Search Eats Little Of Food Budgets

    April 27, 2007

The food and beverage industry is the leader in the U.S. consumer packaged goods (CPG) when it comes to online advertising, but they only put 2.1 percent of their total $8.7 billion advertising budget online in 2006.

Platforms that have not yet been used, such as social networks, games, online video and mobile marketing, offer branding opportunities for CPG marketers. Marketing tactics, such as paid search and online coupons, also have not been implemented effectively, according to eMarketer’s report CPG Online: Food and Beverages Party On.

Out of the $600 million the CPG industry will spend on Internet advertising in 2007, eMarketer believes that food and beverage marketers will shell out $288 million, a 36 percent increase over 2006. Growth is expected to fall to 11 percent in 2008, as advertising targeted at children faces criticism and regulation.

Even though the amount of online spending is small, the Internet was the only medium that saw an increase in food and beverage ad spending last year. Advertising in newspapers fell by 25 percent; outdoor spending dropped by 9.5 percent; and radio decreased by 7 percent, according to TNS Media Intelligence.

TNS does not include search advertising or rich media/video advertising in their measurement. Search marketing makes up 40 percent of all sectors’ online budgets. CPG companies allocate only about 15 percent of their online spending to search, estimates eMarketer.

"Consumers cannot download dog food, so they rarely go online and search for it," says Lisa Phillips senior analyst and author of the report. "That is the thinking behind the CPG industry’s relatively low spending on search marketing."

"Such thinking may be detrimental to CPG success online." Hitwise data for one week in September 2006 shows that nearly 38% of food and beverage Web site visits began with a search engine."