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Big Three Kids Cable Networks Monopolizing Ad Dollars

Marketers trying reach kids and their parents will continue
to send the bulk of their ad spending to the Big Three kids cable networks-Cartoon
Network, Disney and Nickelodeon-although some of the money previous allocated
to TV is moving to those networks' digital platforms.

Media buyers say as much as 90%-95% of their clients' kids
budgets currently go to the kids cable networks, with the remainder going to
the broadcast networks' Saturday-morning children's blocks.

"The dedicated kids networks are dominating the kids
marketplace, and the broadcast Saturday-morning blocks are not much of a player
anymore," says one kids network sales executive who did not want to speak for

However, the sales exec's view is shared by kids media
buyers. "Kids programming on broadcast is only a three- or four-hour block a
week; the networks don't give a lot of promotion, and the [shows] are not that
highly rated," says Jason Maltby, director of national broadcast at Mindshare.
"The days when Pokémon did a 10
rating among kids 2-11 are long gone."

Darcy Bowe, associate media director at Starcom, agrees.
"Saturday morning has become a small niche area, just one day a week. For many
clients, it has become almost an afterthought," Bowe says. "Broadcast is no
longer a mass reach for kids, and pricing can also be an issue. It's hard for
them to compete with the kids cable networks."

Still, the broadcast network Saturday-morning kids blocks
will get that 5-10% of kids ad spending overall, because they are reaching the
15% of homes nationwide that still are not accessible by cable.

The broadcast networks, however, are no longer involved with
the blocks, having syndicated them out. ABC's Saturday-morning block targets
teens with programming from Litton Entertainment and is branded Litton's
Weekend Adventure. The CBS block still targets younger kids with programming
from DIC Entertainment and is called Cookie Jar. The CW block is provided by
Saban Brands and is called Vortexx. Fox lets its affiliates program the block
locally. NBC Kids is a Saturday-morning block that features programming from
PBS kids channel Sprout; NBCUniversal owns a small interest in the network.

But most of the attention from kids advertisers is focused
on the kids cable Big Three.

"Other than Radio Disney and a few print products, there's
no way to reach large amounts of kids except through the kids cable networks
and their websites," Maltby says. 

Even with recent ratings declines of as much as 25%,
Nickelodeon still brought home significant ad dollars in the kids upfront this
year because there are few alternatives to reach kids 24/7. The network will
even expand its demographic reach next month with a nighttime Nick Mom block.

The kids networks are also broadening their digital
platforms, offering marketing partnerships beyond commercials on an even
broader basis than the general audience entertainment networks.

John O'Hara, executive VP of ad sales and marketing at
Cartoon Network, says 95% of the channel's fourth-quarter deals have a digital
component. "The dollar investment on the TV side is still where a majority of
the spending is, but digital continues to grow," O'Hara says.

Jim Perry, head of sales at Nickelodeon Group, says, "In the
past, digital has been more of a scatter buy. But this year, more advertisers
made digital buys in the upfront. TV is still far and away the primary
component of every kids advertisers' media mix, but the digital platform is

While mobile advertising is still a small portion of overall
kids ad spending, Perry says, "as content on mobile kids devices continues to
grow and become more robust, the dollars will start to increase."

Neither Disney Channel nor the new Disney Junior accept
traditional advertising, so they are more sponsorship- heavy than their
competitors. They also have the advantage of being affiliated with Radio
Disney, which has stations in 31 markets around the country. The radio piece
means Disney can sell cross-platform packages across TV, digital and radio.

Rita Ferro, executive VP, Disney Media Sales &
Marketing, says "marketers don't just buy on-air TV sponsorships, they extend
their sponsorships across our radio stations and online site and they can also
do licensing deals with our on-air talent. It's more of a 360-degree

Starcom's Bowe says merging the Radio Disney and Disney TV
sales units under one roof a few years back was a smart move. "Having all sales
under one umbrella makes it so much easier for clients to buy advertising and
cross-platform campaigns," she says. "And although Disney doesn't offer commercials,
it built out big packages with events using their talent. Disney has a bigger
machine to do these live events in local markets where their radio stations and
personnel are located."

 "We can create a
customized event at a retail location and promote it on the radio station,"
says Ferro. "The local component of bringing talent out where kids can see them
in person is very important."

While traditional TV is where the bulk of the dollars are
spent, marketers and their media buyers are very aware that kids consumption of
media is changing rapidly. "Kids don't act like kids anymore," Maltby says. "Ten
years ago, most kids played with toys until they were 10 or 11. Now, most kids
are playing with handheld electronic devices when they are 3, 4 or 5 years old.
This changes how we need to reach kids. But while that is happening, we still
realize that if you run the majority of your gross ratings points on TV, you
will still reach most kids."

One area of linear TV that is becoming more popular for
reaching kids is video on demand. Bowe says, "Adults watch VOD to catch up on
an episode they missed. Kids watch VOD as part of their regular daily viewing."

What makes VOD particularly enticing to kids marketers is
that the kids networks usually sell each episode to one advertiser and
guarantee a certain number of views, Bowe says.


Overall ad spending in the kids TV marketplace has been flat
over the past few years and there are a number of reasons for that. Government
regulations on sugar content of food and drinks marketed on kids networks over
the past several years have caused a lot of advertisers to drop out. Some of
them have reformulated their products and come back, and some of the lost
spending has been picked up by new "healthier" foods brands.

"You see very few cookie ads directed at kids on TV,"
Starcom's Bowe says. "Even some cereals that are perceived to be healthy have
too much sodium. Some snacks companies have moved their ad dollars out of kids
programming and are now marketing to adults."

The video games category, which was once a big target of
kids, has seen a decrease in spending on kids networks. "More of those dollars
are being spent to reach the 18-24 market," Bowe says.

Maltby says video game marketing to kids has been hurt
because more kids are now using their parents' smartphones and tablets to play
games on. He says another contributing factor to the flat video games ad spend
is that Microsoft XBox and Nintendo Wii have not come out with any new systems
that would require a major purchasing of new games.

Cartoon Network's O'Hara says the food categories on his
network are spending more this year, however, but "healthier snacks like
yogurts and lunch meals have replaced the heavy sweets." Kids footwear also has
seen a growth in ad spending on the network.

Cartoon Network sees its 20th anniversary this coming season
with its official birthday celebration on Oct. 1. O'Hara says the network is
marketing the occasion using the word "birthday" instead of "anniversary"
because "it resonates better with kids."

The network has signed up Mattel and Kraft as partners for
both linear TV and digital ads and sponsorships.


One growing category that might be considered non-traditional
for the kids marketplace is auto advertising. Not only are the commercials and
sponsorships directed at the parents, but some of them are also directed at the
kids. Many of these ads are for SUVs and minivans and tout inside-the-car
features such as TV screens and other such options.

Nickelodeon's Perry has been working with auto advertisers
to develop special creative messages targeting kids, involving elements in the
cars as well as safe driving messages for older teens.

Perry says that generally speaking, some
marketers have pulled ad dollars out of broadcast primetime looking to reach
moms and dads and families on certain kids programming. He adds that Nick Mom,
the new Nick Jr. 10 p.m.-to-midnight block that premieres Oct. 1 with four
comedies, has sold an assortment of ad categories, including auto, movies,
electronics, wireless and insurance, in addition to packaged goods and
food. Perry says the network would not sell any alcohol ads in the late-night
Mom block, even though the kids are tucked into bed.