Ad dollars flood Web, but will they go far enough?

By Paul Thomasch Fri Oct 12, 12:42 PM ET

NEW YORK (Reuters) - Companies will spend a record $31 billion this year to advertise everything from toothpaste to home loans on the Internet, supporting countless news sites, social networks, video exchanges and blogs.

But some media veterans worry that expectations for online advertising may be getting out-sized.

Increasingly, they say, too much media depends on advertising as the only source of revenue. With new players from software makers to cable operators also trying to cash in, the dollars simply may not stretch far enough.

"I'm getting to the point where I feel like every answer to every business development pitch is 'We're going to be advertiser supported'," said Beth Comstock, president of Integrated Media at NBC Universal, which this year set up a fund to invest in media and digital companies.

"It's just not going to be possible," she said at a recent advertising conference. "There are not going to be enough advertising dollars in the marketplace. No matter how clever we are, no matter what the format is."

NBC Universal's television networks, cable channels and Web sites compete for advertising dollars with everything from niche blogs to big media peers like Time Warner Inc (TWX.N) and Walt Disney Co (DIS.N). In addition fast-growing Internet companies like Google Inc (GOOG.O) are snatching up advertising budgets.

But new rivals are entering the market. Comcast Corp. (CMCSA.O), the largest U.S. cable operator, expects at least $1 billion in online advertising in the next five to six years.

Verizon Communications (VZ.N) and AT&T (T.N) are looking at advertising opportunities on their video and wireless services, while startups like social network Facebook are seen as a new frontier for Web marketing.

Even Microsoft Corp (MSFT.O) has made a bold move into advertising with its purchase of Web marketing firm aQuantive.

THE MONEY FLOW

Until recently, the focus was squarely on how much money is moving into online advertising, rather than whether too many companies are making a grab for it.

There is little doubt today that a hefty portion of advertising dollars will shift to the Internet from TV, radio, print and elsewhere in the coming years. ZenithOptimedia forecasts that online ads worldwide will rise 28 percent in 2007, while the rest of the market grows at 3.7 percent.

Next year, ZenithOptimedia forecasts it to rise by 21 percent, and climb another 13 percent to $43 billion in 2009.

At that point, Web advertising would represent almost 10 percent of the $495 billion spent on advertising worldwide -- yet would trail spending on newspapers, magazines, and TV.

"There are billion of dollars that can still move," said Craig Lambert, Chief Digital Director of Colangelo, an integrated marketing agency based in Darien, Connecticut.

"Is there enough money flowing to support the businesses out there? I'd guess there is, just because there's so much money that has always been spent on TV and print," he added.

BIG SITES GET BIG DOLLARS

Others also take the position that there should be sufficient advertising money to spread around.

Jeff Brooks, Chief Executive of digital and direct marketing agency Euro RSCG 4D, sees a "huge gap" between the amount of time people spend on digital media and the amount of advertising money it attracts.

"The thrust of ad spending online, while dramatic in its growth quarter over quarter, still represents a disproportionately small percentage of total advertising dollars," he said.

The catch, according to some, is that much of the money flowing toward the Internet is concentrated on a few dozen of the most popular sites. That has left smaller, less well-known sites at a severe disadvantage when it comes to attracting advertising money and surviving.

In the United States, the top 50 Web sites accounted for more than 90 percent of the revenue from online ads in the first half of 2007, according to the Interactive Advertising Bureau and PricewaterhouseCoopers. The top 10 sites accounted for 70 percent of the revenue.

All the while, the number of Web sites continues to grow, creating more competition for audiences -- and advertisers -- who can also choose among video games, movies, TV, portable music and every other type of media entertainment.

"It's not like the old days, when it was 'if you build it, they will come,"' said Jonathan Sackett, Chief Digital Officer at Arnold Worldwide, a Boston-based advertising agency. "Now if you build it, they probably won't."

One alternative for Web sites would be to bank on subscriptions rather than advertising revenue, but few existing outlets have been successful with that model.

The reason is that unless the site offers extraordinary content, people simply refuse to pay for it, said Mark Miller, president of RMG Connect, an advertising and marketing agency.

