Big-Budget CPGs Lag in Online Spending

Consumer packaged goods companies, the 800-pound gorillas of ad spending, are still 90-pound weaklings when it comes to online advertising, according to a recent report by New York firm eMarketer.

And importantly for direct marketers, the key for online ad sellers getting more CPG dollars may lie in stripping any residual image the medium has of being mainly for direct response and implementing online branding metrics commonly used offline.

“That means after years of pitching metrics such as unique visitors, page views and click-through rates, interactive agencies and Web publishers would deploy mainly traditional metrics — measuring tools used for decades by media such as TV and print,” the report said.

Those metrics are reach, frequency, gross ratings points and targeted ratings points.

PepsiCo led CPG firms in online ad spending in both percentage of its budget and actual dollars spent with 3.4 percent, or $38.1 million, of its $1.1 billion ad budget going to Internet advertising, according to eMarketer, which gathers and analyzes information from other sources such as trade publishers and research firms.

Procter & Gamble is the second-biggest online spender in terms of dollars with $17.3 million going to the medium. But P&G spent a comparatively meager 0.6 percent of its whopping $2.67 billion ad budget online, putting it behind eight other CPG companies in percentage of online ad spend, the report said.

Johnson & Johnson and Unilever are the third- and fourth-highest spending among CPG companies, with $9.1 million and $7.7 million going toward online advertising, respectively.

However, SABMiller, which ranks fifth in ad dollars spent online, is tied for second with Kimberly Clark in percentage of ad budget spent online, eMarketer reported. The giant beer brewer reportedly spent 1.6 percent, or $7.2 million, of its $458.5 million ad budget online last year.

Kimberly Clark spent $5.5 million of its $352.5 million ad budget online, the report said.

Though CPGs accounted for 34 percent of ad spending overall in 2002, according to Ad Age magazine, they accounted for just 5 percent of online ad impressions in third-quarter 2002, according to Nielsen//NetRatings.

Moreover, the only CPG company in the top 10 of all online advertisers in June was Estee Lauder Cos. Inc. with 1.9 billion impressions, Nielsen//NetRatings said.

“That consumer packaged goods companies are disproportionately underrepresented for online advertising is mainly a consequence of tradition — traditional companies gravitating toward traditional means of marketing their traditional products,” eMarketer's report said, a stark reminder that while online advertising is bouncing back from the dot-com crash, it has a long way to go before it is proportionately integrated into brand marketers' ad plans.

Branders' disproportionately low spending online has frustrated Web publishers. As a result, the Interactive Advertising Bureau, a trade group representing companies accounting for more than 75 percent of advertising sold online, has been steadily publishing reports aimed at convincing brand advertisers of the Internet's effectiveness.

For example, the IAB last week at its annual advertisers' forum held in New York published a press release touting a study done with Volvo Cars of North America that it claims showed a substantial lift in brand consideration when Volvo was an exclusive sponsor on participating Web sites.

However, online advertising still has two longtime barriers, according to a recent survey of chief media buyers by GartnerG2: 31 percent cited a lack of standardized measurement tools, and 30 percent cited skepticism among upper management.

With these barriers in mind, the IAB in August announced the creation of a so-called Acceleration Program, to which members are contributing $5.8 million, aimed at simplifying the planning, buying and creating of interactive advertising and “educating key marketers, media planners and buyers on the value offered by interactive advertising.”

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