Toy Story: Kids' Ad Market Plays Strong

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Strong toy ad dollars on kids' TV networks are fueling a surprisingly higher-priced third- and fourth-quarter selling period.

The advertising CPM in key demo kids' groups is soaring -- up 20% to 30% or more over an already strong 2010-2011 kids' upfront market.

Completed this past summer, it was also bullish for TV kids' marketers, pushing this niche ad marketplace up well over the $1.2 billion mark. It rose over double-digit-percentage volume increases versus the year before.

So strong is the market that certain networks are sold out in specific days/weeks. "This hasn't happened in a long time," says Shelly Hirsch, CEO of New York-based media agency, Beacon Media Group, which focuses on kid-targeted marketers. "This has been a spectacular year."

"It has been nothing short of phenomenal," adds Jim Perry, executive vice president, 360 Brand Sales for Nickelodeon/MTVN Kids and Family Group.

Perry says for the third quarter, Viacom's kids' TV network group will finish some 40% higher in overall spending versus a year ago. He says Nickelodeon has not seen anything like this in four years. The network group is the dominant kids' TV player -- controlling some 50% of the marketplace, according to executives.

Concerning the coming weeks before the holiday season, Perry says, "it's only going to get stronger." Here's why: toy manufacturers. Big kids' retailers Wal-Mart, Target and Toys 'R Us" are pushing even modest-size toy manufacturers to spend heavily on television.

In the past, retailers might have made a determination to carry a toy product based on whether it had the benefit of the marketing support from a theatrical movie deal. Now, retailers are upping the ante for toymakers.

This rise in toy TV ad dollars actually started in the fourth-quarter 2009, said Perry. "Consumers are just buying more toys," he says.

Plus, retailers want manufacturers to spend the TV money early in the process, so if something doesn't work, the product can be pulled. Kids' marketers typically spend heavily in the fourth quarter and especially in the so-called "hard eight" or 10 weeks before the Christmas holiday.

"September has really blossomed over the last couple of years, and that has been driven by the upfront," says John O'Hara, executive vice president of advertising sales and general sales manager for Cartoon Network ad sales and marketing. "We came out of the upfront with pretty high sellouts. We don't have much inventory left."

For years, toy companies have been the biggest kids' advertising category. Recently, spending from theatrical movies, video games and other electronic entertainment categories grew -- all with toy advertising suffering somewhat.

Continuing to lose steam, however, is the kids' food category.

Food marketers had been curtailing efforts, especially around rising kids' health and obesity issues. Sara Lee Corp., for example, recently said it would limit its kids' TV marketing under an industry-wide initiative. Sara Lee joins 16 other companies, including Burger King, Campbell Soup Company, Coke and Pepsi, Dannon, General Mills, Hershey, Kellogg, Kraft Foods, Mars, McDonald's and Nestlé.

Virtually all TV networks targeting children have prospered from the current scatter kids' ad market: Nickelodeon, Disney XD, Cartoon Network and the Saturday morning network kids' programming blocks.

The fast-moving marketplace is also giving some start-up push to the new Discovery Networks/Hasbro kids' network, The Hub, which launches next month.

Media-buying executives believe some kids'-targeted marketers might use the new network -- which is cheaper to buy, they say -- as a way to reduce some of their overall media costs against soaring pricing on established kids' networks.

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