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CPGs Finally Embrace Internet Advertising

  • WSJ.com, Tuesday, April 18, 2006 10:36 AM
Consumer packaged goods brands are some of the largest advertisers worldwide; increasingly, they too are shifting large portions of their ad budgets to the Internet, according to The Wall Street Journal. Companies like General Mills and Kraft are expected to more than double their online advertising efforts this year, underlining the Web's threat to traditional media revenues. The money has to come from somewhere, right? "Our job is to invest in where consumers are engaging with media," says one PepsiCo Internet marketing vice president, who expects online spending to increase from 1 percent of his company's budget to between 5 and 10 percent this year. That said, CPGs spent an average of 1.6 percent of their 2005 budgets on the Web, compared to the 5.8 percent of total spending for the average U.S. advertiser. If others were to follow a similar path to PepsiCo, the resulting sea change in CPG spending would have huge implications for the entire industry--as the category accounted for more than 11 percent of the $145 billion spent on advertising in the U.S. last year, according to TNS Media Intelligence. Consumer Direct, Yahoo's effort with ACNielsen to track the impact of Internet ads on offline sales, has definitely played a part in luring CPGs like Pepsi and Kraft back to the Web, following the dot-com bust years. The results showed a positive, cost-effective increase in sales, forcing companies like Kraft to shift dollars away from TV to the Internet. Kraft, for example, now devotes just a third of its budget to TV, down from two-thirds just five years ago.

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