The kids upfront is moving. But it may be going nowhere fast, buyers said.
While networks say that they’ve received budgets from most of the agencies and clients they deal with, the parties might be far apart on pricing, sources said.
“It’s begun. We’re doing business,” Jim Perry, senior VP of Nickelodeon Ad Sales, said Friday. He said budgets from advertisers began coming in the week of April 17 and then picked up: “Most of the budgets came in this week, and we’re almost fully registered at this point.”
Based on the budgets registered, “There is without question more business than there was a year ago,” he said. “Demand is up, and it’s up across the movie studios, it’s up across the mid-tiered toy companies, it’s up for video games and it’s up for packaged goods business. We like what we’re seeing.”
Mr. Perry said pricing varied depending on the time of year in which the advertising will run. “There are significant price increases happening in the holiday fourth quarter and in pre-Easter,” he said. But for the rest of the year, the increases are “a couple of ticks below where they were a year ago.”
He said this week will be the telling week as the pace of deal-making picks up.
Mr. Perry added that advertisers are showing much more interest this year in advertising on Nickelodeon’s online properties and are buying it during the upfront. Sources said Cartoon Network has received the bulk of its budgets and has begun making deals.
“We have a larger percent of our budgets in as well,” said Tricia Wilber, senior VP of advertising sales and promotions for the Disney ABC Cable Networks Group. She said the budgets were about what she’d expected, with no big surprises: “We’re pleased with it.”
No deals had been closed as of last Thursday. “We’re negotiating at this time,” she said.
But some buyers refuse to be rushed to market.
Jon Mandel, chairman U.S. and chief global buying officer of MediaCom, said his agency, which handles a big chunk of kids advertising, hadn’t submitted its budgets to the networks.
“It’s like `What if they gave a market and nobody came,”‘ Mr. Mandel said, accusing the networks, Nickelodeon in particular, of trying to stampede buyers into making fast deals in a soft market.
“They were saying, `We’ve got everybody’s budget.’ And it’s like, we all know you don’t,” Mr. Mandel said. “There’s a difference between lying and selling, and it ain’t soup yet. It isn’t even out of the can.”
He said as far as he knows, only a handful of deals have been done, including some with some DVD and movie companies.
As a big fish in a consolidated kids market, Mr. Mandel said he can make his deals at any time. “There is no such thing as a kids upfront. That’s old school. You do it whenever you do it.”
Ms. Wilber acknowledged that sellers want to see some action. “I’m sure there was a lot of push to get the market started from all realms, and I think what we saw was that when the clients were ready they registered their budgets,” she said. “They wanted to have the best information, and we certainly respect that.”
Sellers Seeking Increases
Last year about $800 million worth of business was done in the kids upfront, and sellers are looking for cost-per-thousand increases in the mid- to high-single-digit range after several years of little growth.
Shelly Hirsch, chairman of Summit Media Group, which has roughly 35 kids clients, said the market doesn’t appear to be that strong because there is some question regarding the health of the business, specifically regarding Toys R Us and KB Toys, two large toy retailers that may be selling off or closing operations.
With Nickelodeon trying to price deals high, some buyers have moved to do deals first with Cartoon Network. Cartoon Network’s inventory is tightening up because its Adult Swim block has been sectioned off as a separate network and because it is launching a preschool block. A more limited group of advertisers sponsors programming aimed at preschoolers.
Toy manufacturers still make up the majority of spending on kids television. Home video entertainment is the next biggest category, followed by food.
Some food marketers, including Kraft, have been rethinking their media efforts because of increased scrutiny on advertising for kids and its relation to juvenile obesity. While Kraft won’t advertise some products, such as Oreos or Kool-Aid with sugar, to kids, it will market products that have nutritional benefits.
While the networks expect food advertising to be unchanged, analysts estimate that all food advertising targeted to kids could drop $100 million.