Peter Kafka

Recent Posts by Peter Kafka

What Internet Ad Slump? P&G Pours Money Into the Web

Last week, I noted that Internet ad spending had dropped five percent in the first three months of the year, and wondered when Web ads might rebound.

And now, here’s a data point for optimists in the “soon, real soon” camp: Procter & Gamble (PG), the world’s biggest marketer, is pouring more into Web ads than ever. Last quarter, it increased its spending on Internet display ads by nearly 150 percent.

Those numbers, from ad tracking service TNS, via Ad Age, are similar to outlays from rival Johnson & Johnson (JNJ). Both companies are now spending about four percent of their ad bugets on online display–the boring banner ads on Yahoo (YHOO) and Time Warner online unit AOL (TWX) that everyone loves to complain about.

The numbers don’t include other Web categories like video and search. But as much as some of us (ok, me) like to chatter about video sites like YouTube and Hulu, Web video is still a tiny ad market. And  consumer packaged goods companies like P&G and J&J,  who bring you everything from toothpaste to diapers, have traditionally had less use for Google (GOOG) than other marketers.

These still aren’t huge numbers in the grand scheme of things: For P&G, that amounts to about $26.9 million in the first three months of the year; for J&J, $15.5 million.

But if this keeps up, it will be a big deal. Internet boosters have been waiting a very long time for the consumer packaged goods guys, who are responsible for a huge swath of offline advertising spending, to move onto the Web. Astonishing that it’s taken until 2009 to get them there, but you’re not going to hear many complaints right now.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik