I found myself at our client meetings last week in San Francisco, Seattle and LA, repeatedly making the point that CPGs had been increasing their online ad spend. This was based upon conversations that I’d been having with folks in the CPG space and the intense interest that we’ve been seeing lately from CPGs in online advertising. As I had a few spare minutes today, I checked AdRelevance to make sure that I was right about this. I was relieved to see that online ad impressions among Food and Drug and Personal Care categories had indeed increased by 32 percent over the past 12 months (Oct 06 - Sep 07 compared with Oct 07 - Sep 08). Interestingly, there is a big difference in the growth between the two big subcategories within CPG. In the most recent 12 months, impressions did not grow relative to the same period in the previous 12 months in the food and beverage category. In personal care, on the other hand, impressions grew by 87 percent.

What happened? Well, when we dig into the data, we see that it’s mostly a story about a few big advertisers significantly curtailing their online ad budgets with many others showing modest increases. During the two periods that we measured, Coca Cola’s ad impressions dropped from 276 million impressions to 50 million. Miller Brewing’s impressions dropped from 184 million to 52 million. On the personal care side, though, we saw the big advertisers generally keeping their impressions up.

Is this about personal care, or about food and beverage? I don’t think so. I think that it’s mostly about the immaturity of the media in tough economic times. As one big advertiser pulls back, we’ll see many others plodding along with modest increases in the online ad budgets, reflecting even greater increases in the allocation of ad dollars to the Internet. Given the tough economic climate that many advertisers are going to be operating in, I think that this is the story that we’re going to be seeing for another year or two. Some big advertisers will scale back significantly, a rare advertiser will dramatically shift dollars to the Web, and many others will continue to execute a modest shift of dollars from traditional vehicles to Internet.

I’ve gotten a bunch of questions over the past few days about what we’ll be covering in tomorrow’s Webinar - so here’s a preview:

1. In low involvement and high involvement retailer categories, what is the relationship between online research and offline purchase?
2. What types of online research are people doing that ultimately manifests itself in offline purchase?
3. What are the incremental sales associated with strong multi-channel execution?
4. Where should multi-channel retailers look for examples of strong multi-channel execution?

In addition to the related blog that I posted a couple of weeks ago, here’s another data point to whet your appetite.

Hope to catch up with y’all tomorrow.

Here’s some data that provides an interesting perspective on the Google/Yahoo deal announced last week.

While this deal does seem to be a pretty clear win for both parties, the audience overlap data below suggests the possibility that we should be wary of the most optimistic incremental revenue scenarios. Given the fact that 77% of Yahoo searchers also search on Google, it is possible that there may be a material number of instances in which a person searches on Yahoo and does not click on a sponsored link, and then searches on Google and clicks on a sponsored link.

With the Yahoo/Google deal in place, this person would not need to execute the second search on Google. This would simplify the experience of the searcher, but would not generate incremental revenue for Google. Yahoo, however, would get a cut of search revenue that it would have otherwise lost. The scope of this behavior in the future may ultimately be what determines whether Yahoo or Google got the better end of the bargain.

At the risk of stealing my own thunder, here is the most interesting slide from a presentation that I’ll be giving this week at the Internet Retailer conference. This is based on a survey that we ran during May, where we looked at cross channel (online/offline) usage among 659 people (US only) that had purchased consumer electronics (either online or offline) within the past 60 days. We found that a surprisingly large percent had utilized multiple channels in the course of researching and purchasing. 64% of those that visited local stores (to either see/touch/evaluate the product or to talk to a salesperson) also used the Web to research the purchase. 50% of those that used the Web to research the purchase also visited the store. The data points below, though, really blew me away.

More than half of brick and mortar buyers that used the Web to research the purchase said that they wound up buying from the retailer whose site they spent the most time researching. Equally interesting, 80% said that they had purchased from a retailer whose site they had visited first. I’ve seen a lot of multi-channel impact stats out there over the years, but I don’t know that I’ve seen a data point that so clearly makes the case for the importance of a solid Web site and strong multi-channel integration.

Yeah, yeah, this just looks at consumer electronics, which may be an extreme example, but take a look at the data below, looking at guys that you wouldn’t think of as multi-channel bellwethers…This is Homescan Online data (really old Homescan Online data, 2005) that looks at spending levels among multi-channel shoppers. You can see that multi-channel shoppers spend a LOT more than the average shopper. People that both shop at CVS’ brick and mortar stores and that visit its site spend, on average, 57% more than the average CVS shopper. 61% for Walgreen and Costco, 37% more for Sam’s and 38% for Wal-Mart.

Many of you are asking yourselves whether this is a simple reflection of loyalty, or whether multi-channel behavior causes higher spending, and it is a fair question. However, either way you slice it, these guys are valuable. Whether strong multi-channel integration rewards your most loyal shoppers or compels higher levels of spending, it seems pretty clear that it’s a good thing for retailers.

Barry Diller got the go ahead a couple of weeks ago to split Interactive Corp into five companies. HSN, Lending Tree, Interval International, Ask/Match, and Ticketmaster will go their separate ways, now that objections from Liberty Media have been overcome.

So, now that these companies can go their separate ways, does it make sense for them to stay in touch? A quick look at our NetView data from April 2008 suggests that they shouldn’t tear up each other’s phone numbers, because there appears to be some benefit to the integration of units. In April of 2008, visitors to Ask, HSN, Lending Tree, Match and Ticketmaster seemed to be a lot more likely to use IAC’s sister properties than any random online user.

Take Ask.com, for example. In April 2008, 22% of online users visited Ask at least once. For those that also visited HSN, Ask enjoyed 32 percent reach. It was 34% for those visiting Lending Tree, 35% for those visiting Match, and 33% for those visiting Ticketmaster. Taking a simple average across the board (measurement sciences, avert your eyes!), IAC visitors were 52% more likely to have visited Ask than any random online user. More strikingly, IAC visitors were 226% more likely to visit Lending tree, and 207% more likely to visit Match.com than the overall online population (see table below)

So, does this mean that IAC has made a mistake, by splitting up? Not necessarily. IAC had certainly allotted house ad inventory to pitching its own properties (one analysis that we did a year or so ago had the number at about 20%). While this house advertising might have been effective, it may have also had an opportunity cost (lost ad dollars from outside parties). Secondly, there is no reason that the firms cannot work together in the future as separate companies. Further, allowing each company to focus on its own business without regard to its sister companies may allow them to be more responsive to the market.

So, is this the right move? I dunno. I won’t be betting against Mr. Diller.