The Shifting Trends in FMCG Ad Spends: A Move from Traditional to Digital

For decades, the fast-moving consumer goods (FMCG) industry has relied heavily on traditional forms of advertising such as television, radio, and print media to reach their target audience. However, recent data shows that the FMCG industry has adapted to the digital age and is shifting from traditional to digital channels. In fact, the maximum ad spend on digital last year came from the FMCG industry. This shift in advertising trends are being driven by various factors such as the growth of e-commerce, the increasing use of mobile devices, and the rise of social media. In this blog, we will delve deeper into the trends that are shaping the FMCG category and causing this shift in ad spend from traditional to digital. 

While scrolling through social media we can’t help but notice an abundance of ads from FMCG brands, which brings tons of opportunities for advertisers in recent days. So, grab a cup of coffee, and sit comfortably because we are about to take you on an exciting and informative journey.

Indian FMCG Industry Analysis 

• Home and personal care make up 50% of the sector.
• Healthcare accounts for 31% of the share.
• Food and beverages account for 19% of the sector.

Urban sector contributes to 55% of FMCG revenue share, while the rural sector contributes to 45%.

Source: IBEF

Trends in FMCG Industry 2023

FMCG trend 1: Indian consumers are  becoming more digitally inclined

With the rise of affordable smartphones and data plans, Indian consumers are turning to digital platforms for shopping. FMCG companies are investing in their digital presence to connect with consumers through social media, e-commerce websites, and mobile apps. The COVID-19 pandemic has accelerated this trend as more consumers are shopping online, the trend is expected to continue in the future as more consumers embrace digital technologies and companies innovate to cater to their needs.

Below mentioned are some data points and examples to support the trend of Indian consumers becoming more digitally inclined:

The state of digital in India in 2023

Here are the essential headlines for digital adoption and use in India in early 2023:

• There were 692.0 million internet users in India at the start of 2023 when internet penetration stood at 48.7 percent. 
• India was home to 467.0 million social media users in January 2023, equating to 32.8 percent of the total population.
• A total of 1.10 billion cellular mobile connections were active in India in early 2023, with this figure equivalent to 77.0 percent of the total population.

Source: IBEF

FMCG trend 2: The Continuous growth of the D2C Brands 

Direct-to-Consumer (D2C) business model has been gaining momentum in the Fast-Moving Consumer Goods (FMCG) industry. D2C brands are companies that bypass traditional distribution channels and sell their products directly to consumers through their own websites, social media platforms, or physical stores.

• One of the main advantages of D2C brands is that they have greater control over their brand and customer experience. 

• Another advantage of D2C brands is their ability to create a strong and loyal customer base through personalized experiences. 

• D2C brands have the flexibility to adapt quickly to changing consumer preferences and market trends.

Mamaearth is a fast-growing D2C personal care brand that offers natural and toxin-free products for babies, kids, and adults. The company was last valued at $1.2 billion in January this year and has over 5 million customers across India. 

(Source:Business standard)

Mamaearth is among the first set of D2C brands that started online-only and are now expanding their presence through offline channels as well.

Slurrp farm is the first internet startup offering cereals, dosa, pasta, and cake products. The company includes milk mixes, superfood products, natural sweeteners, pancakes, grains, ragi, jowar, and foxtail millet, and noodles products.The startup claims to have grown 10X between June 2020 – December, 2021 and aims to reach INR 500 Cr in revenue by 2025.

Patanjali Ayurved Limited was established in 2006 with a thought of rural and urban development. The company is not merely an organization but a thought of creating a healthy society through Yog and Ayurved.The company manufactures cosmetics, ayurvedic medicine, personal care and food products, for the full year ended March 30, 2022, Patanjali’s revenue increased nearly 9% to Rs 10,664.46 crore against Rs 9,810.74 crore in the previous financial year.

Sugar Cosmetics is a D2C makeup brand that offers high-quality and affordable cosmetics products. The brand has raised $35.5M in funding and has a strong online presence with over 2.6 million social media followers. 

