Subtle shifts in sector spend mark a fairly flat kids upfront

While the kids upfront market might have broadcasters pulling out all the bells and whistles to attract prospective advertisers right now, toy clients aren't heeding the call in hordes anymore. Mired in a deep funk, the sector's ad spend has dropped by between 15% and 20% since 2002, and although some ad sales execs suggest that smaller and mid-sized toy players could prod the category to growth this year, it's uncertain if that will happen without another Pokémon-sized hit property.
May 1, 2003

While the kids upfront market might have broadcasters pulling out all the bells and whistles to attract prospective advertisers right now, toy clients aren’t heeding the call in hordes anymore. Mired in a deep funk, the sector’s ad spend has dropped by between 15% and 20% since 2002, and although some ad sales execs suggest that smaller and mid-sized toy players could prod the category to growth this year, it’s uncertain if that will happen without another Pokémon-sized hit property.

What is certain is that the packaged goods category now wields a much heftier influence than in years past. According to Starcom media director and lead kids negotiator John Wagner: ‘Packaged goods is now probably the biggest player in the kids business, which I think no one would have ever imagined five years ago.’ That kids play a much larger role in household buying decisions is at the heart of the category’s 5% ad spend growth over the last two years.

Generally, media buyers say spending from retail and QSRs will be fairly consistent this year, with summer box-office releases like Disney’s Finding Nemo (May 30), Universal’s The Hulk (June 20) and Dimension’s Spy Kids 3 (July 23) potentially increasing the amount spent by the movie and DVD sector. Broadcast players, meanwhile, are expecting food (both cereal and snack products), beverage and video game companies to spend more. But even as new categories increase in importance, little change is felt in the market as a whole because ‘gains in any of the other categories are only offsetting the loss on the toy side,’ says Wagner.

As far as ad space availability goes, Wagner believes there’s a possibility that the drop in total kids programming hours that resulted from Disney purchasing and cutting back Fox Family Channel’s slots might put a higher price on the kid space that’s left this year. In support of that supposition, Nickelodeon senior VP of ad sales Jim Perry blamed a lower kids population, a loss of total kids programming hours and lower ratings for year-on-year supply losses of 8% during Nick’s upfront presentation in March. Although Starcom’s Wagner believes that 8% figure might be high, he does see a drop in supply.

But for her part, Patty Norway sees these losses only affecting certain parts of the upcoming market. ‘I know that ratings points are down, which in theory could put a strain on inventory [as clients aim to book more ad space to reach the requisite number of kids they're targeting],’ says the Active International senior VP and director of children’s media. ‘But when we talk about a strain on inventory, we’re only talking about six weeks prior to Thanksgiving and four weeks prior to Easter.’ Norway says these key holiday time periods may sell for slightly more than usual (she estimates a low to mid single-digit percentage increase), but the overall market should be even.

On the broadcast front, Nick, Cartoon Network/Kids’ WB! and Disney still hold the most sway with media buyers, leading Wagner to lay out what he describes as The Goldilocks Dilemma. ‘If Goldilocks were a media buyer shopping for beds, you’ve got this great big Papa Bear bed in Nickelodeon. You’ve got this Mama Bear bed with Cartoon Network/Kids’ WB! And then you’ve got this little Baby Bear bed with Disney. You have a couple of other fringe players, but you’ve really got a choice between big, medium and small. Each bed has its hard and soft spots, but none of them are just right.’

So what do media buyers say are the broadcasters’ hard and soft spots?

It’s hard not to think of Nick as the market’s pacesetter. It boasts the highest average ratings (4.4 on weekends and 2.8 on weekdays with kids two to 11 in Q4 2002), a Godzilla-like GRP (up 3% over last year to 52%, according to Perry) and impressive brand strength and impact with its target demographic. But Wagner says Nick still lacks the winning formula for on-air added value, promotions and sponsorships compared to some of its competitors, although he’s quick to add that the current Nick team seems to be working hard to change that.

