Now, kids TV is dominated by 24-hour cable outlets Nickelodeon and Cartoon Network. The two networks combined account for more than 60% of the Nielsen ratings points for 2-to-11-year-olds, while broadcasters attract less than 3.5% of the viewing. Broadcast network ABC, with its ABC Kids Saturday block, garners 0.5%; back on cable, ABC Family attracts 1.4%. The Disney Channel garners about 23% of the ratings but carries no ads. The cable-broadcast disparity is likely to continue widening.
"The kids business absolutely is dominated by these behemoths, Nickelodeon and Cartoon," says Marjorie Kaplan, general manager of Discovery Kids, Discovery Networks' 24-hour cable channel found in 37 million homes.
"Advertising to kids used to be relegated to Saturday mornings," says Donna Wolfe, exec VP-chief negotiation officer at Interpublic Group of Cos.' Universal McCann, New York. "Now, with Cartoon and Nickelodeon and the other cable networks that program primarily to kids, it really is a genre and a destination."
According to a January report from Interpublic's Magna Global, in 2004 children aged 2-11 spent 9 hours a week watching youthful programming and another 8.5 hours watching non-kids programming. However, the kids ad market is largely concentrated in content geared for younger eyes.
Jim Perry, senior VP-ad sales at Viacom's Nickelodeon, says the kids advertising market is about $1 billion to $1.1 billion between upfront and scatter money. The market was stagnant in 2000 and 2001, but has been ticking up since then, he says. The big question this year is how the decision by Altria Group's Kraft Foods to no longer market its sugary foods in shows reaching kids 6-11 will affect the upfront selling period.
Growth has been driven in part by an influx of money from movie studios, Mr. Perry says. While the big categories of toys, games, cereals and snack foods are strong, movie studio business is rising, riding the coattails of the box office success of family-friendly films like Disney/Pixar's "The Incredibles," DreamWorks' "Shrek 2" and Sony Pictures Entertainment's "Spider-Man" franchise.
The movie studio category also propels ancillary ads for licensed products the movies spawn. For instance, in the fourth quarter of last year, "The Incredibles" and Paramount/Nickelodeon's "The SpongeBob SquarePants Movie" generated ad dollars from the films as well as package goods and toys related to them, says Dan Barnathan, exec VP-sales, marketing and promotion for 4Kids Entertainment. "Entertainment really fuels our marketplace," he says.
Marketers looking for reach and frequency will be most drawn to Nickelodeon's animated shows "SpongeBob SquarePants" and "The Fairly OddParents," the top-ranked kids shows in the 2-11 demo, says Universal McCann's Ms. Wolfe.
While Nickelodeon has built its success by trying to appeal to both genders, Cartoon Network has tilted toward boys. Cartoon Network made efforts to diversify last year when it introduced a 2-hour programming block at 5 p.m. called "Miguzi," which targets girls with such fare as "Totally Spies," chronicling the secret-agent adventures of three high-school girls, says Kim McQuilken, exec VP-sales and marketing. Cartoon Network, part of Time Warner's Turner Broadcasting System, says the block has grown ratings for kids 6-11 by 23% and girls 6-11 by 88%, compared with the 2003 time period.
Cartoon Network wants to reach younger kids and will introduce a preschool block for the first time later this year. The block is also an opportunity for Cartoon Network to reach the 18-49 crowd since parents often watch with their kids.
Beyond animation, the live-action format is strengthening with shows like "Unfabulous" with Emma Roberts and "Zoey 101" with Jamie Lynn Spears on Nickelodeon, Mr. Perry says. "A significant amount of new show launches have been live action, and they are hitting big," he says.
Walt Disney Co.'s Disney Channel helped propel the live-action format with hit show "Lizzie McGuire,"fronted by teen star Hilary Duff.
Some advertisers are exploring the emerging video-on-demand advertising market. With VOD in more than 19 million digital cable homes and growing, programmers are seeking ad partners to sponsor on-demand shows. Cable operator Comcast Corp. says kids shows have consistently been in the top-performing free on-demand programs, with seven of the top 10 shows for the week ended Jan. 9 coming from kids program providers.
Programmers tell the same story. Cartoon Network is among Turner's most-watched on-demand categories, and Discovery Kids is one of the top-performing among Discovery Networks' on-demand content. Cartoon Network-with on-demand advertisers including Lego, Kellogg Co. and Nintendo of America-generates about 1.5 million views per month from an on-demand universe of 10 million homes, says Chris Pizzurro, VP-multimedia marketing at Turner.
A VOD spot also allows a brand like Lego more flexibility with execution and creative, says Lincoln Armstrong, senior brand manager for Lego Americas' Bionicle brand. "VOD is a very appealing medium as it is a consumer-initiated experience," he says.