Q2 Mobile CPG Spend Spike Isn’t Just An Aberration

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mobileCPGspendCPG brands are starting to shell out more on mobile programmatic and the second quarter of 2014 seems to be the burgeoning proof.

Mobile ad exchanges Smaato, Millennial Media and Nexage all saw noteworthy upticks in CPG mobile spend in Q2. A report released Tuesday based on global data gleaned from the Smaato exchange found that the food and retail category grew from 8% to 25% between Q1 and Q2 2014, an increase Smaato’s chief strategy officer Ajitpal Pannu attributed, at least in part, to brand advertisers growing more comfortable with spending on mobile.

Smaato Mobile Exchange (SMX) serves about 90 billion impressions per month.

“CPG as a category is a fairly large spender in the overall industry and CPG advertisers have definitely been early adopters of programmatic,” said Pannu, who pointed to P&G’s announcement at the beginning of June that it wants to buy 70% to 75% of its media programmatically by the end of 2014.

Nexage also saw significant growth in CPG spend in Q2 – upwards of 400% for certain advertisers. Victor Milligan, CMO at Nexage, theorized, as did Pannu, that the increase is being partly driven by brands’ “strong commitment to move budget to mobile programmatic to gain reach.”

“We’re also seeing a significant growth in rich media and video ad formats and I suspect these trends are related,” Milligan said. “Higher-value ad formats are a key conduit for that spend.”

Milligan also posited that CPG spend is growing in tandem with the growing efficacy of local and hyperlocal campaigns that drive foot traffic and in-store sales, but Smaato’s Pannu said he doesn’t think “we’re there just yet” in terms of hyperlocal campaigns. What’s missing is true dynamic creative.

“We’re just starting in mobile to get beyond the 320 x 50 ad units, but as screens get bigger and we have the ability to serve different kinds of advertising, that’s going to drive a lot of hyperlocal campaigns,” Pannu said. “It’s still more of a shotgun approach now rather than a truly targeted approach, but hyperlocal is the next thing that will bring more advertising spend to the mobile ecosystem.”

Pannu said Smaato is “getting ready” for the coming maturity of hyperlocal advertising.

“Right now we’re seeing that only about 20% or 30% are sending lat/long [latitude/longitude], so location can only capture a small to medium amount of spend,” Pannu said. “We’re still a small industry at this point and we’re just scratching the surface here.”

World Cup spending and regular seasonality aside – Mother’s Day, graduation day and early summer campaigns all occur in Q2 and bring in a regular influx of spend from CPG brands – Pannu said Smaato is seeing continued growth in Q3, although somewhat tapered. Nexage’s Milligan concurred. Both said they’re looking forward to a “record-breaking” Q4 driven by brand holiday spend.

Though it’s true that CPG isn’t the only vertical that has the potential for growth, Millennial Media’s chief revenue officer, Frank Weishaupt, observed that CPG is particularly primed.

“Mobile ad campaigns enable CPG advertisers to supply product information, promote social interactivity, drive in-store sales and foot traffic and generate overall brand awareness,” Weishaupt said. “CPG advertisers also enjoy the scale, data transparency and premium inventory garnered through programmatic campaigns.”

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