"If Warren Buffett wanted to put out his own subscription newsletter online, well, I'm sure he'd get a bucketful of people to subscribe to it," Miller said.

http://news.yahoo.com/s/nm/20071012/tc_nm/advertising_web_dc_1

Article: TV junk food ads feeding child obesity

The first study of child health in Queensland in more than a decade shows one-in-five children are overweight or obese.

The rates are slightly lower than in New South Wales and Western Australia, but Queensland Health Minister Stephen Robertson says the Commonwealth should act.

The university study also found half the state's children ate less than one serve of vegetables a day, while fewer than one-in-six boys and one-in-15 girls did an hour of daily moderate physical activity.

Health Minister Stephen Robertson says it is further proof of the need for the Federal Government to limit TV junk food advertising.

"We banned tobacco advertising years ago - why? Because advertising encourages people to smoke," he said.

"Why not apply that same rationale, that same commonsense, to the advertising of junk food during the hours when kids are most likely to be watching it."

http://abc.net.au/news/stories/2007/07/12/1976452.htm

Article: Kids Market Buoyed by Non-Traditional Categories Upfront Chronicles Part 9

By Jack Myers

Turner, Nick & Disney Bullish on Kids' Upfront Market
With spending power of $78.5 billion annually, kids are an increasingly vital economic force. A growing number of non-traditional advertisers are moving into kids television not only to reach them but to reach their parents in a relevant environment. According to Yankelovich Youth Monitor, 72 percent of kids say commercials influence their purchase decisions and a growing majority of adults admit they are significantly impacted by their children's requests and recommendations.

Until earlier this decade, the "Kids Upfront" market would typically move in February in conjunction with the Toy Market and would offer a telltale sign of what might happen in the general market. But, agree senior executives of Turner Entertainment, Nickelodeon and Disney /ABC Cable Network Group, the kids network television advertising business has changed dramatically and is now moving closer to the traditional Upfront season. In separate interviews Jack Myers Report spoke to David Levy, president of Turner Sports and Entertainment Sales & Marketing; Cyma Zarghami, President of Nickelodeon Television; Jim Perry, SVP Nickelodeon Ad Sales; and Tricia Wilber, SVP Ad Sales & Promotions for Disney/ABC Cable Networks Group.
Search


Wilber points out "the kids' business is different in two primary ways. First there is a smaller number of players so the competitive environment is different. At the same time, the market — the number of traditional kids advertisers — is smaller. We don't have the depth and breadth of kids advertisers we had in the past."

Credit: Nickelodeon

Levy comments, "products are now marketed to four age groups: birth to three, three to five, six to eleven and eight to fifteen. Manufacturers market products to these age groups and we're programming to them but they still buy media targeted to two age groups, two to six year olds and six to eleven. The growth of hand held gaming, computer gaming and electronic products for kids has resulted in greater market segmentation."

But, says Zarghami, "the kids' market is attracting several new categories. Non-traditional accounts have started to reach out to kids. Their influence on household purchases is significant and marketers are responding." She adds "there are a number of packaged goods advertisers using kids TV as a way to reach moms who are watching TV with kids. More pre-school programming is interactive," she explains, "and we attract more moms in Nick Jr. than many prime time programs."

Credit: Cartoon Network

Perry claims Nickelodeon's business from traditional categories has been steady. "Growth of our toy business isn't aggressive but all the major toy companies are introducing electronics products. The automotive, food and entertainment business has been incredibly strong over the last 18 months. The automotive category has been growing," he claims, with Nickelodeon already scoring campaigns from Ford, Dodge, Toyota, Mitsubishi and Honda and about to announce a sixth automotive partner. "Food manufacturers are reformulating products and coming out with new product introductions, so they have to spend to support them," Perry explains.

Levy agrees food manufacturers may be changing product ingredients and launching new brands. "That's a more positive way to look at the impact of regulatory concerns," he suggests. Wilber confirms the food industry's messages are changing and dollars associated with the category are still strong. She also says "the entertainment business seems to have a good slate of theatrical and DVD releases coming out. Video games are strong." Levy adds "the studios are coming out with more kid friendly and animated movies. The launches and the aftermarket are exploding."

Perry claims travel is also a growth category, with clients like the Cayman Islands, Embassy Suites, and Best Western. (Nick is opening its first Nickelodeon Family Suites by Holiday Inn on Memorial Day Weekend.)

