September 25, 2019
A Different Type of Influencer Marketing: Household Purchasing Influence in CPG
A long standing truism in CPG marketing is that advertising to a household’s ‘shopper parent’ is the optimal method of driving short-term ROI for a brand or portfolio. For decades, brands across product categories have tried to reach, with a singular focus, the parent who physically goes to the store and buys goods for the home.
Now, those same brands must adapt to new realities.
Consumers have more choice and control over the channels and devices through which they consume content, which presents brands a complicated landscape through which to reach them. This has given rise to purchase-based and shopper-age target strategies becoming the new norm in digital advertising. Put differently, advertisers have tried to deploy the ‘reach the shopper parent’ strategy on digital.
Under this new paradigm, the industry has seen large, established brands struggle to drive consistent sales and share gains.1 This begs the question as to whether these traditional advertising strategies centered around the ‘shopper parent’ in the household deserve revisiting.
Why should marketers care about Gen Z’s influence?
Households make joint purchase decisions. Some purchase decisions affect everyone in the household and some purchases are made by some on behalf of others.
Gen Z has a loud voice in these household purchase decisions. According to Cassandra Research, 87% of Gen Z say they have influence on their family's purchase decisions.2This is confirmed by their parents. 92% of parents say their children influence the purchase decisions.3
When we look at the household purchasing power over which Gen Z has influence, it presents a compelling business opportunity for marketers:
Quantifying purchase influence effects on Snapchat with NCSolutions
Although we knew that influence effects had been playing a major role in the success of CPG advertising campaigns on Snapchat4, they had yet to be explicitly quantified. We saw this as an opportunity to show how powerful it can be for brands to advertise to Gen Z and how our clients are driving short and long-term growth by advertising to them now. That’s why we partnered with NCS to conduct one of the first ever studies to quantify household purchase influence effects resulting from ad exposure.
The study analyzed 19 CPG campaigns that ran on Snapchat in 2018 and included 32 individual sales lift calculations for different brands. These campaigns all ran in the United States and served just under 4 billion impressions using a combination of Snap Ads, Story Ads, Lenses, and Filters.
First, we classified households into one of three buckets using user ad exposure and household metadata: (1) Primary Shopper exposed (2) Purchase Influencer exposed (3) Both Primary Shopper and Purchase Influencer exposed.
Next, we summarized sales lift results for these campaigns across these three dimensions. What we found was incredibly compelling. 76% of sales driven by Snapchat were from households where a Purchase Influencer had been exposed, and 63% of incremental sales came from households where ONLY Purchase Influencers saw advertising.
Since we started measuring with NCS in 2017, Snapchat has seen sales lifts 17% higher than NCS's average norm for mobile advertising5. The new data indicates that most of this sales lift is due to household influence effects. Not only is purchase influencing a thing. It’s a real thing. Driving real results.
This helped answer the question of efficacy -- advertising to Gen Z drives incremental sales -- but what about efficiency? Can these results be achieved in a cost-effective way?
To help answer this question, we calculated a sales lift response index6 for each campaign to contextualize the sales lift numbers we observed relative to the rate of exposure for each group. We then placed each group of households into one of three buckets on a per-study basis : (1) Under Responsive, an index less than 85 (2) Average Responsiveness, an index between 85 and 115 (3) Very Responsive, an index greater than 115.
When we looked at households with only purchase influencers exposed, we saw that 84% of brands had sales lift responsiveness indexes at or above Average Responsiveness; this metric was 78% among households with both purchase influencers and primary shoppers exposed. This is compared to only 53% of brands seeing a sales lift response index at or above Average Responsiveness for households where only primary purchasers were exposed. This indicates that purchase influencers are responding to advertising on a per-impression basis at a rate equal to or above that of primary shoppers.
In summary, the data presented here indicates that there is a real business opportunity for marketers to tap into Gen Z's influence over household purchasing decisions by creating advertising strategies around them. We've worked with NCS to demonstrate that CPG advertisers in the United States are using Snapchat's advertising platform -- and these household purchase influence effects by proxy -- to drive measurable returns on their advertising spend now, at rates surpassing the average returns on mobile advertising spend NCS measures elsewhere.
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1Andria Cheng, Forbes, “[Small CPG Brands Are Gaining Upper Hand On Giants -- And Now The Big Want To Get Even Bigger](https://www.forbes.com/sites/andriacheng/2018/10/17/17-billion-this-is-how-much-sales-major-cpg-brands-have-lost-to-upstart-labels/#f1a7fca6d35f)” Oct. 17, 2018.
2Cassandra, an Engine company; 2017 survey of 1,000 Gen Ys and Gen Zs in the U.S.. This sample is nationally representative based on age, gender, region, and race/ethnicity. Cassandra also includes a nationally representative sample of 250 Gen Xers and 250 Boomers for comparison.
3Cassandra, an Engine company; 2016 survey of 1,000 Gen Ys and Gen Zs in the U.S. and UK. This sample is nationally representative based on age, gender, region, and race/ethnicity. Cassandra also includes a nationally representative sample of 250 Gen Xers and 250 Boomers per country for comparison.
4Snapchat has commissioned over 80 CPG ROI studies from NCSolutions since 2017 and has seen consistently strong results: 7% sales lift & $3 ROAS on average according to NCSSolutions.
5$2.92 average ROAS on Snapchat vs $2.50 average ROAS on Mobile (Q1 ‘16 to Q1 ‘19), according to NCS
6Response index = (% contribution to sales lift / % exposed households) * 100