(Source: YourStory)

Licious – Licious is a D2C meat and seafood brand that offers fresh and high-quality products. The company, which serves 28 Indian cities, including Bangalore, Hyderabad, Delhi-NCR, Chandigarh, Mumbai, Pune, Chennai, and Kolkata, through its online channel, is also looking to have a presence through offline retail stores besides expanding its product offerings.

(Source: The Economic Times)

These brands are just a few examples of successful D2C companies in India, and there are many more that are rapidly growing and becoming popular among consumers.

FMCG trend 3: Emphasis on E-commerce and a connected supply chain management

E-commerce has been growing rapidly in recent years, and it has become an important channel for FMCG companies to reach their customers. As a result, FMCG companies are increasingly investing in e-commerce capabilities, including online ordering, home delivery, and mobile commerce. The COVID-19 pandemic has accelerated the shift towards e-commerce and has highlighted the importance of having a connected supply chain management system. FMCG companies like Instamart, Blinkit, Zepto etc. have adapted quickly to the changing consumer behavior and supply chain distribution.

Overall, the emphasis on e-commerce and connected supply chain management is likely to continue as FMCG companies seek to meet the evolving needs and preferences of consumers while also ensuring efficiency and profitability in their operations.

FMCG trend 4: Millennials and Gen Z having the main character moment

FMCG companies are adapting to the unique values and behaviors of Millennials and Gen Z by introducing eco-friendly products and packaging and leveraging social media and other digital channels for transparency and authenticity. These generations prioritize convenience, sustainability, and ethical production practices, which is reshaping the way companies approach product development, marketing, and customer engagement. As they gain more purchasing power, FMCG companies will need to keep up with their evolving values to stay relevant and competitive in the market.

Advertising Spend by FMCG Industry

The advertising spend by the FMCG (Fast-Moving Consumer Goods) industry refers to the amount of money that FMCG companies spend on various advertising channels, such as television, digital, print, radio, and outdoor advertising. Advertising is an essential tool for FMCG companies to promote their products and brands, create awareness among consumers, and stay in the market.

The advertising spend by the FMCG industry can vary depending on several factors, including the size of the company, the type of product or brand, and the target audience.

The FMCG industry is one of the largest spenders on advertising globally, and the trend is expected to continue as companies look for innovative ways to reach and engage with consumers effectively. With the rise of digital channels, the industry has shifted its focus towards online advertising, including social media, search engines, and programmatic advertising, to target and engage with consumers more efficiently.

Below mentioned is the graph of media spends across industry verticals by densu for your reference.

(Source: Dentsu)

The FMCG industry contributes nearly one-third or 30% of the total advertising revenues in India followed by the e-commerce segment which contributes 18%.

Distribution of advertising expenditure in the FMCG industry across India in 2023, by channel

(Source: Dentsu)

Based on the graph provided, it can be observed that the advertising spend is distributed across various mediums. As per the data presented, television advertising holds the highest share with 47.1%, followed by digital advertising with 44.1%. Print advertising and outdoor advertising account for 6% and 2% respectively, while radio and cinema advertising have a smaller share at 0.5% and 0.2% respectively. 

(Source: Dentsu)

According to last year’s data, the digital adex for fast-moving consumer goods (FMCG) was already on the rise, but this year’s figures show even more impressive growth. In just one year, digital ad spending in the FMCG sector has increased significantly,from 38% to 44.1% indicating a rapid acceleration of the industry’s shift towards digital advertising. This growth can be attributed to several factors, such as the continued rise of e-commerce and the increasing importance of social media as a marketing tool. 

Additionally, advancements in technology and data analytics have made it easier for FMCG brands to target and personalize their digital advertising efforts, leading to greater ROI and more effective campaigns. Overall, the data clearly demonstrates the incredible pace at which the digital landscape is evolving, and the FMCG industry is fully embracing this trend to reach consumers in new and innovative ways.

As from the above analysis we have noticed that digital marketing has been the top choice of the advertisers, let’s have a closer look at the growth of digital advertising industry.

