oflannabhra comments on “Unilever threatens to pull its ads from Facebook and Google over ‘toxic content'”

Ben Thompson, writing at Stratechery[1][2], has some good analysis of the CPG business model. One insight he highlights is that the entire CPG business model is tightly coupled to the retail business model: that is, consumer buying decisions used to happen at a retail location, meaning that brand awareness, loyalty, and product placement within the retail location were paramount.

The entire structure of CPG companies is an organic outgrowth of a) retail’s constrained distribution and b) old-media advertising (radio, tv, etc).

It makes sense, then that digital advertising does not deliver ROI on CPGs. E-commerce and digital advertising break all of the constraints above: consumers no longer have a single point-of-decision for what they buy, and because of that, digital advertisements can directly track their effectiveness (and ROI for advertisers) through immediate conversions. CPGs can somewhat take advantage of that new opportunity, but they are built for the post-war era of consumer behavior and advertising.

[1] – https://stratechery.com/2016/dollar-shave-club-and-the-disru…
[2] – https://stratechery.com/2014/technology-changing-world-pg-ed…


Author: oflannabhra
Go to Link: https://news.ycombinator.com/item?id=16368768