Credit: Cartoon Network

Levy confirms the growing importance of packaged goods, DVD and new studio releases, gaming advertisers, and non-traditional categories, suggesting a key to the growth of this year's kids market will be how big these new categories grow and how much these advertisers spread their campaigns beyond the traditional "hard eight" weeks prior to Christmas and the two weeks prior to Easter.

Zarghami points out "while the Upfront plays a big part in the business, because of integrated promotions, licensing and tie-ins, we are doing business 52-weeks a year. We have a fairly significant percentage of business already wrapped up." Levy agrees "there are new opportunities for marketers trying to extend reach and find new opportunities."

Credit: Nickelodeon

"Levy believes the kids Upfront market should "break" just two to four weeks prior to the traditional Upfront market, meaning there remains six to eight weeks before kids' networks get a clear picture of market demand. "Buyers are not yet showing their cards," says Levy. "When one buyer moves, the whole market will follow. The market moves when toy and gaming advertisers need to get money down for the hard ten weeks." Three agencies, Starcom, Mediacom, and Summit Media are the primary drivers of the traditional kids market, followed by Mindshare.

Zarghami believes the kids Upfront market could be wrapped up by mid-April and says "we expect the market to be up in total revenues in the high single digits. Overall kids' gross rating points are down two percent but demand will be up." "The market is still forming." Wilber confirms. "Budgets are still being formalized, although we see it as a strong marketplace. We will definitely see growth in costs-per-thousand and we're waiting to see where the market will end up."

Nickelodeon and Turner's Cartoon Network are the major players in the kids advertising marketplace. Disney Channel is not a fully commercialized network but Toon Disney is in close to 50 million homes and is becoming a stronger force. Kids WB, which is packaged with Cartoon Network, is the only broadcast network with a strong Monday to Saturday kids presence and ABC Saturday morning continues to attract sizeable audiences. Additional competitors in the kids market are Fox Box and Discovery Kids, but Nickelodeon and Turner are the dominant market forces.

"We look at Cartoon Network as being well positioned for this year's Upfront," says Levy. "Ratings are up year over year. Anytime you can show growth it is a great opportunity. We've had two new hit shows, and we're launching a pre-school block with two hours each weekday from 7 to 9 am. We have identified a great opportunity with Adult Swim from 11pm to 5 am. The demand will be there because ratings are up and supply is tighter."

Zarghami points to the continued leadership of Nickelodeon. We introduced 'Nick Toons' in the fourth quarter and it is already in 32 million households and on its way to 40 million. 'The N' digital network for teens was introduced last year and it's now in 42 million homes. We believe the combination of Noggin, Nick Jr. and the CBS Saturday morning programming is a powerful offering to reach pre-schoolers and moms. Our consumer products business is tremendous. Our sales and marketing groups are closely aligned with our programming groups and our multiple platform pitch has been significant."

Wilber claims the strength of the Disney/ABC kids platforms is the "ability to deliver targeted kids. If they're looking for targeted audiences we offer the most efficient ways to deliver them. We give marketers a place where they can get an incredible concentration of boys on Jetix, which has a 70 percent concentration of boys. Our Saturday morning offers the largest concentration of girls in the marketplace. Plus," she adds, "the uncluttered environment of Disney Channel is a place where marketers are breaking through and making emotional connections with kids."

http://www.mediavillage.com/jmr/2005/03/30/jmr-03-30-05/

Article: Kellogg Move Bodes Ill for Ads to Kids

More Than a Billion Food Marketing Bucks in Limbo as Companies Try to Satisfy the Critics

By Ira Teinowitz

Published: June 18, 2007
WASHINGTON (AdAge.com) -- Saturday morning will never be the same again.

Legions of kids who start their weekends with the boob tube and a bowl of sugary cereal won't be seeing Snap, Crackle and Pop. Instead, they'll soon be seeing ads for more-healthful foods -- or none at all. By agreeing to market to kids only the 50% of its brands that meet certain nutritional criteria, Kellogg has kick-started an industry trend expected to throw into play some $1 billion or more in marketing dollars.

Turning up the heat
It's a move that ratchets up pressure on the other 10 marketers in the so-called Children's Food and Beverage Advertising Initiative, which account for more than two-thirds of the food and beverage ads kids see. They are feverishly working to meet or beat a July 18 deadline to announce responsible-marketing pledges of their own at a government kids'-obesity forum.

Titans in the initiative, such as Hershey, McDonald's and General Mills, have already committed to devote at least half their TV, radio, print and internet marketing to kids under 12 to furthering "the goal of promoting healthy dietary choices and healthy lifestyles."

Each marketer will set its own individual standards, so it's impossible to say just how much spending will be affected. But judging by the breadth of the Kellogg plan -- which alone involves more than $200 million -- it's going to be a significant sum, particularly if you're a kid-focused media owner.

Healthy ad diet
Kellogg said it would advertise only foods that fit a particular nutritional profile in any medium that gets more than 50% of its audience from kids under 12. Products that fit the criteria will have no more than 200 calories per serving, no trans fat and no more than 2 grams of saturated fat. There are also limits on sugar. Some 30% of Kellogg's cereals don't meet the standard; oddly, Rice Krispies doesn't (too much sodium) while Frosted Flakes does.

According to President-CEO David Mackay, 27% of the company's ad spending in the U.S. is directed toward children under 12. According to Advertising Age estimates, Kellogg spent $765.1 million on total marketing in 2006, so a potential $206 million could be affected. Kellogg said it would no longer spend on kid-directed TV, print, radio and internet for the affected brands and would ditch "website activities directed to children, promotions/premiums, product placement and in-school marketing" for brands that don't meet its criteria.
Brand Identity


"Wherever possible, implementation of Kellogg commitments will begin immediately," Kellogg said in a statement. "For example, certain brands will feature better-for-you options in their advertisements. We will be making content enhancements to our child-directed websites, including adding automatic screen-time limits and healthy-lifestyle and nutrition messaging, plus limiting depictions of foods that don't meet our nutrient criteria in interactive activities like games, downloads and wallpaper."

Half Kellogg's products
But even Kellogg isn't sure whether it will be redistributing those ad dollars or not. Mark Baynes, chief marketing officer for North America, said about half of the company's products marketed to kids under 12 don't meet the new nutrition threshold, and it's still not clear which ones can be reformulated to meet the guidelines and still appeal to kids. "The challenge now is: Can we reformulate without too much a trade-off in taste?" he said. "If we can, we will, and [continue] advertising to children in much the same way we do now. If we can't reformulate our product and there is too much of a trade-off, we have to find a new target audience to make the brand relevant or, if we can't, stop advertising it all together."

Though kids' TV programmers are staying cool publicly, the winds of change are buffeting networks such as Viacom's Nickelodeon and Time Warner's Cartoon Network. Kellogg alone spent some $44 million on Nickelodeon advertising last year, according to TNS Media Intelligence (excluding Nick at Nite) and $22 million on Cartoon Network.

The groups that pressured Kellogg into its agreement, the Center for Science in the Public Interest and the Campaign for a Commercial-Free Childhood, also had threatened to sue Nickelodeon, but they've put that on hold. With the Kellogg settlement and an expected flood of similar efforts from other marketers, the groups appear to feel Nick will be punished enough.

Nick will be like "a used Edsel no one is buying," said Steve Gardner, chief litigation officer at CSPI, before hastening to add that kids' food marketers could still advertise on the network -- just with more-healthful products.

Nick 'thrilled'
Cyma Zarghami, president of the Nickelodeon/MTV Networks Kids and Family Group, said, "As a company that's been at the forefront of encouraging our partners to provide more balance in their offerings, we are thrilled that companies like Kellogg are taking initiative to provide us with opportunities to introduce healthier food options to kids." Cartoon Network had no comment.

One thing is crystal clear: Big Food is expected to almost universally step up to meet the challenge of Kellogg. Sen. Tom Harkin has called this the "defining moment in our nation's fight against childhood obesity."

Article: Markey Demands McD's, Other Marketers Follow Kellogg's Lead

Congressman Tells Five Food Titans to Implement Kids' Advertising Limits

By Ira Teinowitz

Published: June 19, 2007

WASHINGTON (AdAge.com) -- The chairman of a congressional panel is ratcheting up pressure on McDonald's, Coca-Cola, General Mills, Kraft Foods and PepsiCo, demanding they follow Kellogg's lead and commit to kids' marketing limits -- or else.

