Media economy
For kids upfront, a long cool summer
By Kevin Downey
Jul 6, 2007 - 7:59:06 AM

This year’s broadcast upfront market moved quickly, driven by strong demand and limited inventory, as did the syndication upfront.

Not so for the kids upfront. It’s really just getting underway, with some advertisers only now registering budgets, and it is expected to drag on for most of the summer. Media buyers say ad budgets are slightly down or about flat to last year, with demand weak.

Just a few months ago, Merrill Lynch analyst Jessica Reif Cohen was predicting that spending would increase 5 percent over last year, to $950 million, but buyers now say that estimate is high.

“We’re hearing that it’s not a great market but it’s not a terrible market,” says Shelly Hirsch, CEO of the Beacon Media Group in New York. “I think it’s down more than the sellers are willing to admit."

Demand is strongest for inventory on top-rated networks for the 10 weeks leading up to Christmas, the so-called Hard Ten, but comparatively weak for inventory for the other 10 months of the year. To sell inventory outside those weeks, some networks are packaging it with Hard Ten buys at favorable prices.

But in addition to weaker demand, there’s also more inventory available to buyers this year, giving them a wider choice and more incentive to skip the upfront entirely and wait to see where pricing is in the later scatter market.

There are the mainstay kids networks, Nickelodeon and Cartoon Network, but also an increasing number of networks like PBS KIDS Sprout, a partnership between Comcast, PBS and HIT Entertainment, and Qubo, a digital network with a programming block that airs on NBC, Telemundo and Ion.

“There’s much more supply than there is demand,” says Hirsch. “Nickelodeon introduced Nicktoons with a plethora of inventory and Sprout is a serious competitor to Nick Jr. with inventory, and then there are networks that are often overlooked, like Discovery Kids.”

More troubling for sellers, major ad categories aren’t rushing into the marketplace, among them food advertisers, who typically buy multiple quarters.

Food advertisers have been pressured by watchdog groups the past few years to discontinue targeting kids with commercials for fattening foods, and advertisers like Kellogg’s have committed to doing just that. Buyers say the result is clipped ad budgets.

But there's also turmoil within the toy category, another key player, especially in the Hard Ten. At the heart of it is Wal-Mart, the nation's largest retailer.

Wal-Mart is such a dominant force in the toy business that what toys it chooses to push during the holiday season determines how toy advertisers will allocate ad budgets, boosting spending to toys Wal-Mart gets behind but trimming for other toys. The problem is that the retailer has yet to decide which toys it will get behind, which leaves advertisers unsure of how much to budget for specific products.

“Negotiations go on the whole summer,” says Daniel Barnathan, president of ad sales at 4Kids Entertainment, which distributes shows like “TMNT” and oversees programming on Fox’s Saturday morning block. “I think one of the reasons is that advertisers are waiting to see what’s picked up by Wal-Mart.”

All these factors leave the kids upfront something of an anomaly in the media market, an upfront in name only outside of Hard Ten inventory. Buying and selling goes on all year with inventory almost always available.

Some ad categories all but skip the upfront. Rather than setting budgets leading into the upfront, they wait until after specific products' sales figures come in and then set budgets, and that could happen anytime during the year. That's the case with entertainment advertisers like movies, DVDs and videogames, which all release products throughout the year. If a movie comes out and bombs, the studio will yank ad dollars and let it sink quietly.