CPG’s $50B media war chest: Why digital testing is a must

The consumer packaged goods industry (CPG) is an extremely competitive, fast-moving and endlessly innovative sector. 

On average these companies spend 25% of their total budget on advertising and marketing. Why? It’s essential for them to make sure that consumers know about their new products, and digital advertising is increasingly “the way” to reach consumers. 

In this article, I’ll cover what this typically looks like, digital spend channels to consider, why this is so critical for the industry and some helpful tools.

CPG companies collectively invested $48.8 billion in digital spend in 2024, second only to retail. Looking at all digital spend in the US, CPG made up 16.5%. The trend toward digital advertising isn’t new, but it continues to grow, with 2024 seeing a 16.6% year over year growth in digital spend. 

The spending is highest in grocery stores, and part of the reason is that CPG brands are partnering with retailers to make use of retail media networks or RMNs. RMNs offer brands the opportunity to advertise to consumers at crucial moments, such as when they are already on a website shopping, or when they are physically in a store. RMNs include digital retail media, off-site media and in-store media. 

One of the biggest advantages of RMNs for brands is that retailers provide first-person data. Brands get huge insights into when consumers buy, how they search and detailed demographic data. 

That information allows brands to personalize the shopping experience and precisely target customers likely to be interested in purchasing specific products, which is an improvement for shoppers, too. Everyone wins! 

 “Digital spend” covers multiple individual channels, including:

• Mobile

• Display

• Search

• Social

Each of these channels offers benefits and drawbacks. Choosing the right channel for the right product is sometimes relatively straight-forward. Here’s two examples: 

1. P&G x Walmart

P&G and Walmart partnered to bring pop-up mini-stores to cities using a food-truck model. This collaboration was the result of Amazon’s growth among city-dwellers who would rather go online and have items conveniently delivered to their apartments than drive out to the retailers typically located in more suburban areas. 

These trucks brought bulky items closer to customers in cities, and also displayed QR codes that allow shoppers to order items for delivery. 

Chad Brizendine, Brand Manager at Walmart Grooming and Walmart.com, shared, “We look forward to seeing results of this initiative in Chicago and New York. While I can’t elaborate on our plans going forward, we know reaching the urban consumer is a big opportunity for us and we are committed to finding the right to better serve this consumer.” 2. Sour patch kids x influencers

Sour Patch Kids invested heavily in social media and influencers to create content across Snapchat, YouTube and other social channels to reach younger audiences, and it worked! Between 2010 and 2015 the brand doubled its market share. 

Farrah Bezner, Head of Business Ventures at Mondelēz International, shared, “There are a lot of different marketing metrics you can look at, but we landed on fame because we felt that really encapsulated how we needed to behave as a brand. Even though fame was difficult, we really thought fame was the driver of cultural relevance and our goal ultimately was to connect with teens and millennials in a way that is meaningful to them.”

Bezner continues, “Scripted content living on the influencers’ channels, incorporating the ‘sour then sweet’ [theme] and incorporating the Kid [mascot], was another way we were ‘hanging out’ with famous people. When we did a meetup, we had kids lined up outside for three hours waiting to come in and meet with these influencers.”

Here’s a closer look at where CPG digital spend is going. 

Mobile 

CPG spends $33.94 billion on mobile ad spend, the highest among industries.

Given that most people have smartphones with them when they are shopping, it makes sense for CPG brands to invest in mobile advertising. Mobile advertising can be anything from push notifications to incentives to download an app and they can use location information to display ads when consumers are near specific places. 

With the detailed information available through partnerships with RMNs, brands can make sure the right consumers see their ads at the right time, whether that’s while they are browsing online or walking through the grocery store.  

Display

Annual display ad spending for CPG is likely to be $28.19 in 2025, second only to retail. 

Although CPG brands spend more on mobile advertising, display ads play an important role in reaching consumers. Display ads are those that show up in the sidebar or as banners on websites and apps. 

For instance, travel brands such as Expedia, Airbnb, and Booking.com all use display ads. 

Search 

Performance-driven tactics have pushed CPG brands to invest $19.3 billion in search ads. 

Marketing is increasingly driven by metrics and analytics. Brand is still important, but performance marketing ties measurable returns to business goals. Performance-driven tactics aren’t limited to a single channel, but the CPG sector’s investment in search is at least partly due to the fact that the tools available, like SEO and paid search are tried and true. 

