driven analytics and robust performance metrics are crucial for optimizing ad performance and ensuring efficient budget allocation. Such tools enable brands to identify high-performing segments and optimize their campaigns to maximize ROI even in a slowing growth environment.
Responding to Consumer Behavior Trends
Post-pandemic consumers prioritize value, experience, and personalized interactions, prompting advertisers to shift their focus. CPG advertisers have been leveraging targeted promotions aimed at cost-conscious buyers, creating value-driven campaigns that resonate with diverse demographics. This strategic focus on personalization has enabled brands to foster loyalty amidst economic uncertainties. By utilizing advanced data analytics and consumer insights, advertisers can craft compelling narratives that align with consumer priorities.
Subcategory Trends
The US Consumer Packaged Goods (CPG) industry’s subcategories reflect diverse advertising dynamics and growth opportunities. From toiletries and cosmetics to beverages and food, each category offers unique insights into consumer preferences, market trends, and strategic approaches for digital advertising.
Subcategory Trends
The US Consumer Packaged Goods (CPG) industry’s subcategories reflect diverse advertising dynamics and growth opportunities. From toiletries and cosmetics to beverages and food, each category offers unique insights into consumer preferences, market trends, and strategic approaches for digital advertising.
Toiletries and Cosmetics: Leading the Pack
Accounting for 35% of the total digital ad spend, toiletries and cosmetics dominate CPG advertising. This subcategory thrives due to its ability to connect with consumers through premium branding and tailored marketing strategies. Influencer partnerships play a pivotal role, as brands increasingly collaborate with influencers to amplify their reach and resonate with their target demographics. Furthermore, the booming interest in skincare and wellness has driven a surge in digital campaigns promoting self-care products. Advanced analytics have empowered brands to craft hyper-targeted campaigns, ensuring a higher ROI by addressing specific consumer needs and preferences.
Beverages: A Fast-Growing Segment
Beverages, especially nonalcoholic options, are witnessing explosive growth, with a 27.4% increase in digital ad spend. This trend is fueled by changing consumer preferences, including a rising demand for healthier and functional drink options such as nonalcoholic beer, kombucha, and energy drinks. Alcoholic beverages are also leveraging digital platforms to promote premium offerings, contributing to a 22.1% growth in spending. Seasonal and cultural events have become key drivers, enabling beverage brands to create timely and engaging campaigns that align with consumer behavior and market trends.
Food: A Cautious Yet Significant Player
Although food remains a significant subcategory, representing nearly 30% of the total digital ad spend, its growth has slowed to 5.4% in 2024. Economic sensitivities and rising costs have influenced cautious spending in this segment. Brands are focusing their advertising efforts on promoting staples and everyday food items while maintaining relevance through sustainable and innovative product offerings. By emphasizing eco-conscious messaging and tapping into health-conscious trends, food brands can maintain consumer trust and loyalty.
Other Subcategories: Opportunities for Growth
Smaller CPG subcategories, such as household products and tobacco alternatives, are gaining momentum and collectively account for 10.7% of the total digital ad spend. Tobacco alternatives, including e-cigarettes and nicotine pouches, reflect shifting consumer preferences and evolving market dynamics. Meanwhile, household products continue to see stable demand, with campaigns emphasizing convenience, hygiene, and product efficacy. These subcategories offer promising opportunities for brands to experiment with new formats and innovative messaging.
Strategic Takeaways for Growth Leaders
To maximize growth within these subcategories, leaders should diversify their campaigns across high-growth areas like beverages and toiletries. Leveraging consumer insights through advanced analytics and AI tools allows brands to identify emerging trends and optimize strategies accordingly. Experimentation with engaging formats such as interactive videos and augmented reality (AR) can further enhance consumer engagement, driving measurable results and reinforcing brand loyalty.
Leveraging Format Preferences to Maximize ROI
CPG companies are prioritizing display advertising, which accounts for 57.9% of their ad budgets, as a cornerstone of their digital strategies. This format’s ability to drive top-of-funnel brand awareness makes it indispensable for growth leaders looking to capture market share in competitive industries. Rich media and video formats within display advertising enable impactful storytelling, facilitating stronger connections with consumers.
Display Ads: Why They Matter
Display ads play a vital role in reaching large audiences and creating brand awareness. Their versatility allows brands to experiment with various creative formats, such as rich media and video, to tell compelling stories that captivate and engage audiences. For new product launches or brand repositioning efforts, display ads provide the necessary reach and visibility to drive impactful results. By integrating data-driven insights into creative processes, advertisers can enhance the relevance and effectiveness of their display campaigns.
Mobile’s Dominance
Mobile advertising continues to dominate the CPG landscape, with 69.3% of budgets allocated to this medium. This preference is driven by the ubiquity of smartphones and their ability to deliver personalized and immediate advertising experiences. Social media platforms, including Instagram, TikTok, and Facebook, serve as critical channels for mobile campaigns, enabling brands to connect with consumers in real-time. Geo-targeting strategies further enhance relevance by delivering hyper-localized ads that resonate with specific audiences, driving conversions and reinforcing brand presence.