Norway agrees that there is more to the equation than just size and penetration. ‘We do look at market share, and Nick is the market leader. But another thing that plays a factor is how competitive the CPMs are, and that determines who gets what share of the budget,’ she says. ‘It’s a combination of market share, competitiveness on a CPM basis and added value.’ And for added value, Norway says Cartoon Network still has the edge.

With rating drops of 0.2 on weekends and 0.4 on weekdays (kids two to 11 in Q4 2002, compared to Q4 2001), last year was an off year for Cartoon Network, according to Wagner. ‘But it still represents a tremendous value because of where it’s priced and what it will do between on-air and on-line.’ Cartoon Network executive VP of ad sales and marketing Kim McQuilken says the network’s website gets seven million unique hits every month – a penetration level that the sales team takes full advantage of for promotions – and Cartoon is able to dig deep into its massive animation library for ‘integrated promotions on-air, off-channel and on-line.’ The 2002 NBA All-Star Weekend event is just one example of this strategy at work. In support of a December/January national sweepstakes for a family trip to the All-Star Weekend in Atlanta, a series of 53-second on-air spots featured NBA players talking to their fave cartoon characters, and a mini-site with custom games and activities provided contest info and a link to The sweepstakes garnered more than 2.1 million entry call attempts, the on-air spots delivered 6% more boys nine to 14 and 51% more males 12 to 17 than the same time period the previous year, and the mini-site generated more than two million impressions.

As to the growing ABC/Disney footprint, Wagner is intrigued – ‘if it could just stop reorganizing and get some continuity. I really do feel like the people who are in place now are the strongest the channel has had…I think Disney has a lot of potential, and if it can be more aggressive in what it puts out on-air, in sponsorships, in marketing, in promotion and in other ancillary on-air exposure,’ the outlet will play an ever-increasing role in the market.

And how are last year’s start-ups Fox Box and Discovery Kids on NBC stacking up? ‘They’re nice fill-ins,’ says Wagner. ‘But I think for most people, the real issue at the end of the day is what to do between Cartoon and Nick, then what to do between the broadcast guys with Kids’ WB! and ABC, and then how does Disney tuck in. If you need to be really boys for a certain toy, then I think Fox Box makes sense. If you’ve got a bit more of a creative or educational product, I think the Discovery Kids block makes sense. They’re great products…but they’re not going to be the cornerstone of your efforts.’ And the biggest stumbling block the new Saturday morning players face, notes Norway, is their limited size and frequency.

The consensus is that this year’s market should break early this month and stretch into the summer. With CPMs headed slightly up, most players expect the market to match last year’s total, with broadcasters putting that number at US$800 million and media buyers pegging it at a more reserved US$650 million. In the meantime, broadcasters are doing everything they can to attract more dollars.

Nickelodeon fine-tunes for greater growth

If it’s possible, Nick appears to be aiming for bigger and better this year. Senior VP of ad sales Jim Perry sees the channel’s market dominance growing, pointing to Nick’s expanding share of gross ratings points, the shrinking number of outlets for kids advertisers and increased spending by the ‘large endemic players’ (toys, food, beverages, video games, movies, etc.) as factors that hint at a good year. He also sees a three-year-old initiative to woo non-traditional advertisers gaining traction. Last year saw Nick add Ford and Embassy Suites to its roster of atypical clients.

On the programming side of the channel’s 2003/2004 efforts, executive VP and GM Cyma Zarghami has used her US$130-million budget to add new programs like Romeo, a live-action series featuring hip-hop artist Master P and his son; All Grown Up, which checks in with the Rugrats in their pre-teens; Butch Hartman’s Danny Phantom, about a ghost-like superhero; and the 3-D series Backyardigans, which Zarghami describes as ‘a new take on play-along television for Nick Jr.’

Cartoon Network/Kids’ WB! – share and share alike

Kids’ WB! and Cartoon will finalize the marriage of their ad sales teams this summer, with kid responsibilities migrating to Cartoon in time for the upfront. (Kids’ WB! will handle the Q2 and Q3 scatter-market business through August.) Cartoon’s Kim McQuilken says the network has already sold out in the lead-in to Easter, and he expects about 70% of his ad space to go in the upfront.

