Oct 22 2020 12 mins 2
This survey and inforamtion comes from Cleveland Research Company. Business Performance & Profitability: Online channels continue to drive better than expected demand with 70% of respondents indicating their Amazon sales trended ahead of plan in 3Q. Profitability, however, is a growing concern for many manufacturers, with 46% citing they expect their profit margins to decline with their largest omnichannel customers next year. As we covered throughout the Summit, the margin pressure at omnichannel customers is likely to result in a range of asks, including greater investment into media programs, higher co-ops, and funds to offset increased shipping costs. We expect this trend to be most evident with omnichannel customers as margins at pureplay eTailers have improved as a result of growing volume during the pandemic. Commerce Marketing Focus: Nearly every company polled indicated they are participating in advertising on Amazon, and there is growth occurring with the number of brands participating in similar digital activations on sites like Walmart.com and Target.com. Almost two-thirds of brands, however, reported not having enough quality access to data and reporting to efficiently refine and optimize their commerce marketing efforts. Retailer Paid Search: Manufacturers continue to be drawn to paid search advertising activations across different customers. 71% of those responding indicated they spend 75% or more of their ad budget on Amazon within paid search activations. In addition, investing more and refining paid search strategies on Walmart.com was the top area of focus cited by brands selling on the site. The Instacart panel discussion also highlighted that manufacturers are primarily focused on maximizing the paid search opportunity on that platform before moving onto other digital activations like coupons or delivery promotions. Retailer Programmatic: Many companies are looking to layer in DSP spend on Amazon to help reach consumers across the sales funnel, citing the targeting improvements Amazon has developed as a key rationale for increased spend. 60% of manufacturers are looking to increase their investment in this area in 2021 (vs. 33% maintaining investment level and 6% reducing). Amazon’s retail rivals do not yet appear to have as robust of offerings on the programmatic side and brands seem less focused on upper-funnel spend with these retailers. Analytics Focus: Similar to what CRC presented in its opening session, the polling data suggests manufacturers have a major need to build out their analytics capabilities. To do so will take a combination of headcount and technology, something which nearly half of respondents indicated characterize their investment plans for next year. 42% of companies indicated they currently lack the headcount needed to action eCommerce data, and only 13% indicated they actively leverage eCommerce data into their product development needs. Marketplace Control: Approximately one-third of companies report having a distribution strategy that recognizes the dynamics around marketplaces, and nearly half report working on this initiative currently. MAP policies can be one part of this strategy, although, only 19% reported having a MAP policy in place that they are actively enforcing.
