Paul Kedrosky: Consumer Product Companies Heart Online Ads

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April 17, 2006

Consumer Product Companies Heart Online Ads

There is a must-read article in today's Wall Street Journal about how consumer products companies are finally leaping into online advertising. The numbers are impressive, with some doubling their spending (admittedly from small-ish bases) in recent years.

For example:

Pepsi's online ad budget has gone from 1% of total ad spending to 5%-10% in five years
General Mills expects to double online ad spending in the current year
Kraft plans to double online campaigns in 2006, and increase by 50% the number of brands it advertises online
Anheuser-Busch's online ad spending will double in 2006, hitting 5% of the total ad budget

To put it in context, packaged goods companies accounted for 11% of the 145-billion U.S. ad market in 2005 -- but they spent just 1.6% of the ad money online last year. There is, to paraphrase the Google uber-bull case, a lot of room for a major ad-dollar budget shift. A lot of a lot of room.

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