Press Releases Paid Inclusion

December 21, 2004

CPG companies, up until today, have taken to Web advertising far less than many other industries. However, times could be changing. Your pc screen and the complete advertising scenery is now changing.

Since the 1950s and the advent of television, not a lot has changed in the world of consumer packaged goods (CPG) advertising. Even the addition of hundreds of cable channels only caused a ripple in the way CPGs and their agencies pitched products. The 30-second ad spot was still the basic building block of the brand image.

No more. Online, on the airways and on cable television things are changing.

A brand manger's job is getting more complicated and more challenging as broadband penetration grows unexpectedly fast, as consumers spend more time online comparison shopping and buying, as the popularity of DVRs and commercial-zapping rises, as VOD makes it possible for families to watch commercial-free movies instead of network programming during the evening and as corporate management increases the pressure for accountability and the need to target specific audiences to make ad spending more efficient and accountable.

To help you understand the dynamics, and the ramifications, of this evolving environment, eMarketer has published a new report, CPG Internet Marketing.

"With today's fragmented consumer audience, the traditional mass market tactics of CPG companies are increasingly under fire," says David Hallerman, Senior Analyst at eMarketer and author of the report. "And yet the need to pitch the brands remains the same."

To put online ad spending into context, just as CPG advertising makes up a small share of online advertising, currently the Internet represents only a tiny component of the CPG media mix compared with television and magazines.

According to Deutsche Bank's analysis of the "100 Leading National Advertisers" report from Advertising Age, $3.9 billion of all CPG ad budgets went to network (aka, broadcast) TV in 2003, while $1.9 billion went to cable TV networks. Note, however, that broadcast TV spending inched up by only 3% versus 2002, but CPG ad spending on cable jumped by 21%.

What CPG advertisers gain in cable over broadcast is not unlike what the Internet offers: the ability to target messages to an audience based on factors such as demographics and interests. With the Internet's additional targeting capabilities, such as by an individual's behavior or registered preferences on a content or brand Web site, there's good reason why online ad spending by all CPG firms rose by 15% in 2003 totaling $137 million. However, that $137 million for Internet advertising represented a mere 1% of CPG ad budgets for measured media spending.

Nevertheless, there is movement online. Significant online advertising growth can be found in those campaigns with a branding objective — the classic province of CPG marketers. According to eMarketer projections, online ad spending for branding will increase by 22.4% in 2005, compared to a 19.8% boost for direct response advertising. In each of the three years following, spending growth for branding goals will match or outstrip direct response growth.

Source: eMarketer.com