McQuilken believes his net’s closer ties to Kids’ WB! only add to a potent offering that includes access to a robust website and a huge animation library that can be used for integrated promos. Big spenders on the channel include toys, packaged goods and electronic games, which McQuilken sees as a growth category and a natural fit with the game section of, to which 60% of site visitors go directly from the home page.

On the programming front, Cartoon executive VP and GM Jim Samples has an aggressive rollout strategy on the playbooks that will see five series introduced each month. Some of these will be borrowed from Kids’ WB! (including 52 episodes of Jackie Chan Adventures, 100 episodes of Pokémon and 50 more Yu-Gi-Oh! shows). But new this year are Daffy Duck/Porky Pig vehicle Duck Dodgers (July), a new Teen Titans series that will be shared with Kids’ WB! (August) and LowBrow (December), the story of a 20-something slacker who finds an 80-foot robot in the local dump. Samples says Toonami will be refreshed with 95 episodes of the popular Japanese anime series Rorouni Kenshin and 26 episodes of .hack//SIGN, a 2-D series exploring what happens when the real world and virtual reality mix and featuring character designs by illustrator Yoshiyuki Sadamoto of Neon Genesis Evangelion fame.

Cartoon will follow a three-pronged programming strategy moving forward, according to Samples: Diversify the origin of its shows, greenlight series earlier, and greenlight additional seasons before the first one airs. One early nod to the first part of that approach is this year’s Clone Wars, a series of 20 two- to three-minute animated serial shorts created with Lucasfilm.

Senior VP of Kids’ WB! John Hardman says his net will stay the course with its core demo of kids six to 11, ‘but moving forward, our strategy is really to broaden the audience and bring in as many more kids as possible.’ Hardman points to Yu-Gi-Oh! (5.86 with kids six to 11 in Q4) and Mucha Lucha (4.97 with the same demo over the same time frame) as stand-out shows from last year that will remain in the lineup.

Joining them will be three series that Hardman says define adventure in new ways: anime series MegaMan: NT Warrior, which Hardman describes as part Matrix, part Pokémon; Xiaolin Showdown, an animated series starring four young but wise monks; and Teen Titans. Look for Kids’ WB! to roll out more new shows throughout the programming year.

ABC/Disney builds strong brands and returns to its roots

The house of mouse announced a major ad sales reorganization at the end of March, with Kerry Sheldon Hughes appointed to oversee Disney’s ad-supported platforms (ABC Kids, Toon Disney and ABC Family’s daily block) and sponsorship on the Disney Channel as VP of kids advertising sales and marketing. Hughes says the new structure allows her to put a wide variety of packages together with value-added ties to Disney’s many assets, including its magazines, radio network, websites and theme parks. For Disney, the packaged goods, toy, retail, movie and video game sectors remain critical, and Hughes expects the caster’s growing penetration and ‘great household income’ to help sway potential clients.

Disney Channel scored impressive numbers with Lizzie McGuire (3.69 with girls two to 11 in Q4) this year and hopes the show will strike an even more harmonious chord with kids and advertisers when it gets a profile boost from the theatrical debut of Lizzie McGuire: The Movie later this month. Look for Kim Possible (2.74 with girls two to 11 in Q4) to become the second original animated series to be stripped into the schedule, and Disney also hopes to build on the early success of live-action show That’s So Raven, which launched in January.

According to Disney Channel senior VP of programming Jill Casagrande, Disney also has plans to return to its toon roots. ‘We made a choice a few years ago to focus on live action because we really felt that was something our competition wasn’t doing. But now we feel we’ve conquered the live-action side, so we’re reaching back into animation.’ Look for the split between live action and animation to move from 60/40 to around 50/50.

On ABC Family, Power Rangers Ninja Storm was a pleasant ratings surprise (averaging 2.4 with boys two to 11 to date). Casagrande says she hopes the new season of Beyblade (1.4 with boys two to 11 in Q4), which will strip in after Ninja Storm at 7:30 a.m. from Monday to Sunday, will be the break-out property of the year. Joining the ABC Kids sked will be a new 13-part animated Lilo & Stich series, as well as That’s So Raven.

