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Web-Based Marketing to Kids Is on the Rise
By Mike Shields
Media Week, July 25, 2005

In taking a quick online tour around the major sites targeting kids on the Web, one might wonder, where are all those banners, skyscrapers and pop-ups that clutter most content sites on the Web? But it would be incorrect to assume that kids marketers aren’t online; it seems they are simply more subtle.

Recently, interest in the kids online space has swelled, driven by a pair of major moves by kids TV giant Nickelodeon. First, parent company Viacom in late June snatched up virtual pet site Neopets, a move that may have caused many to scratch their heads but was met with praise among those deeply immersed in the kids universe. Then, earlier this month, the company beefed up its broadband content strategy through the launch of TurboNick, which now houses a ton of the network’s TV content, for kids to view on demand.

Both moves are expected to spark advertiser interest in a market that has flown somewhat under the radar during the current ad spending resurgence but is poised to grow. “I think the boom in online kids and family space has lagged behind the Internet in general,” added Jonathan Graff, president of the Kaboose.com kids portal. “Now, a lot of advertisers are coming on that weren’t doing online in the past.”

Part of the reason kids advertisers didn’t originally flock online is that it is one of the most restricted media venues out there. Brands must comply with both the Children’s Online Privacy Protection Act, which was enacted in 1998 by the Federal Trade Commission, and the Children’s Advertising Review Unit, a regulatory board that also monitors kids TV. The basic gist of COPPA and CARU’s rules is don’t sell to kids directly, don’t deceive them and don’t take their personal information without parental permission. Therefore, Web sites tend to err on the side of caution. “We made a very conscious decision that we weren’t going to include banner ads,” said America Online’s senior vp Malcolm Bird, who oversees the kid-targeted KOL portal.

But more than restraint is at work here. “That stuff doesn’t work against the target,” said Sean Black, senior vp and managing group director at MediaCom’s Beyond Entertainment. Black said that targeting kids who have been online since they were old enough to click a mouse warrants a far more interactive marketing approach. Therefore, kids online advertising generally takes the form of immersive games and contests, which are built around brands and their characters.

Several major brands have elected to build stand-alone kids gaming sites. Post runs Postopia, while Kraft runs Candystand and Frito-Lay runs INNW.com. On Candystand, for example, kids can play a dodgeball game with Lifesavers characters and logos woven in.

It’s this immersive marketing arena in which many in the industry believe Neopets, which scarcely features a banner, will excel. The site, which allows users to build custom pets and then have them interact in a futuristic world, already features McDonald’s in the “shops” section. Some media executives imagine a scenario where owners will be feeding their pets with food products from major brands.

Jeffrey Dunn, group COO for Nickelodeon Networks, believes that the popular site has only just scratched the surface. “One of the reasons [Neopets] will tell you they wanted to do this deal is that they had generated a tremendous amount of traffic they hadn’t yet monetized,” he said. That is where Nick’s expertise will come in. Once the two companies fully integrate their sales teams, Dunn predicted Nickelodeon will capture more than half of the kids online ad market, just as it has in TV.

While kids online ad spending is tough to track (one publisher called kids reporting “incredibly weak”), Dunn expects that Nick.com ad revenues will double in 2005. According to Nielsen/NetRatings, the site has pulled in $9.6 million in ad revenue in the last 12 months—tops on the Web.

Dunn’s confidence illuminates an interesting dynamic in kids online media: the fact that traditional media players dominate. For example, according to Nielsen, Nick.com and CartoonNetwork.com garner more than double the traffic of Yahoo!’s Yahooligans site on a monthly basis. Beyond’s Black said that while Yahoo! and MSN maintain prominent kids properties, “they’re not their competencies.” Plus, search—so crucial to the general online ad market—isn’t a factor with kids brands.

So with TV brands like Cartoon, Nick and Disney playing such a large role, it’s no wonder that ad-supported TV content, like TurboNick, is expected to become huge. “We’ve seen streaming video be really effective,” said Jahna Peters, associate media director, Starcom IP. Yet, according to Brooke Goldstein, senior vp, managing group director at MediaCom, kids clients are only gradually increasing their online budgets, as TV still tends to dominate. “We will see a shift down the road,” she said.

Of course, with any kids-directed marketing, there are detractors. Some experts say the practice of designing branded games for kids is even more dangerous than directly selling to them, since kids can’t distinguish what is and is not marketing. Harvard Medical School instructor Susan Linn called the mix of content and advertising to kids “an abuse,” adding that Neopets is “really troubling.”

However, Dunn insists his brands follow the rules. And because of kids’ media consumption habits, “clients are getting more interactive with their advertising on the Web,” he said. “To say that is not [going to happen] would be to deny the experience of the Web.”


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