Social 

One of the fastest-growing categories of advertising spend is social, which at $13.2 billion is up 15.1% year-over-year. 

An early example of a CPG brand using social media masterfully is the Red Bull Stratos campaign in 2012. The campaign was audacious in scope and it contributed to scientific and medical research. 

The event had more than 8 million viewers on YouTube, which was at that time, the most concurrent viewers ever. Facebook and Twitter were also part of the strategy, amplifying the content. 

Since then, CPG brands have used social media advertising to reach customers through influencer partnerships, building communities and more. 

CPG brands allocate around 18% of their revenue to marketing, including both digital and traditional formats. 

Considering that standard advice is to invest 5-10% of revenue in advertising, CPG brands spend heavily on marketing compared to other industries. Given that it’s a super fast-moving sector, consumers’ extreme price sensitivity and the volatility of the economy in recent years, it’s not particularly surprising that brands commit significant funds to advertising. 

One of the reasons that brands are moving more toward digital ad spend is that the available data makes targeting the right consumers easier, provides measurable results and gives brands the opportunity to sell directly to consumers. The trend highlights the ways that brands are adapting to changing consumer behaviors. 

One of the evolving areas of consumer behavior is the demand for a direct relationship. 

Consumers want to have a direct relationship with the brand, and in response, brands are investing in owned channels. Consider PepsiCo’s Tasty Rewards, which allows participants to earn points and receive benefits. 

The program is a way to offer limited-time offers, sweepstakes, digital downloads and contests to consumers. It also includes an interactive element, allowing members to complete surveys or watch promotional videos as well as encouraging them to share achievements and experiences on social media platforms.

Another driver of the surge in digital ad spend is mobile-first behavior. Smartphone-led product discovery is common among customers, and CPG brands are responding. This trend began during the pandemic and hasn’t shown signs of reversing. 

The convenience of being able to shop easily during your lunch hour or from your sofa late at night when you remember you need a product like shampoo makes mobile-first a simple choice. Add in the opportunity to get discounts through an app, and it’s easy to see why consumers are likely to continue using their phones for both product discovery and purchasing. 

The last driver of digital ad spend we’re seeing is subcategory shifts. The growth in CPG is concentrated in beverages, toiletries and cosmetics. The reasons for these shifts are complex and varied. For example, there’s evidence that the rise in use of GLP-1 medications for weight loss has led to a decline in snack sales. At the same time, the functional beverage subcategory, which includes things like protein shakes, is growing.  

Having a massive budget for advertising doesn’t equal using it successfully. Precision testing and optimization across channels is the best path to efficient and profitable use of a war-chest budget. Zappi provides precision creative testing with consumers and delivers insights with the context you need so that you can optimize and repeat. 

When you can test formats and see exactly how your creative ads appear on mobile, display or social media, you can make faster decisions. Then, testing your messaging with your audience means you have a far higher likelihood of conducting a successful campaign. 

As advertising continues to be data-driven, being able to validate your ROI early, before scaling, means you can confidently move forward and demonstrate measurable returns.

The right tools move “advertising spend” into “return on investment.” Reliable testing before rolling out massive, cross-channel campaigns means that brands don’t have to take big advertising risks. Here are the ways Zappi can help: 

Audit & benchmark

Zappi’s consumer insights platform tests brand recall, messaging effectiveness and creative resonance. Ultimately, it helps you to find out if your creative works and why. What is it that consumers like? What works and what doesn’t? 

Test & learn

Once you understand the baseline, you can begin testing, learning and innovating. Run snippet A/B tests across channels and find what works where and why. Getting the message right for the audience is the key to multi-channel marketing. 

Scale with confidence

The test, learn, iterate cycle continues throughout a campaign, but once you’ve done the preliminary work, you can scale with confidence knowing that continued optimization and fine tuning is possible. 

Having a large budget for digital advertising offers opportunities to become more precise and improve the shopping experience for consumers. It allows brands to be agile and adjust to the fast-changing tastes and desires of consumers. But both of those advantages require accurate, layered insights into what works and what doesn’t. 

Zappi helps brands test faster and allocate budget in the best ways to get a return on the big investment in digital spend.