Mobile Advertising as a Growth Accelerator
Mobile advertising remains a powerful engine for growth, enabling brands to meet consumers where they are. Smartphones have become integral to daily life, making them an essential platform for delivering timely and relevant advertising messages.
Why Mobile Works
Mobile advertising’s strength lies in its accessibility and integration with social commerce. By leveraging the seamless nature of mobile-first platforms, brands can create intuitive and engaging shopping experiences that resonate with consumers. Platforms like TikTok and Snapchat offer opportunities for interactive and visually appealing ads, fostering deeper connections with audiences. Furthermore, mobile campaigns can drive measurable outcomes through precise targeting and performance tracking, ensuring optimized results.
Actionable Strategies
To capitalize on mobile’s potential, growth leaders should implement responsive ad designs that maintain consistent performance across devices. Experimenting with innovative formats like augmented reality (AR) ads can captivate audiences and differentiate brands in competitive markets. Additionally, integrating social media campaigns with eCommerce strategies can streamline the consumer journey, driving both engagement and conversions.
Accelerating Digital Transformation for CPG Brands
The CPG industry’s rapid pivot from traditional to digital advertising highlights its commitment to innovation and adaptability. This transformation offers valuable lessons for brands seeking to enhance their digital presence and align with evolving consumer behaviors.
Opportunities in Connected TV Advertising
Connected TV (CTV) advertising presents a unique opportunity for brands to expand their reach through larger screens. These formats are ideal for storytelling, enabling brands to convey compelling narratives that resonate with diverse audiences. By integrating CTV campaigns with mobile and display efforts, advertisers can create cohesive and impactful multi-channel strategies. As CTV adoption continues to grow, brands must invest in high-quality creative content and data-driven targeting to maximize their impact.
Simplifying Fulfillment to Align with Ad Strategies
Streamlined operations are critical to amplifying the success of digital campaigns. By optimizing fulfillment processes, brands can ensure that increased demand generated by successful campaigns is met efficiently. Integrated solutions that simplify logistics and enhance customer satisfaction can drive both operational efficiency and brand loyalty. Investing in advanced supply chain technologies and collaborative partnerships allows brands to align their marketing and fulfillment strategies seamlessly.
Insights and Trends for Growth-Oriented Decision-Making
Emerging technologies and evolving consumer trends continue to shape the digital advertising landscape, presenting new challenges and opportunities for growth leaders. To remain competitive, brands must adopt an agile approach and leverage insights that align with their strategic goals.
AI and Personalization
AI-powered tools are revolutionizing digital advertising by enabling hyper-targeted campaigns that increase relevance and reduce ad waste. Predictive analytics and personalized product recommendations allow brands to anticipate consumer needs and deliver tailored experiences. By integrating AI-driven insights into their strategies, advertisers can enhance engagement, drive conversions, and improve overall campaign performance.
Privacy and Data Collaboration
Privacy-enhancing technologies, such as data clean rooms, offer a secure and compliant way to collaborate with partners and gain deeper insights into consumer behaviors. These tools enable brands to combine datasets, refine audience targeting, and optimize ad performance while maintaining consumer trust. By embracing data-driven collaboration, growth leaders can unlock new opportunities for innovation and drive sustainable growth.
Actionable Strategies for Growth Leaders
To maximize their impact, growth leaders must integrate the insights from this report into actionable strategies that drive measurable results.
Leveraging Marketplaces
Marketplaces like Amazon and Walmart are essential platforms for scaling CPG brands. Optimizing product listings with enriched content and SEO-driven copy ensures better visibility and engagement. Sponsored ads can capture high-intent shoppers, driving both traffic and sales. By leveraging marketplace analytics, brands can refine their strategies and enhance their performance across these platforms.
Driving Demand via DTC Channels
Direct-to-consumer (DTC) websites offer brands a unique opportunity to build deeper connections with their audiences. Targeted email campaigns, personalized content, and seamless checkout experiences can reduce friction and enhance the consumer journey. By integrating DTC efforts with broader digital strategies, brands can create a cohesive and impactful presence.
Exploring Co-Branding Partnerships
Unexpected collaborations, such as the Pringles and Crocs partnership, demonstrate the power of co-branding in reaching new audiences and enhancing brand affinity. Identifying synergistic opportunities within and outside the industry can help brands expand their reach, foster innovation, and drive sustainable growth. By exploring creative collaborations, growth leaders can unlock new avenues for success.
2025 and Beyond: Future-Proofing Digital Ad Strategies
As the industry braces for macroeconomic normalization, growth leaders must adopt forward-looking strategies to remain competitive in an evolving digital landscape.
Key Focus Areas
Agility in budgeting and investment in emerging technologies are critical to future-proofing digital ad strategies. Brands must align their ad spend with dynamic market conditions while staying ahead of trends like augmented reality, voice search, and programmatic advertising. By blending innovation with strategic foresight, growth leaders can position their companies for sustained success and long-term growth in the digital era.