Rep. Ed Markey, D-Mass.


As part of a lawsuit settlement last week, Kellogg announced that in any medium that has a large audience of children under age 12, it would market only foods that meet new nutritional criteria. The marketer also went beyond rivals' initiatives, saying it would alter product ingredients to meet minimum health standards or quit advertising them to children.

Investigating impact of ads
Rep. Ed Markey, D-Mass., in letters to five of Kellogg's competitors, told those companies to implement similar limits, and announced new plans for a House hearing on the issue. Mr. Markey, who chairs the telecom panel of the House Energy and Commerce Committee, said his panel's hearing this Friday on the impact of violent and tobacco-smoking images children see on TV will now also look at repercussions of the food ads children view.

The letters ask the companies to respond by June 29.

Mr. Markey cited a report from the National Academy of Sciences Institute of Medicine that said marketing could have an effect on food choices. "I am concerned that the prevalence of advertisements on children's television for junk food, fast food and other foods wholly lacking in nutritional value is one of the root causes of America's childhood obesity epidemic," Mr. Markey wrote in the letters.

"I would like to know whether your company will commit to implementing the same marketing restrictions Kellogg has announced. Such information may inform the subcommittee and the public as to additional steps that may be warranted to safeguard kids from junk-food ads during children's television programming."

An aide to the congressman said the five companies were selected because of their extensive use of marketing to kids. At press time, a witness list for this week's hearing wasn't yet available.

Could bring in FCC
In an April 16 letter to several Federal Communications Commission commissioners, Mr. Markey said the FCC would need to play a more active role in limiting food advertising on kids' shows if marketers don't act voluntarily.

"There is no question that the commission has both the affirmative obligation and the statutory authority to examine whether placing limitations on certain food advertising to children would further the public interest," he wrote then. "If a 'core' educational program tells children to eat healthy foods and exercise, but the advertisements aired during the program encourage them to eat Twinkies and Fruit Loops, the ads have the potential to undercut the educational and informational value of the program."

Article: Don't Starve Kids TV

By David Kleeman -- Broadcasting & Cable, 6/4/2007

Late in 2006, the British regulator Ofcom announced a ban on commercials for foods high in fat, sugar or salt during any program with substantial viewership under the age of 16. In this country, Rep. Edward Markey (D-Mass.) has asked the FCC to evaluate that law as a model for the U.S., so it's important to explore its immediate effects.

The UK independent producers' trade association, called PACT, estimates the ad restrictions will cut £39 million from children's-TV budgets in its first year (roughly three times PBS' annual spending on kids programming).

As the ad ban went into effect, ITV—one of the UK's unique “commercial public service” channels—closed its children's-production arm and slashed its free-to-air children's hours. ITV spent £35 million for children three years ago; in 2007-08, it will spend about £5 million,mostly on operations. ITV Chair Michael Grade says it's irresponsible to shareholders to transmit children's TV instead of more-profitable fare.

This isn't just a public-service issue. Specialty children's channels will take the biggest-percentage revenue hit. Worldwide, corporate advertising or underwriting is the fuel of most children's TV, and when that fuel runs scarce, carefully crafted programs suffer more than easy-to-market series with multiple revenue streams, like international sales and merchandise.

As revenues plummet, producers take innovative proposals off the table, substituting ideas that imitate financial successes or are cheap and easy to make. Ofcom research notes a sharp drop in what is now spent producing kids shows. Producers are making less programming and making it cheaper.

This is relevant to Markey's proposal to strip “educational/informational” status from programs supported by food advertising. A further-diminished financial model will only induce broadcasters to air cheaper shows.

In kids TV, “good enough” isn't. No amount of money can rescue a bad idea, but cutting corners will ruin every good one. Markey has fought for years to advance excellence in kids TV. Following Ofcom's lead could devastate the very programming he advocates.

Childhood obesity is a serious, complex issue in need of thorough and thoughtful solutions. Starving creativity and quality would be a hollow victory.

http://www.broadcastingcable.com/article/CA6448611.html