By David Goetzl
Special to TelevisionWeek
Isaac Larian, CEO of MGA Entertainment, has few doubts that television is losing clout in kids marketing. “It’s deteriorating,” he said. “We’re not getting the same bang for the buck out of the 30-second spot we used to.”
But even as Mr. Larian-whose company startled the toy industry by making its Bratz dolls a major challenger to Barbie-has questions about the effectiveness of television, he embraces it. MGA increased its TV spending by 45 percent last year, according to TNS Media Intelligence, and Mr. Larian said the company will increase it again in 2006 as it introduces a slew of new products.
Mr. Larian’s predicament is symbolic of what all kids marketers are grappling with: how much to stick with the old reliable-television-and how aggressively to experiment with new and emerging platforms. “That’s the 64-million-dollar question,” said Anson Sowby, director of marketing for Jakks Pacific’s electronic games. “TV is still the main driver, but there are so many other outlets out there.”
The potential flow of dollars away from TV is just one issue that could lead to softness in the $800 million kids upfront market this spring. Others include financial pressures on toy marketers, public-interest pressures on food companies to curb marketing of sweets and fast food to children and a viewership decline in kids programming.
The opportunity to reach kids 24/7-or at least any hour before bedtime-and put them in control makes new media desirable for marketers. Mr. Sowby, for example, believes strongly in tapping into kids’ affection for instant messaging. Others are using cellphones, video-on-demand and iTunes, and custom DVDs also are widespread. And marketers’ Web sites are no longer simply information sources but virtual amusement parks designed to engage kids in games, videos, creative challenges, stories, downloads and other activities.
The goal is brand immersion, allowing kids to enjoy and explore a product interactively-ultimately hoping to build interest leading to purchase. “Children experience your brand and apply it, as opposed to [the product] just being on TV, which is a passive medium,” said Jennifer Goodman, managing director of the Geppetto Group, a youth marketing firm.
Data validates the Web’s influence. For the 2 to 11 demo, Web consumption grew 34 percent in October over the year before, according to Nielsen//NetRatings. Among males 2 to 11, the jump was 43 percent, perhaps due to the explosion in online gaming options.
At the same time, while kids are watching more television overall, a Magna Global study shows they are watching less kids programming, in which kids marketers are most likely to run their ads. And programmers Nickelodeon and Cartoon Network, the two biggest sellers in the kids upfront, are facing ratings struggles. The programming lineup will also be shuffled with the new CW network entering Saturdays and Nick exiting Saturdays on CBS.
On the buying side, toy and video game marketers are in a rough patch. The toy industry has seen sales decline since 2003 and leading marketers, including Hasbro and Mattel, have cut television spending. Much of the toy industry’s struggles have been blamed on kids growing up faster and developing more interest in electronics, yet video game marketers saw sales drop in the fourth quarter.
Food companies are under pressure as well. Advocacy groups are pressing them to stop targeting kids with junk food ads. In January, the Center for Science in the Public Interest threatened to sue Kellogg and Nickelodeon parent Viacom to stop them from marketing sugar-heavy, low-nutrient foods to kids. Kraft last year halted marketing of high-sugar products such as Kool-Aid and Oreos to kids under 12.
“There is some sensitivity to the issue and I think it will have an effect in that category,” said Al Kahn, CEO of 4Kids Entertainment, which sells the Saturday morning children’s block on Fox. “There might be some migration away from television.”
Until a few years ago the kids upfront would break in February on the heels of the annual Toy Fair. Now it takes place just before the adult market, around early May. Networks sell about 80 percent of their inventory, and the bulk of the business is concentrated in the fourth-quarter holiday period. Buyers said that last year saw cost-per-thousand pricing in the fourth quarter up by 7 percent to 10 percent, while the first through third quarters saw increases in the low single digits, if at all. Both Nickelodeon and Cartoon Network said the scatter market is strong, with pricing above the upfront, giving them optimism for volume and cost-per-thousand increases this spring.
“We had a very strong upfront last year and market dynamics are shaping up to be very similar,” said John O’Hara, senior VP of sales and marketing for Cartoon Network.
Mr. O’Hara points to the emergence of the pre-Easter and back-to-school periods as high-demand times, joining Christmas. Nickelodeon, meanwhile, says it is encouraged by the expansion of the kids market into new industries such as travel and automotive, where marketers may be looking to talk to parents through kids programming. Nick has seven advertisers in the auto category.
“Every year there are more and more advertisers looking to talk to kids and their parents,” said Jim Perry, senior VP of Nickelodeon ad sales.
Some new offerings also could drive increases. Games should accompany the release of the new Xbox, while Nintendo and Sony have new consoles coming. The movie slate includes Paramount’s “Charlotte’s Web,” DreamWorks’ “Shrek 3” and the latest “Harry Potter” offering.
Buyers, however, say the market may be lackluster and a reflection of an overall ad slowdown. “Across the industry, whether adults or kids, clients are being very careful with their money,” said MediaCom’s Todd Gordon. “They’re approving budgets later and holding money back until they know how their business is going.”
Without the emergence of a Furby or a Tickle Me Elmo as a hot seller, the toy industry may continue at a slower pace. “There are a lot of good toys, but there isn’t one must-have,” said Josh Kaufman of Summit Media Group.
Some marketers have shown they can shine by passing on television altogether. A bright spot for Mattel is its American Girl line, which hasn’t run a TV commercial since 2000. Instead, it relied on a massive catalog business, direct mail, its Web site and other outlets to boost sales by 15 percent last year. “We have a softer, subtler message and it’s been a good fit for our brand,” said Mattel spokesperson Julie Parks.
The Power of TV
Television networks are still bullish on their ability to reach kids with the powerful brands that marketers benefit from being associated with. “TV really is the predominant platform and will be for a while,” said Pete Danielsen, Nickelodeon’s senior VP of programming.
However, aware that kids are increasingly spending time on the Web and elsewhere, both Nickelodeon and Cartoon Network have embraced new media and are eager to provide off-net solutions to advertisers. In just a matter of months, Nickelodeon has added a broadband channel (TurboNick) and has made show content available on iTunes and on Verizon and Sprint cellphones. “It’s a reaction to where our audience is going,” Mr. Danielsen said.
Cartoon Network executives echo the “follow-the-consumer” theme with their brand moving into the same arenas as Nick, including VOD.
Both Nick.com and CartoonNetwork.com are heavily trafficked. Nick.com is rife with games, video and message boards, while CartoonNetwork.com has been so successful at attracting kids to play games that Time Warner President and Chief Operating Officer Jeff Bewkes touted the site’s 2 billion game-plays in 2005 during the most recent earnings call with analysts.
“We’ve seen a steady increase in advertisers who want to go to CartoonNetwork.com and Cartoon Network VOD,” said Chris Pizzurro, VP o
f digital ad sales and marketing for Turner, which operates Cartoon.