(Source: Dentsu)

The above data shows that there has been a continuous growth in the digital advertising industry across years. This increase in advertising expenditure on digital platforms can be attributed to the rise in over-the-top (OTT) and online video consumption, as a result of increased access to smart devices and the internet. Furthermore, the surge in digital transactions and e-commerce has also contributed to the increase in advertising expenditure on digital media. Additionally, the expansion of advertising opportunities on e-commerce and direct-to-consumer (D2C) platforms is propelling the growth of the digital media industry.

The digital advertising industry in the country is expected to grow at a compounded rate of 31% to reach a market size of Rs 51,110 crores by the end of 

After examining the FMCG industry across various verticals, it is evident that digital media plays a crucial role in brand growth and success. With the rise of e-commerce and mobile usage, consumers are increasingly turning to digital channels to research and purchase FMCG products. Therefore, FMCG brands must adopt a comprehensive digital marketing strategy to remain competitive and capitalize on the growing opportunities in the digital space.

Let’s have a look at the digital marketing strategies that will further help FMCG brands to ace the space!

FMCG Digital Marketing Strategy

Fast-moving consumer goods (FMCG) companies are always on the lookout for effective digital marketing strategies to drive sales and increase brand awareness. With the rise of digital channels and technologies, it has become more important than ever for FMCG brands to establish a strong online presence and connect with their target audience. In this article, we will discuss some effective digital marketing strategies for FMCG companies and provide infographics to illustrate them.

(Source: Dentsu)

Among digital media advertising formats, online videos take the largest spend shares at 43%, closely followed by social media being 25%. Spends on display banners contribute 16%and paid search contributes 14% and on to the Indian digital advertising market.

Social media and online video formats have consistently been the strongest and largest advertising formats on digital media. Online video has seen the fastest growth due to the rapid increase in the number of consumers of this medium, owing to the widespread availability of low-cost smartphones and high-speed connectivity. 

Now, that we have the data let’s build a strategy according to the same-

FMCG Marketing Strategy

Video Marketing is the key

Video marketing is an effective way for FMCG companies to showcase their products and connect with their target audience. By creating engaging videos that highlight the features and benefits of their products, FMCG brands can increase brand awareness and drive sales. According to a study, 54% of consumers want to see more video content from brands they support.

One example of an FMCG company that has successfully used video marketing is Dove, a personal care brand. Dove’s “Real Beauty” campaign, which was launched in 2004, aimed to challenge traditional beauty standards and celebrate the natural beauty of women. The campaign included a series of videos featuring women of different ages, sizes, and ethnicities discussing their views on beauty and self-image.

One of the most popular videos from the campaign was the “Evolution” video, which showed the transformation of a model’s appearance from hair and makeup to retouching and editing, ultimately resulting in an unrealistic and idealized image of beauty. The video was widely shared on social media platforms and garnered millions of views, sparking a conversation about the beauty industry’s standards and its impact on women’s self-esteem.

Dove’s “Real Beauty” campaign’s success can be attributed to its powerful and thought-provoking videos that resonated with its audience and highlighted the brand’s values. By using video marketing to convey a meaningful message, Dove was able to engage its audience and establish itself as a brand that cares about promoting positive self-image and confidence among women.

Invest in Social Media Marketing

Social media platforms like Facebook, Instagram, and Twitter are essential for FMCG companies to connect with their target audience. By creating engaging content and running targeted ads, FMCG brands can increase brand awareness and drive sales. According to a study, social media advertising is the most effective way to reach millennials and Gen Z.

Let’s take example to have a better understanding of the same

One example of an FMCG (Fast-Moving Consumer Goods) brand that is leveraging social media marketing is Coca-Cola. Coca-Cola has a strong presence on various social media platforms such as Facebook, Twitter, and Instagram, where it regularly posts engaging content, shares brand stories, and interacts with its followers.

Coca-Cola’s social media marketing campaigns have been quite successful in generating user engagement and increasing brand awareness. For instance, the “Share a Coke” campaign that was launched on social media allowed consumers to personalize their Coke cans with their names, resulting in a significant increase in user-generated content and social media mentions for the brand.

