FMCG brands increase online ad expenditure

FMCG companies significantly increased their online adspend in the first half of 2010, accounting for £240m of the £2bn spent on the medium between January and June.

Old Spice: FMCG brand engages YouTube in recent digital push
Old Spice: FMCG brand engages YouTube in recent digital push

Brands in the sector, which have not significantly invested in the platform in the past, now account for 11.8% of UK online adspend, up from 9.4% last year, according to research from the Internet Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC).

Marketers invested almost £2bn online between January and June this year, equating to a 10% increase on the same period in 2009.

Online now accounts for 24.3% of total UK advertising expenditure.

The 10% year-on-year growth rate is a marked improvement on the 4.6% increase recorded in the first half of 2009, when the recession was in full swing.

In the first half of 2010, search marketing accounted for £1.2bn, or 60%, of the total spent on online advertising.

Paid-search grew by 8.9%, while spending on display ads increased by 6.4% to £381m. The majority of the latter was devoted to embedded formats such as banner ads.

The total spent on digital advertising by FMCG brands was surpassed only by the expenditure of the media, entertainment and finance sectors.

Media and entertainment brands contributed 14.4% of total spending online, compared with 13.2% for the same period last year.

Finance brands, meanwhile, lowered their online adspend and accounted for 13.3% of the total, compared with 14.9% for the first half of last year.

Jon Ingall, managing director, AIS, said: "Display advertising is getting smarter and, because it can be priced and tailored live, it is now a far more powerful tool than it used to be."

He cited recent campaigns by Old Spice and Marmite as evidence of established brands directing their advertising online in an attempt to attract new audiences.

Brands spent £20.7m on pre- and post-roll video advertising in the first half on 2010, an 82% rise on the same period last year. This form of advertising is predicted to continue to grow, if web-based TV initiatives such as YouView and Google TV lure adspend.

Guy Phillipson, chief executive of the IAB, said: "FMCG brands have taken time to understand the evolution of online advertising, but they are now engaging with the relevant platforms.

"It was tough for advertisers last year, but they have learned a lot and, now that advertising budgets have returned, it is good to see double-digit growth in online adspend, ahead of overall advertising."

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