Cereal makers, fast food restaurants and other food companies spent $1.79 billion to advertise to children aged 2 to 17 in 2009, down almost 20 percent, on an inflation-adjusted basis, from $2.1 billion three years earlier, the FTC said.

But that drop did not come necessarily because companies advertised less, but because they spent less on expensive television advertising and 50 percent more on cheaper online marketing, the FTC said.

Ninety percent of the 48 companies surveyed reported doing some online marketing, the FTC said. The agency did not identify the companies.

The FTC also found "modest nutritional improvements" in the foods advertised to children, in categories including cereals, drinks and fast-food kids' meals.

Cereals advertised to children had a small drop in sugar content and used more whole grains, while fast-food restaurants advertised fewer unhealthy products, the FTC said.

But beverages remained an issue since the FTC found that drinks marketed to children had an average of more than 20 grams of added sugar per serving. That is slightly less than a candy bar.

The FTC praised the Better Business Bureau's Children's Food and Beverage Advertising Initiative for making "major strides" in self-regulation, but urged more progress.

The CFBAI has nudged its members to improve foods advertised to children, and said that cereals in particular were better than those several years ago.

"This is an incremental process. As self-regulation has matured, it's gotten more robust but, yes, there's room for improvement," said CFBAI Director Elaine Kolish.

But health advocates have been unimpressed with the food industry's efforts to reduce fat, sugar and salt in foods.

"Companies still aren't doing nearly enough to support parents and protect kids," said Margo Wootan, director of nutrition policy for the Center for Science in the Public Interest.

She was particularly critical of industry's decision to allow companies to advertise popsicles and fruit roll-ups to children. "The overwhelming majority of marketing is for foods that will compromise children's health," she said.

The issue is a source of concern since about 17 percent of U.S. children and teens are obese and another 15 percent are overweight, according to 2010 data by the U.S. Centers for Disease Control and Prevention.

The Obama administration, with its goal of containing healthcare costs, has emphasized children's health. First Lady Michelle Obama's "Let's Move" campaign encourages children to eat healthier food and exercise more.

Several government agencies, including the FTC, lost a pitched battle last year to have the companies voluntarily end all advertising to children unless the food being promoted was healthy fare such as whole grains, fresh fruits or vegetables.

(Reporting by Diane Bartz; Editing by Phil Berlowitz and Leslie Gevirtz)

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