Food and beverage industry chooses online ads

Forget weekly circulars for consumer packaged goods advertisers. More CPG advertisers are spending more of their food and drink ad budgets on online advertising efforts.

by Kristina Knight

According to a recent study from eMarketer, CPG advertisers are expected to spend $288 million in online advertising alone. That is a 36% increase over 2006 spending. Why the increase?

"Because food and drink is becoming an online staple for consumers who are searching the Internet for healthy eating tips and recipes, as well as for products they see advertised in other media," says Lisa Phillips, eMarketer Senior Analyst and the author of the new CPG Online: Food & Beverages Party On report.

One surprising fact is that CPG advertisers aren't spending on paid search ads. These advertisers prefer branded ads, sponsorships and direst response ads. That is because most of these products depend on in-store purchasing, not a quick online buy. Offering a coupon to a consumer is a much better way to influence their later in-store purchase than a quick search result listing.

Still, food and beverage advertising is a very small portion of total Internet spending, accounting for 1.6% and 2.1% of the budgets in 2005 and 2006. However with the increases in spending last year and the expected increase in 2007, that could begin to change. The Internet is the only advertising resource to see an increase in CPG spending last year.