• by Joe Mandese  @mp_joemandese, February 10, 2004

Faced with a declining pool of commercial TV rating points, Starcom, one of the top buyers of children's TV advertising inventory, is making broadband video a part of its 2004-05 kids' TV upfront buying strategy. With advertisers and agencies poised to begin negotiating with the big children's television networks following next week's Toy Fair conference in New York, Starcom has already begun planning to replace at least part of its kids' TV GRP (gross rating points) goals with ad buys on broadband video outlets, many of which include the sibling Web sites of top kids' TV players such as Nickelodeon, Cartoon Network, and Disney.

The move, which follows a flurry of grown-up broadband video advertising deals negotiated by the agency last fall, is an extension of Starcom's so-called "broadband embrace" into the kids marketplace. Starcom made the foray into the broadband video marketplace for two reasons: 1) to learn about the emerging broadband video marketplace, which it believes is a precursor to TV's video-on-demand marketplace; and 2) to find an alternative means of generating TV-like audience impressions on the Web, where many TV viewers-especially young adult males-have been migrating in droves.

"What we're trying to do is expand the definition of TV advertising into broadband," says John Wagner, media director at Starcom and the agency's chief negotiator for kids advertising buys.

Just as Starcom jump-started that process with grown-up broadband video providers including Yahoo, MSN and Feedroom.com, Wagner says the agency hopes that by putting upfront advertising dollars where its mouth is, it can become a catalyst that gets the major broadband kids programmers to accelerate their plans.

"We're trying to get the big players to provide video content online," notes Wagner, adding: "At the end of the day, kids are not watching less television, but there is reason to believe that they're doing other things while they're watching television. Our goal is to figure out how we can surround them."

In fact, unlike some adult demographics, kids are not watching less TV-they're watching more of it. The problem is that more of what they are watching comes from outlets that accept little or no advertising, such as Disney Channel or Noggin, a joint venture of Nickelodeon and PBS.

Over a two-year period through the fourth quarter of 2003, Disney Channel nearly doubled its share of kids' GRPs, going from 13.8 percent in the fourth quarter of 2001 to 25.3 percent in the fourth quarter of 2003, according to a Magna Global USA analysis of data from Nielsen Media Research.

While Nielsen data is not available for Noggin in 2001 and 2002, the fledgling network accounted for a 1.8 percent share of kids' GRPs in the fourth quarter of 2003. Combined, that represents nearly 27 percent share of kids' market GRPs that have shifted from commercial outlets to non- or modestly commercialized outlets in a two-year period.

During the same period, the kids' TV advertising market leaders, Nickelodeon and Cartoon Network, have each seen their market shares drop about four percentage points. At the same time, UPN has gotten out of the kids business altogether, while most other major commercial players have also eroded considerably, especially Disney's sister networks, ABC Family and ABC's Saturday morning lineup.

Wagner says that unlike the past several years, when demand for kids' TV advertising inventory languished following a shakeout among toy marketers, demand appears to be building at a steady pace as other advertisers expand their activity--especially food marketers, which he predicts will emerge as the No. 1 kids advertising category this year. Other emerging kids categories including apparel, electronics, DVDs, and video games.

He said the shift in demand and the depletions of commercial TV rating points has not yet grown acute enough to make the 2004-05 kids marketplace the kind of stampede of years past, when the major toy marketers would rush the market. But he said it is growing increasingly difficult for marketers to secure key kids advertising inventory, especially around high demand periods such as the pre-Easter holiday season, as well as the so-called "hard eight," the eight weeks leading up to the week before Christmas.

Nonetheless, Wagner says Starcom is seeking to cultivate a broadband video marketplace for kids to ensure its clients to get locked out of critical kids' advertising impressions down the road.

Not surprisingly, Starcom is targeting its broadband video efforts at the major Web extensions of the major kids' TV programmers Cartoon Network, Disney, and Nickelodeon. However, Wagner notes that the agency has already secured a sizeable position with a broadband video deal on Yahoo!'s Yahooligans, as part of its fall 2003 broadband upfront buys. "We're definitely going to take advantage of our spending and leveraging our clients' TV money to secure advantageous positions in broadband," says Wagner.

"If there is an opportunity for us there, we want to say out ahead of the pack in broadband."

Weekly Kids' Rating Point Percent Distribution by Network

Network          Q4 2001    Q4 2002    Q4 2003 
Nickelodeon         39.4
39.2       35.6 
Cartoon             32.6       28.3       26.6 
Disney              13.8       18.6       25.3 
Toon Disney          3.2        3.5        3.9 
WB                   3.2
4.3        3.0 
Noggin               ---        ---        1.8 
ABC Family           2.6        2.4        1.3 
UPN                  1.5        1.4        --- 
ABC                  1.0
0.9        0.7 
Fox                  1.8        0.6        0.5 
CBS                  0.6        0.6        0.5 
Syndication          0.0        0.2        0.4 
NBC                  0.1
0.2        0.2 
Other Cable          0.1        0.0        0.0 

Magna Global USA analysis of data from Nielsen Media Research. All programming designated by Nielsen with kids' program types.