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Kids upfront:
Decent but hardly great


Ad sales expected to be up slightly over last year

Mar 11, 2008

When the kids’ upfront gets underway this week with Nickelodeon’s presentation to media buyers, one might expect it to fetch the hefty increases in ad sales anticipated for the broadcast and cable upfronts.

But that's not likely to happen. It's looking like a decent but not great ad market for the kids' cable networks and the broadcast networks’ kids programming blocks.

Advertising expenditures are expected to be only slightly up from last year, when advertisers spent somewhat under $1 billion, according to David Joyce, an analyst with Miller Tabak & Co. Negotiations will kick off around late April and drag into August.

As in past years, there will be healthy demand for the weeks leading up to Christmas, Easter and the back-to-school period in late summer, but demand is expected to be weak for the other parts of the year.

The problem is a couple of core ad categories have been cutting budgets, led by toymakers, which suffered sales declines this last Christmas season. Part of it came from recalls of some toys because of their lead content, but the bigger factor was the lack of hot products.

“It was not a wonderful year at retail. Usually, a hot item drives the market, but there wasn’t much of a reason to show up at retailers,” says Shelly Hirsch, CEO of buying agency Beacon Media Group. “The good news at Christmas is that all the big companies survived. They absorbed the problems that befell them.”

Ad spending for toys has recently been trending down or been at best flat.

Other categories that have been cutting ad spending include candy, chocolate and fast-food restaurants, report media buyers. Those cutbacks have come in response to harsh criticism on the part government agencies and watchdog groups over ad messages touting unhealthy products to kids.

Kids’ networks hope to make up some of this loss with products geared to adults watching TV with their kids.

“We’ll see a small uptick with the increase in adult advertisers," says Kerry Hughes, senior vice president of advertising sales and partnerships at Qubo, which has a digital cable network and a programming block on NBC. “I’m not sure the increase [in kids' upfront spending] will come from an increase in traditional kids’ advertisers."

Adult categories that are posting ad spending increases on kids' TV include financial services, insurance and retail.

“Advertisers are definitely becoming more open to working with kids’ networks to target that audience,” says Michelle Scarola, who heads up TV ad sales at Disney. “Our category base has grown and we’re in conversations with many different categories, from new autos to financial, and we’re locking in other non-endemic categories.”

A few categories geared to kids are spending more than in the past, including movies and videos.

Food advertisers have also been tinkering with messages to tout healthier products to kids, bringing some of that money back into the market.

“Last year the whole marketplace felt the effects of the pressures on food manufacturers and quick-service restaurants,” says John O’Hara, senior vice president of ad sales and marketing at Cartoon Network. “But they’ve made adjustments like reformulations of products. The category has taken its hit in spending and leveled out.”

The outlook for the kids’ upfront is decent in part because advertising demand has been strong in the scatter market, when inventory not sold in the upfront is auctioned off. The kids’ scatter market hasn’t been nearly as strong as network primetime, which has seen prices rise as much as 40 percent over upfront prices.

But demand is up, says Jim Tricarico, senior vice president of ad sales for Nickelodeon.

“The scatter market, in general, has been really good,” he says. “The movie studios, in particular, have been strong, and toys have come back with scatter, which is a good sign.”



Kevin Downey is a staff writer for Media Life.




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