Behind the Battle for Children's Marketing Dollars
NEW YORK (AdAge.com) -- How many kids' TV networks are too many -- and are there enough ad dollars to go around? As Hasbro and Discovery's The Hub gears up for an Oct. 10 launch, and with Disney readying a preschool network, Disney Junior, for early 2012, more networks are going to be clamoring for an increasingly limited pool of ad dollars.
Analysts predict this year's kids' upfront will pull in 5% to 10% higher than last year's take of $850 million. That haul was down 10% to 15% from 2008 as food marketers such as General Mills, Kellogg and Kraft had to stem the flow of ad dollars while redeveloping their sugary cereals and snacks to meet new Food & Drug Administration and Federal Communications Commission standards. The kids' marketplace lost an estimated $100 million to $120 million last year alone, according to two executives, and is only expected to recover a fraction of those dollars this year as reformulated products start to hit shelves and roll out ad campaigns.
"With these new restrictions it becomes more difficult to increase the pie, so to speak," said Drew Crum, a children's-marketing analyst for investment firm Stifel Nicolaus. "With an increasingly more competitive landscape and a number of new entrants, that makes it harder for everyone to grow."
That's why mainstays such as Nickelodeon, Cartoon Network and Disney Channel are increasingly turning to older kids, tweens, teens and even parents to boost their bottom lines as their core marketing categories wrestle with government pushback. Jim Perry, Nickelodeon's exec VP-brand sales, recently told Ad Age that movie studios had surpassed food marketers as the network's biggest spender as a direct result of the FCC-mandated cutbacks.
Mr. Crum predicts cost-per-thousand-viewer rates to be up flat to low single-digits for kids' networks, with ad volume increases in the 6% to 8% range for this year's upfront. With so many moving parts and different players, Ad Age takes a look at how each of the networks are poised to do and how their ratings and revenues are holding up as they head into this year's market.
The ratings game: Nickelodeon and Nick at Nite were the top networks among total viewers in total-day programming in all ad-supported cable during first-quarter 2010, with Nick at Nite the No. 5 network during prime time among total viewers during the same time period.
Last year's take: Nickelodeon grossed $833.87 million in measured ad spending for full-year 2009, down 10.7% from 2008, according to Kantar Media. Meanwhile, Nick at Nite saw ad spending rise a whopping 20% during the same period to $511.1 million.
The ratings game: Disney Channel consistently finishes No. 1 or No. 2 in prime time and total day in all key demos against Nickelodeon, while ad-supported Disney XD has become a medium-size player among children 2 to 11, ranking No. 4 in prime time and No. 5 in total among the demo during the first-quarter of 2010.
Last year's take: Disney Channel ad revenue is not tracked by Kantar Media, but Disney XD grossed $82 million in measured ad spending in 2009, down 1.1% from Toon Disney in 2008.
The ratings game: Cartoon Network finished first-quarter 2010 as the No. 2 ad-supported kids' network (No. 3 after Disney is factored in), reaching an average 740,000 children ages two to 11 during prime time and 584,000 during total day.
Last year's take: Cartoon banked $230 million in measured ad spending during 2009, down 1% from 2008, while Adult Swim grossed $99 million during the same period, down 1.1% from the year prior.
Ratings outlook: Vying with Nick, Cartoon and Disney for a restrained group of audiences, expect the Hub to have a soft launch in the fourth-quarter but become a competitive third or fourth-place player once it finds its niche in early 2010.
Ad sales outlook: Attracting new sponsors will be difficult in a marketplace that has only single-digit growth on the whole, but parent-targeting brands such as automotive, financial and movie-studio marketers might want to make an early investment.