Markets Wired

The Federal Trade Commission today announced the results of a comprehensive study of food and beverage industry marketing expenditures and activities directed to children and teens. The study, A Review of Food Marketing to Children and Adolescents: Follow-Up Report gauges the progress industry has made since first launching self-regulatory efforts to promote healthier food choices to kids.  It serves as a follow-up to the Commission’s 2008 report on food marketing requested by Congress.

The report released today provides a picture of how food companies allocated $1.79 billion on marketing to youth ages 2-17 in 2009.  The FTC found that overall spending was down 19.5 percent from 2006, with most of that decrease coming from less spending on television ads to youth.  At the same time, food companies stepped up their spending to market to children and teens in new media, such as online, mobile, and viral marketing, by 50 percent.

New to this report is a detailed analysis of the nutritional profile of foods marketed to youth.  The analysis suggests that industry self-regulation resulted in modest nutritional improvements from 2006 to 2009 within specific food categories heavily marketed to youth, such as cereals, drinks, and fast food kids’ meals.  

According to the report, food company participation in self-regulation has increased, but some companies with significant marketing to children still have not joined the effort. The entertainment industry lags farther behind.  With a few exceptions, media companies have not limited licensing of children’s characters and placement of ads during children’s programming to more nutritious foods.

“This report paints a comprehensive picture, from soup to nuts, about expenditures, marketing techniques, and the nutritional profile of foods advertised to children and teens – it will be enormously helpful for policymakers and the public,” said FTC Chairman Jon Leibowitz. 

“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.  But there is still room for improvement:  We will look for continued progress by the food industry and greater participation by the entertainment industry.”

The follow-up study compares the 2006 data presented in the first report to 2009 data.  The FTC obtained the data through compulsory process orders, or subpoenas, that it issued to 48 major food and beverage marketers.  Key findings on how much companies spent and the types of marketing activities they used to reach children and teens include:

• Total spending on food marketing to youth ages 2-17 dropped from $2.1 billion in 2006 to $1.79 billion in 2009 – a 19.5 percent drop, adjusting for inflation.
• Much of that drop is the result of less spending on television advertising, which also decreased 19.5 percent.  At the same time, however, spending on new media, such as online, mobile, and viral marketing, increased by 50 percent.
• Heavily integrated marketing campaigns, combining traditional media,  Internet, digital marketing, packaging, and other marketing techniques, continue to be the hallmark of food marketing directed at children.
• Cross-promotions linking foods with popular children’s movies and TV characters across all these marketing techniques increased from 80 children’s movies and TV shows in 2006 to 120 in 2009.   Movies like Ice Age: Dawn of the Dinosaurs and Night at the Museum: Battle of the Smithsonian, along with TV characters like SpongeBob SquarePants, were used extensively in television advertising, on packaging, in online sweepstakes, and by other means, to promote kids’ meals, frozen desserts, candy, and many other foods to children.
• Research reported by the companies confirmed that food marketing to kids is effective in generating “pester power.” One company’s research indicated that food ads and packaging were key to children asking for a food item, and 75 percent of parents bought a product for the first time because their child requested it.  Another company found that in-store advertising campaigns using child-targeted, character-based themes outperformed those using mom-targeted themes.

Key findings about the nutritional quality of foods within the product categories most heavily marketed to children or teens, include:

Cereals:

• Cereals marketed to children ages 2-11 in 2009 had less sugar than in 2006 (a 0.9 gram decrease) and slightly more whole grain (an increase of 1.6 grams, or one-tenth of one serving).  Marketing to children of the most sugary cereals – those with 13 grams or more sugar per serving – was virtually eliminated between 2006 and 2009.
• Cereals with mostly refined grain, however, continued to dominate youth marketing in 2009.  Cereals marketed primarily to children ages 2-11 were the least nutritious, averaging two grams more sugar and half the whole grain of cereal marketed to teens or to all audiences.
• Cereals marketed to children using licensed characters and other cross-promotions had less than half the whole grain of cereal marketed without cross-promotions.

Drinks:

• Drinks marketed to children and teens were slightly lower in calories in 2009 than in 2006, but still averaged more than 20 grams of added sugar per serving.
• Most of the improvement came from drinks marketed and sold in schools, as the result of a self-regulatory program launched in 2006 by the Alliance for a Healthier Generation and the American Beverage Association.
• Water and 100 percent juice continued to make up only a small percentage of drinks marketed to children and teens in 2009 (16 percent of drinks marketed to children, and 8 percent of drinks marketed to teens).

Quick-Service Restaurants (QSR):

• The FTC found that QSR food, or fast food, marketed to both children and teens was lower in calories, sodium, sugar, and saturated fat in 2009 than in 2006.
• Restaurant menu items specifically identified as “children’s meals” were more nutritious than other QSR meals and main dishes marketed to children ages 2-11.
• Pledge companies participating in the Children’s Food and Beverage Advertising Initiative (a self-regulatory program run by the Council of Better Business Bureaus) marketed more nutritious products to children than restaurants that did not participate in this self-regulatory program.

The Commission also examined food consumption data from outside sources to look for signs that children and teens are changing their diets as food companies shift their marketing expenditures, marketing techniques, or the nutrition content of the food marketed to youth.  The report notes that over the past decade, children and teens have reduced their daily caloric intake, as well as their consumption of total fat, sodium, and sugar. 

The report further noted that since 2009 many food companies have continued to improve the nutritional profile of their foods by reformulating existing products and introducing new ones.  In July 2011, the Children’s Food and Beverage Advertising Initiative (CFBAI) – whose member companies accounted for nearly 90 percent of advertising spending on foods marketed to children in 2009 – announced standardized nutrition criteria that will take effect at the end of 2013.  

While the report states that, as a general matter, the CFBAI uniform criteria will likely lead to further improvements in the nutritional quality of foods marketed to children, it also notes that in several specific food product categories, some of the criteria may have little to no impact on nutritional quality, because many foods marketed to children already met the new standards as of 2009.  Moreover, the report notes that some companies have not yet joined CFBAI or adopted meaningful nutrition standards of their own. 

The Commission vote to approve the report was 5-0.

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