The campaign was a social media success and within six months of its launch, Coca-Cola reported 330 million impressions on Twitter, with nearly 170,000 tweets from 160,000 fans.

Coca-Cola’s use of social media marketing has helped the brand to maintain a strong connection with its audience, foster brand loyalty, and drive sales by promoting its products in a creative and engaging way.

Leverage Influencer Marketing

Influencer marketing is a popular strategy for FMCG companies to promote their products and reach a wider audience. By partnering with influencers who have a large following on social media, FMCG brands can increase their brand visibility and drive sales. According to a study, 49% of consumers rely on influencer recommendations when making a purchase decision.

Below mentioned is the data which shows the consumer behavior affected by influencers.

Let’s have a look at a FMCG brand who leveraged Influencer marketing to it’s best.

boAt left no stone left unturned regarding influencing people with influencer marketing. boAt has not struck the deal only with influencers but also with celebrity endorsements, cricketers, content creators, and even, stylists.

BoAt, a brand that produces audio equipment, has partnered with celebrities such as Jacqueline Fernandes, Kartik Aryan, and Kiara Advani, as well as popular content creators including Prajakta Koli, Harsh Beniwal, and Bhuvan Bam to endorse their products. These individuals will be promoting the brand’s products to their respective audiences.

Optimize for Mobile Devices

With the rise of smartphones and mobile devices, it is crucial for FMCG brands to optimize their websites and digital assets for mobile devices. According to a study, 69% of consumers use their mobile devices to research products before making a purchase. FMCG companies should ensure that their websites are mobile-friendly and that their digital assets are optimized for smaller screens.

By looking at the above strategies and examples FMCG companies can significantly benefit from implementing various digital marketing strategies, such as social media marketing, influencer marketing, mobile optimization, and video marketing. These approaches can enable FMCG brands to effectively increase brand awareness, generate sales, and establish meaningful connections with their target audience.

Now, that we have discussed the strategies let’s have a look at a few examples of FMCG brands that have adopted these strategies and have been among the top ad spenders in the FMCG industry in 2022.

Top Ad spenders in the FMCG Industry in 2022

Rank	Advertisers	Range in crores
1	Hindustan Lever	3800 – 4000
2	Reckitt Benckiser	1200 – 1400
3	Mondelez India	800 – 1000
4	Procter & Gamble	800 – 1000
5	Coca Cola India	600 – 700
6	Godrej Consumer products	500 – 600
7	Pepsi Co	450 – 550
8	L’Oréal India	450 – 550
9	Vini Product	450 – 550
10	ITC	400 – 500
11	Colgate Palmolive	250 – 350
12	Nestle India	200 – 300
13	Amul	200 – 300
14	Patanjali Ayurved	200 – 300
15	Emami Limited	150 – 250
16	Parle Agro	150 – 250

(source:pitchmadison)

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Conclusion

In conclusion, the FMCG industry is constantly evolving, with new trends and strategies emerging every day. As the industry continues to grow and adapt, companies are investing more than ever in advertising and marketing to stay ahead of the competition. The industry is undergoing significant changes in response to shifting consumer trends, and companies must adapt their strategies to stay in the competition. Increasing ad spend and a focus on digital channels highlight the importance of a customer-centric approach, with personalized experiences and engagement at the forefront. Brands that successfully adopt this approach will be better positioned to build customer loyalty, increase sales, and maintain relevance in an ever-evolving market. In short, a focus on trends, ad spend, and strategic adaptation is essential for FMCG companies to thrive in the face of changing consumer behavior and increasing competition.

“The chief enemy of creativity is ‘good’ sense.” FMCG companies must break free from conventional thinking and embrace their creative side to stand out in a crowded marketplace. By keeping a finger on the pulse of the latest trends and leveraging new technologies, FMCG companies can continue to innovate and bring innovative products to market. The key is to stay nimble, think outside the box, and keep pushing the boundaries of what’s possible. 

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