As the major ad shops begin finalizing their media plans for upcoming 2004-05 upfront TV negotiations, the kids television marketplace will be their first major challenge. The kids market-which in theory could happen soon but likely will not truly manifest for another couple of months-typically precedes the overall upfront marketplace and may or may not be bellwether of things to come.
In fact, heading into next week’s Toy Fair conference, a major toy industry trade show in New York that many see as a kickoff point for kids upfront negotiations, big kids buying agencies were unclear exactly how strong demand for advertising inventory on the major kids programming outlets might be. While demand has been abysmally weak for the past several years, following the near-collapse of some key kids ad categories-especially the toy business, conditions have firmed up over the past year, especially for the most sought-after periods of demand: the period preceding the Easter holiday and the eight weeks leading up to the week before Christmas, also known as the “hard eight.”
What makes the advertising demand equation so unpredictable is the fact that there has been a fundamental shift among the key advertising players in the kids marketplace. Whereas in the past toy makers ruled the market, food marketers are emerging as a big factor and may actually surpass the toy industry as the No. 1 kids advertising category this year. Other emerging markets, especially for older kids and teens, include fashions and accessories, home video and DVDs, video games and electronic devices.
Kids media planners say the demand picture should clear up somewhat following Toy Fair, when major toy and game launches are announced, including any significant tie-ins or licensing deals that are related to big TV advertising or programming deals.
Planners already are buzzing about an announcement ABC plans to make this week about the rebranding of its Saturday morning kids lineup into a boy-oriented action-adventure block called “Jetix,” though it was unclear whether there would be any explicit toy tie-ins to it.
Planners say there also are dramatic shifts taking place among the suppliers of kids TV rating points, or gross rating points.
While the overall supply of kids GRPs continues to expand-as it has for the past several years-with the proliferation of new programs and new outlets, the market shares of those rating points has begun to shift, with much of the movement going to outlets that don’t carry any or much ad inventory.
“We are starting to see commercial rating points becoming non-commercial rating points, but so far it doesn’t seem to be enough-outside of certain windows-that it is tightening things up to a point where we can’t buy what we want,” said John Wagner, media director at Starcom USA, one of the biggest buyers of kids TV advertising time.
The most pronounced shift has been toward Disney Channel, a commercial-free cable channel, as well as Noggin, a joint venture of Nickelodeon and PBS that has very limited commercial inventory. The big losers have been the most dominant market players: Nickelodeon and Cartoon Network.
Over the two-year period through the fourth quarter of 2003, Disney Channel nearly doubled its share of kids GRPs, going from 13.8 percent in the fourth quarter of 2001 to 25.3 percent in the fourth quarter of 2003, according to a Magna Global USA analysis of data from Nielsen Media Research. While Nielsen data was not available for Noggin in 2001 and 2002, the fledgling network accounted for a 1.8 percent share of kids GRPs in the fourth quarter of 2003. Combined, that represented a nearly 27 percent share of kids market GRPs that have shifted from commercial outlets to non-commercial or modestly commercialized outlets in a two-year period.
During the same period Nickelodeon and Cartoon Network each have seen their market shares drop about 4 percentage points. At the same time UPN has gotten out of the kids business altogether, while most other major commercial players also have eroded considerably.
The relaunch of ABC Saturday Morning and the increased commercialization of Noggin likely will help shift some of those GRPs back to the advertising world, but the biggest factor influencing supply continues to be Disney Channel, and that has a lot of planners speculating not so much on if but when Walt Disney Co. might change it to an advertising-supported model.
“We continue to hear rumblings that they’re going to figure out a way to restructure their contracts with cable operators in a way that will allow them to do that,” a top ad agency executive said, adding, “They have to. They’re just leaving too much money on the table.”
Indeed, at 25 percent of kids TV market GRPs, Disney Channel’s share is worth hundreds of millions in potential new advertising revenues to Walt Disney Co. The deals may be complicated by the fact that many of the channel’s agreements with operators mandate that it remain commercial-free.
But some buyers believe Disney could start by adding “PBS-style creative” that would not provoke the ire of cable subscribers, while allowing Disney Channel to tap Madison Avenue ad budgets, especially when packaged with kids ad inventory from Toon Disney, ABC Family and ABC Saturday Morning.
But agency execs don’t expect that to happen in a significant way for the 2004-05 season.
The good news, said Starcom’s Mr. Wagner, is that TV usage levels for the kids 2 to 11 demographic has been growing.
“There’s a misconception that kids GRPs are going down. They’re not; they’re going up,” he said, adding that while the shift to Disney Channel and Noggin has tightened the supply of ad inventory, most kids advertisers can still get the inventory they need outside pre-Easter and the hard eight.
“Basically, they’re 52-week money. They’re not as locked into things as the toy marketers are,” he said.