FMCG worries add to mixed ad spend outlook for 2009

FMCG brands – the biggest spending global advertisers – remain the hardest to attract to digital, despite the IAB this week announcing online ad spend in 2008 rose 17.1% to £3.3bn.

The report from the IAB, in partnership with PricewaterhouseCoopers and the World Advertising Research Centre, found that online had increased its share of total UK ad spend to 19.2% in 2008, up from 15.5% in the previous year. Online now accounts for £1 in every £5 of media budget.

But despite this overall growth, the IAB report showed the consumer goods category had fallen to its lowest proportion of total spend, to 3.8% from a high of 5.7% in the second half of 2004.

FMCG brands have warned spending for 2009 will be withheld if the industry fails to provide robust measurement. Kara Clarkson, head of media and connections planning at Coca-Cola, said, “Online faces significant challenges in measuring the effects of building brand engagement online. This is a real challenge for the online industry particularly in the current economic context.”

McDonald’s marketing director Alistair Macrow agreed a common currency was crucial. “Because our primary use of digital media is brand advertising, it’s harder for us to measure media and advertising effectiveness,” he said.

The battle to attract FMCG advertisers is being fought against a backdrop of plummeting TV ad rates. Macrow added that the digital industry can’t afford to be complacent about its recent growth.

“Advertisers that have been testing digital activity are being offered significant discounts to invest in other media channels that have long-established tools for measuring ROI,” he said.

But IAB CEO Guy Philipson was more positive about FMCG brands’ digital investment. “In the display category, FMCGs accounted for 6.5% of spend, which is encouraging,” he said. “Developing an industry currency is an issue and we’ve accelerated our efforts behind the UKOM measurement initiative.”

At the IPA, head of digital Matt Simpson acknowledged it was a challenge to attract FMCG spend. “It only takes a few advertisers to wake up to the role of online advertising to change the marketplace.”

Although the economic situation has wreaked havoc on marketing budgets in the first quarter of this year, brands remain confident online advertising will remain stable.

Ben Rhodes, VP of marketing at MasterCard, said, “It’s the first time people are taking the internet seriously and online advertising this year will be stable, if not buoyant.”

In 2008 online ad spend overtook all press display, with newspaper and magazine combined. Paid-for search in 2008 grew by 22.7% to £1.9bn, accounting for 59.3% of total spend. Classifieds were up 22.2% to £715.2m.

At Honda, digital marketing manager Jonny Freeman said the company would be allocating the highest proportion of overall marketing budget to digital this year.

“The IAB report just reaffirms people’s use of online,” he said. “I see a big opportunity for online this year.”

This story first appeared on newmediaage.co.uk