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Webkinz Takes Heat For Taking Advertising


Karlene Lukovitz

MediaPost Publications

December 14, 2007

IN THE LATEST BATTLE OVER advertising to kids, The Campaign for a Commercial-Free Childhood (CCFC) has announced that it's demanding that Webkinz World, the phenomenally successful social networking site for kids who have bought Webkinz stuffed animals, "stop targeting its users with outside advertising." As every family with kids and a computer knows by now, Webkinz are plush animal toys that come with a code enabling children to create digital avatars that look like the animal and interact in all kinds of ways within Webkinz World.

CCFC, a Boston-based national coalition of health-care professionals, educators, advocacy groups and parents seeking to shield children from exposure to advertising and commercialism, has launched a letter-writing campaign to Howard Ganz, CEO of privately held, Toronto-based Webkinz parent company Ganz. CCFC is urging parents to sign and launch a pre-written email letter on its Web site that asks Ganz to rethink his company's "unfortunate decision" to begin taking advertising.

The letter reads in part: "Many parents purchase Webkinz toys for their children with the expectation that is free of outside advertising and links. Ganz has benefited from Webkinz' reputation as an advertising-free site. Surely the Webkinz brand has been extremely profitable for Ganz without selling its young users to advertisers."

In a press release about the letter-writing campaign, Susan Linn, CCFC's director and a psychologist at Judge Baker Children's Center, maintained that Ganz "was already walking a fine line, since the site is really designed to sell more Webkinz. But adding immersive advertising for other products is all about greed."

CCFC reported that Webkinz has, since October, "quietly" integrated ads into the site, and complained that the "Parents Area" of the site does not mention that Webkinz takes advertising. The organization cited two ad campaigns currently on the site: one promoting the movie "Alvin and the Chipmunks" (along with promotions for purchasing chipmunk costumes and food for kids' virtual Webkinz pets), and one for "The Bee Movie."

Ganz declined to be interviewed about the CCFC campaign, but Communications Manager Susan McVeigh offered a corporate statement that stressed that the company "took a very cautious and considered approach to third-party advertising." Ganz confirmed that it has had only two third-party advertisers on the site thus far, and has no further third-party ads scheduled at this time.

The company added that it considers several criteria in taking ads. Ads must pass its standards for "quality, family-friendly products--we would not allow junk food, products that are violent nor brands and/or products that are not age-appropriate," Ganz stated.

In addition, Ganz says that it requires that it approve all ad content (it does not use a second-party advertising distributor, to ensure that "no inappropriate ad would ever 'slip by'"); it does not allow linking off of, and it will not allow branding of any prizes won through ads on the site.

"The majority of 'advertising' space remains dedicated to positive life style messaging (get exercise, eat fresh fruit, drink milk, get outdoors etc.), and Webkinz products and features," Ganz added., launched in April 2005 and geared to children six through 12, is the most-visited virtual world for children in the U.S., according to CCFC. As of 2006, the site had a million online accounts. Ganz subsequently stopped releasing online and sales figures. However, Nielsen//NetRatings showed the site drawing over 4 million users in May.

At least a million of the toys have been sold in Hallmark and other specialty stores and online since the launch; some estimates put the number at double that. Online, newly released animal toys are going for between about $15 and $25. In Wired, Toy Wishes editor Jim Silver estimated Webkinz's 2006 sales at $100 million. In addition to the toys, and now advertising, Ganz is realizing revenue by charging a fee to continue using the site once an individual user has been active for a year.

What are the odds that CCFC's efforts will succeed? Is Ganz risking killing the golden goose (or bear or collie or whatever)?

Branding expert Laura Ries, a parent with considerable firsthand exposure to the Webkinz craze, says that the decision to begin taking advertising on a site--particularly a paid-for site--is "certainly serious." Whereas advertising is part of the implicit bargain on a free-content site, any paid site, and certainly one for kids, needs to carefully consider the pros and cons of potentially changing the user experience, she stresses.

At the same time, Ries, partner in Ries & Ries, says she thinks it may be unrealistic for parents to expect zero advertising on most any site--never mind hope to shield kids from all advertising in today's world. "Do you think Disney isn't marketing to my kids on their site?," she notes, adding that she feels strongly that it's incumbent on parents to educate children early on, in an age-appropriate manner, about advertising and how it works.

Ries says that Webkinz appears to be taking a selective, "not overwhelming" approach to ads. "Even PBS is taking advertising or sponsorships now, and in my mind, Webkinz's approach seems to be akin to that model--at least as things now stand on the site," she says.

As for damage to the brand, "Webkinz is so powerful now that, unless they really go overboard--which I doubt they'll do--people will in all likelihood accept this," Ries predicts.

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