General Mills Thrives on Increased Marketing Spending

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Boosting TV Ads Hiked Cereal Sales, But Digital ROI Even Higher

The company has staunchly supported consumer-marketing spending increases -- 19% in the first half of fiscal 2009, which began in June -- while competitors, including Kellogg and Kraft, have begun to scale back on the heady marketing outlays of 2008, instead preaching bundling and greater return on investment. General Mills estimates that its consumer-marketing spending will be up by "double digits" for the full fiscal year.

But while the bulk of the company's spend remains on TV, Mr. Friendly said in a conference with reporters that it has begun to see significantly higher return on digital investment. General Mills has been diverting funds online, driving traffic to recipe sites such as BettyCrocker.com. The company's cooking sites had about 8 million visitors last month. General Mills also recently launched a free Betty Crocker iPhone application, which offers meal suggestions based on what's in a consumer's pantry.
"We are seeing very high returns from digital than broadcast," Mr. Friendly said, declining to give the percentage of spending that's moved online. "It's not that our TV ads don't work, but when you're watching TV you're doing it for a different reason. When you go to a website you have a very specific purpose."