Package goods' online spending to jump $80M

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Consumer package-goods manufacturers are shifting more dollars from TV and onto the Internet than ever before.

Online market-research firm eMarketer projects that 2006 online ad spending in the category will rise to $470 million, up from $390 million in 2005, based on numbers from the Internet Advertising Bureau and PricewaterhouseCoopers. Much of the increase lies beyond online advertising as these companies learn to use the Internet as a means to build customer relationships.

One way they'll do it is to build relationship/lifestyle sites and position their products as solutions. And they are offering things like podcasts, ringtones and personalized calendars to remind people of their brands when offline, the study found. "Behind the scenes, CPG marketers are spending huge amounts of money on CRM databases to keep customer information fresh and help hone their promotions and new products," wrote Lisa Phillips, senior analyst, eMarketer and author of the study.

Package-goods companies spent on average 1% of their total advertising budgets on the Internet in 2004, the last full year reported. But according to recent data from TNS Media Intelligence, online advertising revenue increased in the first nine months of 2005 over the same period in 2004. "For the first time since the dot-com bust, offline brands accounted for a majority of Internet ad spending," the TNS report said.

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