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’04 Kids Upfront Explodes

Apr 26, 2004  •  Post A Comment

The kids upfront market is off to a bullish start, with ad prices soaring 15 percent to 20 percent and more over a year ago.
The chief reason for the rise in prices is skyrocketing advertising demand in the entertainment categories, including kids-targeted DVD and video sales, electronics and video games. Those categories typically pay higher advertising rates than other categories because they change media schedules almost daily and kids TV programmers charge higher prices for such flexibility.
Nickelodeon, the Cartoon Network and other networks have been grabbing these hefty price increases, according to media executives. Overall, kids advertising revenue has grown 5 percent to 10 percent over the $750 million in national kids TV advertising of a year ago, according to media-buying executives.
“We are more than half done, and we are seeing very strong double-digit pricing increases,” Mel Karmazin, president and chief operating officer of Viacom, said of Nickelodeon’s kids upfront market last week during Viacom’s first-quarter earnings call with stock market analysts.
Mr. Karmazin said strong business is coming from toys, movies, packaged goods and consumer electronics companies. Nickelodeon, following its typical sales strategy, has struck multiyear deals with “a number of advertisers,” Mr. Karmazin said.
David Levy, president of entertainment sales and marketing, Turner Broadcasting Sales, said kids is “a very strong marketplace” and that Cartoon Network is getting “double-digit CPM increases.”
“The business is being driven by Hollywood,” said Shelly Hirsch, CEO for Summit Media Group, a media agency whose clients are small to medium-size toy companies.
Media estimates are that 50 percent to 70 percent of kids TV programming inventory already has been sold. Last year, according to TNS Media Intelligence/ CMR, Nickelodeon pulled in $844.1 million in advertising revenue and the Cartoon Network grabbed $231.9 million. While the bulk of these cable networks’ advertising dollars are for kids advertising, both networks also grab significant numbers of teen and young-adult advertisers.
Also pushing prices higher is the slightly diminishing supply of advertiser-supported kids ratings points. ABC Kids, ABC’s Saturday morning kids block, will lose the noon-1 p.m. hour for ABC’s West Coast stations in the fourth quarter so the network can run NCAA college football. Cable’s advertising-free Disney Channel has also hurt advertising-supported kids TV ratings by siphoning off ratings points from ad-supported TV programmers as its ratings have risen substantially over the past several years.
Traditional kids advertisers-toy companies and food companies-haven’t increased spending that much this upfront, according to media agency executives. Food companies have been increasingly concerned about overtures by federal agencies and Congress that kids TV food advertising should be regulated.
The kids upfront market, which started two weeks ago, is moving faster than in previous years. Last year, for instance, the market started in May and was completed in August. Media agency executives say this kids upfront market should take another two weeks to complete.
All this is a far cry from the weaker-priced kids upfront markets of the past several seasons-in which advertisers were always in the driver’s seat. “We are in the middle of the upfront and it’s not as easy as in the past,” Mr. Hirsch said. “But it’s not that bad. This is after four years of declines. The networks are catching up.”
So strong is the market, some media agency executives said, that networks are inking even better cost-per-thousand-viewer increases in prime kids selling periods. Media agency executives said CPMs are up some 20 percent to 25 percent over last year’s prices for the “hard eight” period, which refers to the eight weeks before Christmas.
The strong kids upfront follows a strong scatter market. Starting at the end of the fourth quarter, kids TV programmers witnessed a sharp upward push on program pricing. During the fourth-quarter 2003 scatter-market period, kid programmers posted-on average-8 percent to 10 percent price increases.
Turner’s Mr. Levy noted that the kids marketplace isn’t necessarily a predictor of how the prime-time adult programming upfront will go. “They don’t always match up,” he said.
Jay Sherman contributed to this report.