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Upbeat on kids upfront

Jul 8, 2002  •  Post A Comment

What’s the matter with kids today?
Not a thing.
That’s the somewhat surprising message as this year’s drawn-out kids upfront market scrambles to an end.
What began way back in March and April with the big sellers’ calls on the big agencies-amid dire warnings that consolidation might mean a shrinking kids marketplace and perhaps even no kids upfront this year at all-will most likely end sometime this month with volume and costs per thousand both generally up.
The kids marketplace overall may even exceed $800 million, an increase of about 5 percent from last year’s generally accepted $750 million to $760 million total. Another forecast put the 2002 kids upfront revenue at $836 million, up a full 10 percent over last year.
Of course, buyers and sellers don’t always
agree about numbers, and the kids upfront is no exception. Sellers clearly see the $800 million upfront, with CPMs up in the mid single digits; buyers say that’s a stretch. It’s their contention that last year’s kids total was around 5 percent below the $750 million to $760 million figure, and that this year’s take will be up around 5 percent from that lower base, with CPMs for some deals slightly up and others slightly down, but overall averaging out to be flat.
“Personally, I would describe it as a more neutral market,” said John Wagner, media director and lead kids negotiator for Starcom, whose kids-business clients include McDonald’s, Kellogg’s, Buena Vista (motion pictures and home video), Lego, Nintendo and Toys “R” Us. Starcom itself is expected to account for about 15 percent to 20 percent of all kids upfront business written this year. It does 85 percent to 90 percent of its kids business in the upfront, as opposed to the scatter market, Mr. Wagner said.
A `moderate’ upfront
“It certainly has not been as robust a [upfront] buyers’ market as the last two years,” Mr. Wagner said, “but I would certainly not call it a sellers’ market either. It’s been a moderate marketplace.”
Another New York-based media buyer said that since ABC/Disney sold its consolidated broadcast and cable network inventory earlier in the upfront, Starcom “appeared to have achieved some substantial discounting” on fourth-quarter kids inventory.
Excepting perhaps only consolidation, the biggest single change in the kids landscape, both buyers and sellers agree, is the migration of gross rating points from broadcast to the wired world of cable networks.
“The gross rating points are in cable, but the premium CPMs are in broadcast,” said Ken Ripley, VP of advertising sales for Discovery Kids, who, for the first time this upfront, is selling both kids cable, in the form of Discovery Kids network, and kids broadcast, in the form of NBC Saturday morning, which Discovery will be programming with mostly live-action kids fare. “So it’s still a two-player field.”
Though cable CPMs (cost-per-thousand rates) generally are anywhere from 40 percent to 60 percent below broadcast’s (with limited exceptions where there’s near-parity), the trend, buyers and sellers agree, is in the direction of an eventual leveling of the CPM playing field.
As the kids upfront ends, “Folks who haven’t done their kids business yet are going to be surprised by higher CPMs,” said one senior buyer. ABC Family, for one, already “claims to have no more inventory to sell,” the buyer said, adding that Cartoon Network and Nickelodeon are best positioned to benefit from rising cable CPMs. As for this fall’s rating prospects, Kids’ WB knows “what kids will eat up,” while Discovery Kids on NBC, with its distinctive live-action programming, has a “fighting chance” to catch ratings lightning in a bottle.
With this upfront, premium CPMs might also be migrating from broadcast to cable, said Susan Danaher, executive VP and general sales manager for Nickelodeon/Nick at Nite, TV Land and TNN.
Currently, Nickelodeon and Cartoon Network, the two big players in kids cable, together account for “almost 90 percent” of the gross rating points” in the kids business, according to Kim McQuilken, executive VP of sales and marketing, Cartoon Network.
Unlike its larger chief competitor, Cartoon, which coordinates its sales activity with Kids’ WB, is actively pursuing young-adult audiences and the advertisers that court them. Going into the Fourth of July break, Cartoon and Kids’ were approximately 75 percent soldout, Mr. McQuilken said. Dollar volume is up “big time,” he said, with around 15 new advertisers coming aboard this upfront.
Buyers similarly estimated that Kids’ WB sold up to 75 percent of its inventory in the upfront in addition to achieving 6 percent to 8 percent in CPMs. Much of the increase was attributable to Kids’ WB’s across-the-board kids demo growth, including posting 10 percent growth in the key boys 6 to 11 demo (5.3 rating/22 share) this past season-holding the top rank among all TV networks.
While he declined to divulge Kids’ WB’s sellout levels or CPM increases, Bill Morningstar, The WB’s head of ad sales, nonetheless said that he agreed the broadcast network’s joint sales effort with Cartoon Network produced “positive traction” in the area of high-single-digit increases in CPMs and total dollars taken in.
“Overall, like the prime-time upfront, the tone of the kids upfront has been pretty positive despite some of the negative ripple effects still being felt in the [U.S.] economy,” said Mr. Morningstar. “It’s just one of those strange times, when marketers still know they have to keep moving money into the networks as they are preparing for what should be a stronger fourth-quarter selling season.”
Shift to cable
In the meantime, buyers and sellers said Cartoon’s CPMs remain below Nick’s, which are generally regarded as the highest in kids cable.
Nickelodeon pegs that same joint share with Cartoon at 83 percent but agrees with the general principle of a “share shift from broadcast to cable … primarily to Nickelodeon and Cartoon,” said Ms. Danaher, who has wrapped her kid upfront. “Volume is robust, double-digit dollar growth, strong positive CPM territory,” she said.
This upfront, Nick did business with approximately 100 parent companies (as opposed to individual brands), including a dozen new advertisers, Ms. Danaher said. “The traditional players are all back in force,” she said. In addition, “Approximately 10 percent of the revenue generated in the upfront is from new advertisers.”
At Discovery, “Dollars were up across the board,” Mr. Ripley said. Approximately “80 percent of [upfront] business is [for] both NBC and Discovery Kids.”
The new venture with NBC is a branding opportunity for Discovery, Mr. Ripley said. “Truly, we’re using NBC to point toward Discovery Kids Channel, and we’re using Kids Channel to point back down to Discovery” and its other networks.