FTC Tallies Kid-Targeted Food Marketing at $1.79 Billion

Agency cites 'Modest' Nutritional Improvements But Calls Out Entertainment Industry for Not Doing Its Part

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When they advertise to children, food companies are shifting more money from TV to digital and viral marketing programs, according to a report by the Federal Trade Commission.

The report is a bit dated because it relies on 2009 spending figures subpoenaed in 2010 from 48 major food and beverage marketers. Still, the study gives a detailed and comprehensive account of how marketers are adapting to heightened pressure from health advocacy groups that have blamed food marketing for the nation's obesity epidemic.

In total, the companies in 2009 allocated $1.79 billion to marketing aimed at children ages 2 to 17. While that is a 19.5% drop from 2006, the FTC found that companies stepped up spending on online, mobile and viral marketing 50%.

The report cited "modest nutritional improvements" in food categories that are heavily marketed to children, including cereal, drinks and fast food. The FTC also noted that participation in self-regulation has increased, but chided the entertainment industry for lagging behind. "With a few exceptions, media companies have not limited licensing of children's characters and placement of ads during children's programming to more-nutritious foods," the FTC said in a statement.

Cross-promotions linking foods with popular children's movies and TV characters jumped to 120 in 2009 from 80 movies and TV shows in 2006, according to the report.

The tactics are apparently working. Food marketing to kids is "effective in generating 'pester power,' " the FTC stated. Citing one company's research, the agency said that "75% of parents bought a product for the first time because their child requested it." Also, "another company found that in-store marketing advertising campaigns using child-targeted, character-based themes outperformed those using mom-targeted themes."

The report is the first comprehensive review since the FTC issued a similar report in 2008 that was based on 2006 data.

"The encouraging news is that we're seeing promising signs that food companies are reformulating their products and marketing more-nutritious foods to kids, especially among companies participating in industry self-regulatory efforts," FTC Chairman Jon Leibowitz said in a statement. "But there is still room for improvement: We will look for continued progress by the food industry and greater participation by the entertainment industry."

Still, the FTC has few enforcement tools at its disposal. Even a move by the agency to recommend voluntary guidelines was thwarted earlier this year. That effort, called the Interagency Working Group, died in the face of opposition from advertising industry leaders who called it "backdoor regulation."

Industry leaders have instead promoted the self-regulatory program run by the Better Business Bureau's Children's Food and Beverage Advertising Initiative . Known as CFBAI, the program launched in November 2006 and now includes 16 voluntary members, including McDonald's USA, Burger King, The Coca-Cola Co., PepsiCo, General Mills and Kraft Foods Group.

CFBAI released an annual report this week showing what it described as "steady improvements" in the nutrition content of foods advertised to children. The report cited a recent in-house review of ads in 31 hours of Nickelodeon programs that found "a majority of the CFBAI participant ads were for foods containing fruit, vegetables, whole grains or non/low-fat dairy." This, the report stated, "showed a steady upward trend from past analyses, from 48% of the foods advertised in the 2010 sample to 72% in the 2012 sample."

CFBAI also touted guidelines taking effect Dec. 31, 2013 that the for first time will enact identical nutritional standards for all its members, rather than letting companies pick and choose their own rules. The rules also tighten some of the nutrition standards.

Still, health advocates say that the CFBAI did not go far enough. "Self-regulation has led to only fairly modest improvements," said Margo Wootan, director of nutrition policy for the Center for Science in the Public Interest, or CSPI. "The overwhelming majority of foods that are marketed to kids are unhealthy."

Ms. Wootan said self-regulation can work, but "the problem is what the companies have agreed to do is too weak." She pointed out that some significantly sized marketers do not participate in the CFBAI self-regulatory program, including Chuck E. Cheese, IHOP and The Topps Co., whose brands include Bazooka bubble gum. Also, CSPI wants the program to include on-package marketing, in-store displays and toy giveaways.

Elaine Kolish, VP-director of CFBAI, responded that shopper marketing is not covered because it is primarily an "adult-oriented" environment, citing an industry study showing that only 15% of shoppers bring their children on shopping trips. She said toys are excluded because "deciding what child gets a toy based on what their parent orders is not what we are trying to cover. We are trying to help support parents by having the advertising to the kids be for healthier products."

Under CFBAI's guidelines, cereal brands with more than 10 grams of sugar per serving won't be able to advertise to children. That is "better than the 12 or 13 grams that it used to be," CSPI's Ms. Wootan said. "But it still means that that your average breakfast cereal [will] be one-third sugar, one-third refined flour and one-third whole grain. That's more like a cookie than a cereal."

The FTC report found that :

Cereals marketed to children ages 2-11 in 2009 had less sugar than in 2006 (down by 0.9 grams). But the FTC noted that kid-targeted cereals were still the "least nutritious, averaging two grams more sugar and half the whole grain of cereal marketed to teens or to all audiences."

Drinks marketed to children had slightly lower calories in 2009 compared with 2006, but "still averaged more than 20 grams of added sugar per serving."

Kid- and teen-targeted fast food were lower in calories, sodium, sugar and saturated fat in 2009 compared with 2006.

CFBAI's Ms. Kolish said in a statement that "since 2009 there have been further reductions in calories, saturated fat, sugars or sodium, and increases in the fruit, vegetable, dairy and whole-grain content of the foods the CFBAI participants advertise to children." She added that "we recognize that there is room for improvement and our record to date shows that CFBAI and its participants are committed to dynamic, effective self regulation."

Read the full FTC report here.

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