Once-Wary Industry Giants Embrace Internet Advertising

ONCE WARY INDUSTRY GIANTS EMBRACE INTERNET ADVERTISING
[SOURCE: Wall Street Journal, AUTHOR: Kevin J. Delaney kevin.delaney@wsj.com]
After years of cautiously experimenting with Web marketing, powerhouse advertisers like General Mills and Kraft Foods are cranking up online spending and increasing the range of brands they promote on the Web. Providers of consumer packaged goods accounted for more than 11% of the $145 billion in U.S. ad spending in 2005, according to research firm TNS Media Intelligence. But they spent just 1.6% of their ad dollars online last year, on average, compared with an overall average of 5.8% of total ad spending for U.S. advertisers, says TNS. These advertisers have been the most challenging targets for Internet companies, says Wenda Harris Millard, chief sales officer at Yahoo. That company has overcome some of their resistance by wielding new tools to show that Web ads can increase consumer spending. General Mills, maker of Cheerios and Betty Crocker baking mixes, expects to nearly double online-ad spending in the current fiscal year. Kraft, home of Jell-O and Kool-Aid, plans to double its number of online-ad campaigns in 2006 and to increase the number of brands it advertises on the Internet by at least half. The shift underlines the Internet's threat to traditional media such as television and print magazines. It suggests that the boom in Internet advertising that has already fueled rapid revenue growth in recent years at Google, Yahoo and other companies could continue as still other groups of more traditional advertisers step up online spending. The packaged-goods companies say their customers are spending more time online and using the Web in new ways, such as watching TV shows and other video. U.S. consumers go to the Web for about 15% of the time they spend with all media, according to another research firm, Knowledge Networks. Some Internet executives believe Web spending will echo the patterns set in earlier years with broadcast and cable TV, which both saw sharp growth in advertising once they reached a critical level of consumer adoption.
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