(Bloomberg) Food companies cut spending on television ads that market less-healthy food in the U.S. to children and increased marketing on the Internet and through mobile devices, according to a Federal Trade Commission report.
The companies designated $1.79 billion for marketing to people ages 2 to 17 in 2009, compared with $2.1 billion in 2006, according to the report released today. Adjusted for inflation, the drop was almost 20 percent, the agency said. At the same time, online and mobile marketing rose by 51 percent to $122.5 million, according to the report.
The U.S. child obesity rate has almost tripled since 1980 to 17 percent, or 12.5 million people, according to the U.S. Centers for Disease Control and Prevention. The findings suggest industry self-regulation isn't doing enough to limit advertising to children, said Margo Wootan, nutrition policy director at the Center for Science in the Public Interest.
"It's great that a number of food and media companies have stepped up and agreed to self-regulate, but as currently practiced, the self-regulatory system is weak and ineffective," Wootan, whose consumer advocacy group is based in Washington, wrote in an e-mail.
The companies' efforts were in response to consumer pressure to help reduce obesity and improve the nutrition of products on supermarket shelves. The online and mobile ads have grown because they cost less, Wootan said.
SpongeBob SquarePants
TV characters such as Nickelodeon's SpongeBob SquarePants and movies such as 20th Century Fox Film Corp.'s "Ice Age: Dawn of the Dinosaurs" were used extensively in advertising to promote kids meals, frozen desserts, and candy, the report said.
The reduction in TV spending follows successful efforts by Nestle SA, Kellogg Co. (K) and other industry leaders to push for self-regulation instead of government guidelines seeking to limit ad spending on children's fare with high levels of sugar and fat.
The report shows food companies are making progress in efforts to curtail ads to children, Nestle (NESN), the world's largest food company, said in a statement. The company doesn't advertise to children younger than 6 and promotes only products that meet nutritional criteria to those ages 6 to 11, Nestle said in a statement.
Nestle participates in the Children's Food and Beverage Advertising Initiative, a voluntary self-regulation program.
Industry Program
"We are pleased that the Federal Trade Commission has recognized the progress being made under self-regulation with the CFBAI participants' commitments to advertise to children only foods meeting meaningful, science-based nutrition criteria," Nestle said.
Industry self-regulation resulted in modest nutritional improvement in marketing cereals, drinks, and fast-food kids' meals to children, the FTC said in the report.
Media companies continued licensing children's characters and ads during children's programming to less nutritious foods.
"The encouraging news is that we're seeing promising signs that food companies are reformulating their products and marketing more nutritious foods to kids, especially among companies participating in industry self-regulatory efforts," Jon Leibowitz, FTC chairman, said in a statement.
Obesity Costs
U.S. consumers spend about $147 billion a year on obesity- related medical costs, with the government health programs Medicare and Medicaid covering 42 percent.
In 2009, Congress created the Interagency Working Group on Food Marketed to Children, which in 2011 drafted proposed marketing principles to guide the industry. The proposal was fought by industry and groups such as the Association of National Advertisers, whose board members include Coca-Cola Co. (KO) and Unilever NV. (UNA)
Nestle and Kellogg, the biggest U.S. breakfast-cereal makers, were among the companies that have fought the government guidelines. Kellogg had said it would cause severe financial harm because they would have had to remove Tony the Tiger from Frosted Flakes boxes to comply.
Industry has pursued its own voluntary efforts through an initiative by food and beverage companies and The Council of Better Business Bureaus, an Arlington, Virginia-based nonprofit organization that administers self-regulation programs for businesses.
"We recognize that there is room for improvement and our record to date shows that CFBAI and its participants are committed to dynamic, effective self-regulation," Elaine Kolish, vice president of the Council of Better Business Bureaus and director of the advertising initiative, said in an e-mail.
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