Kids' TV Up Despite Regulatory Challenges--Sector Took Hit When Food Companies Came Under Scrutiny, But It's Expected to Make Gains on Strong 2010
By Andrew Hampp
The reformulation of sugary, fatty and high-sodium foods aimed at kids that began in 2007 was supposed to be a wake-up call to the kids media marketplace. The changes to the products, resulting from years of watchdog-group scrutiny and FCC recommendations, sent shockwaves through the sales departments of Nickelodeon, Cartoon Network and Disney as they scrambled to work with their partners to find new ways to market their products.
Four years later, a lot of that ad money has come back -- even as sales of some affected products have slowed.
The kids' upfront finished as much as 5% up last year, compared to 2009, at just under $1 billion, on the strength of strong spending among toys, movie studios and renewed spending from packaged-food and quick-service restaurant advertisers. This year's kids upfront is expected to increase another 3% to 5% based on early estimates from multiple executives. Driving that resurgence is a new focus on targeting parents vs. kids, and a commitment to marketing healthful products.
As part of the Children's Food and Beverage Advertising Initiative, issued by the Council of Better Business Bureaus, 17 advertisers, from Burger King to Kraft to Mars, have pledged to improve the health content of their products and change their marketing strategies. Elaine Kolish, VP-director of the CFBAI, said advertisers were in 2007 required to promote healthy products in at least 50% of their media targeted to kids, but all the participating marketers ended up promoting those products in all their kids' ad time. In January 2010 that became an official requirement. Additionally, Coca-Cola, Cadbury, Mars and Hershey's have all committed to not advertising at all to children under 12.
Food ads are certainly less frequent than non-food ads in an informal media study conducted by the CFBAI last spring. During a 38-hour review of kids' programming, only 24% of all ads were for food-related products, the rest were for non-food products like games and movies, which were twice as prevalent.
"Our goal is not to reduce the number of ads to kids but to shift the content [of the ads]," Ms. Kolish said. "Companies have had to discontinue some products, reformulate others and innovate new products once budgets became effective. It's led to reductions in calories, salt and trans fats."
But ads for unhealthful foods haven't disappeared entirely, said one kids' cable sales executive.
"The loophole is they still advertise those brands, they just do it in different places," the executive said, noting that daytime broadcast programming has benefitted from such shifts. "High-sugar cereal, high-sodium lunches, those products' budgets have only been redirected, not cut." The idea is to target moms -- and the kids who might be watching with them.
A kids' media buyer cautioned that such shifts haven't always made the most economic sense. "We've experimented with taking kids' advertising and running it against moms. That was not particularly effective. The question was, 'Can we do this inexpensively as opposed to making entirely separate creative to talk about kids' products?' And the answer to that was no," the buyer said.
As parents have been identified as the new target, kids' cable networks have added more prime-time programming that appeals to both kids and parents to avoid further ad-related scrutiny and capitalize on the high volume of co-viewing that occurs around the 8 p.m. hour. Nickelodeon recently expanded its Nick At Nite lineup to include an additional hour of family-friendly reruns and original series such as "Glenn Martin D.D.S." The programming block, sold separately from Nickelodeon, posted a 13.6% increase in revenue in 2010, according to Kantar Media, and saw a 40% bump in revenue among non-endemic advertisers.
Cartoon Network's college-targeted Adult Swim also added more prime-time hours, and saw a 9.2% bump in measured ad spending in 2010, according to Kantar. Discovery Communications and Hasbro's The Hub launched last fall with prime-time reruns of shows like "Happy Days" and "The Wonder Years," and has found some early success in reaching packaged-food and gaming advertisers.
Jim Perry, Nickelodeon's exec VP-360 brand sales, told Ad Age last spring that movies and entertainment had replaced food as the network's No. 2 ad category. And indeed, only two food clients made up its top 10 biggest spenders in 2010. General Mills was No. 1 with $74.18 million, an essentially flat change in spending from 2009, while Kellogg Co. was No. 7 with $21.67 million, down slightly from the previous year, according to Kantar Media. Nick At Nite, however, counts General Mills (No. 3), Kraft Foods (No. 4), Nestlé (No. 8) and Hershey Co. (No. 10) among its top clients, with boosts in spending among many.
Cartoon Network has also been adding more live-action and sports programming to its schedule to stay competitive in the ratings with its cable peers and capture a higher volume of dollars from the movie-studio, video-game and healthy-food marketers such shows attract. Its first awards show, the sports-themed Hall of Game, attracted marketing partners like Pepperidge Farm, Kids Foot Locker and Sears.
One kids' media buyer suggested the worst of the food-marketing cuts may be over. "They're continuing to spend at or above the traditional levels. The things that are impacting them now aren't so much kid advertising rules and restrictions. Those have not been a big problem for the past couple years now," the buyer said, noting that food companies such as Kellogg and General Mills have spent more time lobbying on their products' behalf in Washington. "They're trying to do a better job of promoting the positive aspects of their products to fend off any regulatory efforts that might be put in place."