In Depth

Recession Woes Not Kid Stuff

Buyers Say Demand Could Be Down, But Sellers Are Optimistic

Will the kids advertising market be affected by the recession, which has rocked ad sales on most other broadcast and cable networks?

It depends who you ask.

Kids Programming

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The kids networks say the key categories that drive the kids upfront market—toys, video games, movies, fast-food restaurants—haven’t seen sharp cuts. They also do relatively little business with the auto and financial advertisers, which have been canceling upfront buys aimed at grown-ups, leading the kids networks to forecast ad sales roughly on par with last year’s $900 million.

But buyers say the networks shouldn’t count on Santa Claus to deliver the usual big bag full of ad dollars.

“We don’t think the kids market is recession-proof,” said Darcy Bowe, who heads kids buying at Starcom USA as associate activation director. “I think demand will be down.”

The kids market is driven by the few times of the year when marketers are frantic to reach their young audience. One is in the impending second-quarter, pre-Easter period.

“The good news is the money does seem to be coming, especially in categories like the movie studios and the video game category and the fast-food companies,” said Jim Perry, executive VP for 360 Brand Sales at Nickelodeon and the MTV Networks Kids and Family Group.

“So the money is coming, although it is coming a little late. The pricing on the kids side has held up,” he added.

But Ms. Bowe noted that after Easter, the market quiets down.

“The networks tend to have a lot of inventory to sell in scatter, and they usually have a challenge selling it even in better economic times. It should be interesting to see how that affects the upfront,” she said.

The key to the upfront is how much demand there will be for the eight to 10 weeks leading up to Christmas.

“There’s a supply-demand equation that takes place in the September period and the hard 10,” said John O’Hara, executive VP of ad sales and marketing at Cartoon Network. “In my view, there’s going to be strong demand for that period of time.”

After all, “People don’t want to deny their kids toys at Christmas time,” he said.

Mr. O’Hara said it would be silly to expect that the kids business won’t be impacted by the overall economy. But at the same time, he said, “It has the potential to be similar year-to-year because the categories that drive it are less impacted by the economy.”

In the kids market, cable dominates, with about 95% of the viewership.

“Broadcast gets a very small piece of the pie in terms of ratings and share, and it’s trending smaller,” said Jackie Kulesza, senior VP and broadcast activation director at Starcom USA.

At its upfront presentation earlier this month, Nickelodeon, which controls the bulk of the ratings points in the kids market, announced it will have seven new series next year. It also said it was rebranding two of its networks—Noggin and The N—to bring them further into the family as NickJr. and TeenNick, respectively.

“We hope it expands the overall Nickelodeon brand, which is a monster brand already,” Mr. Perry said. “We think that if the overall brand gets bigger, it will drive more advertising to all the different platforms.”

Mr. Perry said advertisers are buying ad packages designed to reach kids on the variety of media they use, rather than simply buying spots on TV.

“We think that’s the best way to work with Nickelodeon, to take advantage of all the touch points we have,” he said. “It makes people’s marketing message and brand message more impactful.”

Cartoon Network last week unveiled plans to move into live-action programming with both scripted and nonscripted shows in development, including shows that look like junior versions of “Survivor” and “Ghosthunters.”

Cartoon Network was up 17% in the first quarter and sees its growth in an overall flat market as a part of its pitch.

“We’re resurgent,” Mr. O’Hara said. “Nick is a strong competitor, and we’re aware of them, but we have a great story this year. We have a lot of new programming, and we’ll have some new opportunities with those programs because the programs are different.”

The live-action shows should open the network up to some new categories, he said.

“We are boys at our core, but we think some of these shows will skew a bit older and could have the potential to draw mom and dad for family viewing,” Mr. O’Hara said.

“We’ve seen nice growth on Cartoon. They’ve found a niche with boys,” said Starcom’s Ms. Bowe.

The live-action shows on Nickelodeon and Disney Channel and those coming to Cartoon Network, which mostly use older characters to appeal to younger viewers, signal a change in viewing habits.

“The composition of who a kid is today is so dramatically different,” Ms. Bowe said. “It’s great to see the networks are turning themselves around to cater to new aspects of their audience.”

While Disney Channel rivals Nickelodeon for viewership with some of the market’s top-rated shows, it doesn’t sell traditional advertising. Instead it offers a limited number of sponsorships for its programs. Disney will be pushing those sponsorships hard in the upfront.

For example, Disney is working with JCPenney on a multiplatform package tied to “Hannah Montana” that gives kids an opportunity to win a trip to L.A. for a rock star makeover.



State Farm is working with the channel on a safe teen driving campaign with interstitials featuring Selena Gomez, star of “The Wizards of Waverly Place.”

“Next year is going to be a big year for Disney Channel,” said Michelle Scarola, senior VP for TV sales of the Disney Media Advertising Sales and Marketing Group. In the fourth quarter, Disney Channel will have its first “Wizards of Waverly Place” movie. Later in the year, “High School Musical 4” and “Camp Rock 2” are coming.

Ms. Scarola said there are already some sponsors attached to the “Wizards” movie, but she declined to name them.

Disney also is pushing Disney XD, which was rebranded from Toon Disney and aimed at boys.

Disney XD is packing its fourth quarter with a new live-action show, its first original movie, specials and sports-related programming from ESPN.

Disney XD also extends into multiple platforms.

“When you’re targeting this audience, you have to be,” Ms. Scarola said. “Disney XD is not just a TV brand; it’s an entertainment brand that encompasses all the different media and platforms that kids are in these days.”

Ms. Scarola said she thinks the overall kids market will be flat, but with Disney XD on line, she expects Disney’s share of the market to rise.

By and large, all of the major kids players said they expect few changes in the market, despite the economic upheaval that is making advertisers wait until the last minute before committing to spending.

“I have no indication from my contacts that they will not buy on an upfront basis,” said Mr. O’Hara of Cartoon Network. “Are they modeling more than one model for the upfront? I bet you they are.”

“We’re having good discussions with our partners and we’ll just have to wait and see what the market brings,” Nickelodeon’s Mr. Perry said. “Even in tough times, people are advertising, and where they’re advertising is on the most reliable quality places.”

But negotiations, which usually take place prior to broadcast and cable upfronts in May and June, could drag out.

“I think kids will be slow like the rest of the market if they try to behave as if there’s going to be increased demand in pre-Christmas time periods,” Starcom’s Ms. Kulesza said.