For preschoolers, Playhouse Disney will launch Cartoon Pizza’s JoJo’s Circus (a 52 x 11-minute toon about a little girl who heads off to clown school) in September, as well as continuing to build on Stanley (1.24 with kids two to 11 in Q4) with 26 new episodes.

On Toon Disney, last year’s successes included branded blocks such as the Princess Power Hour. Princess delivered the highest ratings in the channel’s history, with an average audience of 535,000 viewers. ABC Kids/Toon Disney senior VP Jonathan Barzilay says Toon’s top-rated programs continue to be movie blocks, but prime-time and branded blocks are gaining ground, thanks in part to the channel’s increased distribution. (Toon grew by eight million homes last year.) Look for A-list animated pics such as A Bug’s Life, Toy Story, Atlantis and The Emperor’s New Groove to join the Toon Disney double feature movie lineup next year. And new series coming to the channel include: Recess (which has enjoyed a six-year run on ABC Kids), The Legend of Tarzan and Buzz Lightyear of Star Command.

Discovery gets animated

Discovery Kids VP of ad sales Ken Ripley says his outlet’s upfront strategy will be similar to last year’s – the Discovery team will approach each agency in person, getting feedback and explaining the Discovery philosophy. Ripley expects about 70% of the NBC block’s inventory and 50% of that on the cable outlet to go in the upfront.

The big development for this year is that the Discovery Kids block is shifting its focus away from tween narrative dramas to get into animation for a slightly younger demo. Ripley says the idea is to more forcefully establish the block’s kid focus, which is important given that it follows the very adult-skewing Today Show. So leading off in Q4 will be a Real Toons segment that includes Tutenstein, a 2-D/3-D series about a 10-year-old mummy king who comes back to life; and Kenny the Shark, a 2-D toon about a shark who gets bored with ocean life and comes ashore – only to become the pet of female lead Kat. This second show will figure into a Shark Weekend event that’s on the slate for August.

Kaplan also plans to beef up Discovery’s three strongest genres: Discovery Channel/TLC powerhouse programs redone for kids, reality shows, and real-world narratives. This month marks the debut of Adventure Camp, a reality show in which kids take on zoo-keeper responsibilities and compete for rewards like swimming with dolphins. Endurance 2, an updated and more challenging version of the first series (which scored a 0.80 with kids six to 11 in Q4) will join the sked this fall, along with two new seasons of Real World series like Scouts Safari (0.66 with kids six to 11 in Q4), about a New York girl who gets transplanted to South Africa; and Strange Days at Black Hole High (0.76 with kids six to 11 in Q4). And borrowing from the TLC cupboard, the block will introduce Trading Spaces Kids: Boys vs. Girls this fall.

Fox Box builds around its heroes on a half shell

4Kids CEO and chairman Al Kahn understands what it takes to make it in the kids marketplace. ‘When we first got here, we knew that everything related to establishing a hit. Every block on television – be it network, adult, or kids programming on broadcast – it’s all driven by hits.’

The Box may have found that hit in Teenage Mutant Ninja Turtles, which was a late-launcher on the block in February. The show pulled in an average 2.1 rating with kids six to 11 in its first eight weeks on-air, and the property’s merchandise is experiencing sell-outs and reorders at retail. Kahn plans to build his 2003/2004 season around the Turtles, adding at least three new shows that could include recent pick-ups Funky Cops (Antefilms) and Winx (Rainbow). The newbies will join second seasons of Ultimate Muscle (2.22 with boys two to 11 in Q4) and Kirby (2.15 with the same demo over the same time frame).

Although Kahn admits the block has gotten off to a ‘standing start,’ he notes that 4Kids still benefits from holding a significant number of ancillary rights for super-selling properties like Yu-Gi-Oh! and Pokémon.

This year will see 4Kids ratchet up off-network promotions and sell around the nine to 14 boys demo, which it didn’t anticipate attracting to the ratings tune of 2.3 (Saturday, March 29 from 8 a.m. to noon) when it launched last year.

Editor’s note: The electronic version of this article has been edited from the original print version in order to correct or clarify some information that it contained.

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