Reeling Nickelodeon Sets Plans to Stay in Kids Game Lead

Upfront presentation seen as key to rebound for lagging overall sector

Why This Matters

Apps Are Happening

Kids TV networks have watched for years as the phenomenon known as the “pass-back effect”—devices being “passed back” to kids in the back seats of cars—has taken root. Now, nets are selling advertising on mobile apps this upfront, and it could be a game-changer.

“For the first time, we’re going to see more advertisers embrace the idea of multiscreen video in the kids marketplace,” says Darcy Bowe, associate media director at Starcom.

Disney has apps for Disney Channel, Disney XD and Disney Jr. Cartoon Network introduced its app last year. And Nickelodeon’s app just launched ahead of the Kids’ Choice Awards in March. The apps’ live streams will generally be the same as the respective on-air content, leaving pre-roll video spots as the primary opportunity. There is always a layer of extra scrutiny on those targeting kids, but the opportunity to connect via apps is a major new frontier.

“Kids have been watching VOD for years. They’re not afraid to watch video on their tablets. They’re taking their moms’ iPhones and are watching video constantly,” Bowe says. “Now you have the three top players in the kids’ space who finally have released a methodology by which someone can more easily consume that content. I think you’re going to see an interesting shift of dollars that way.”

The Nick app is “going to be very different than anything marketers or consumers have ever seen before, so we’re very excited about it,” says Jim Perry, Nickelodeon group head of sales. “Everyone is looking for ways to have their advertising message seen wherever the kids are. And if they’re going to mobile and they’re going to different platforms we’re going to be there, and we think it’s going to be real good for business.”

“Once you have an app, you hit that icon and it takes you directly to the content you want. That’s a beautiful thing. It creates such an engaged experience,” says Rita Ferro, executive VP, Disney Media Sales & Marketing. “We’re very excited about what that’s going to do for our business.”

Advertisers aren’t waiting for the upfront, Ferro says. “They all want it now. There isn’t an advertiser who hasn’t asked about it,” she says, adding that the app doesn’t seem to be either stealing viewership from Disney’s TV channels or cannibalizing ad dollars. “What we’re seeing is, it’s incremental.” —JL

Media buyers, and in some respects
the larger television world,
are eager to hear how the network of
SpongeBob and Dora plans to reanimate itself.

Times have certainly grown more stressful
at Nickelodeon, which is preparing for a highstakes
upfront presentation on Feb. 26. The
network’s ratings plunge and declining revenue
have echoed through the broader kids
market. Even industry observers not directly
involved with the sector have come to see the
network’s saga as a case study in the challenges
facing storied brands fighting to stay on top.

Buyers say the kids’ category was flat to down
last year, with fewer family movies pumping
marketing dollars into the mix. Home video
and restaurant buys on kids’ shows also declined,
according to Darcy Bowe, associate
media director at Starcom. Those drops were
balanced by increases in the toys, gaming and
packaged goods categories, Bowe says.

Sales executives naturally are optimistic this
year’s kids upfront market will be up from the
$850 million in business that got done last year.

No company has more at stake than Viacom,
whose Nickelodeon business is in the crosshairs.
With its ratings down 23% among kids
2-11, Nick’s industry-leading ad sales fell more
than 9% to $1.165 billion, according to SNL
Kagan. In recent months,
as the network’s ills hurt
Viacom’s earnings, senior
management took
steps to reassure worried
investors, including reorganizing
Nick’s programming

Absent a persuasive
plan to reverse its slide
with a fresh programming
approach, things
could get worse for Nickelodeon,
according to
media buyers. So far, they
say, most clients have not
shifted much spending from the leader to the
other players in the kids market, but that leadership
position is anything but a given.

“Everyone wants to steal share from Nickelodeon,”
says Bowe.

So when Nickelodeon holds its upfront presentation
in New York, the audience will be eager
to hear the script for getting ratings heading
upward again. “We’re waiting for the big reveal
of how they’re actually going to go about doing
that,” says Amy Sotiridy, senior VP at Initiative.

Nickelodeon’s pitch basically will thank clients
for sticking with them during the downturn
and show them what’s coming, according
to Jim Perry, Nickelodeon group head of sales.

“We look to deliver more value to our partners…
better programs, more targeted programs,
more digital video programs,” Perry says.
“Obviously we’re doing something right….We
still own the kids space, and we’re very appreciative
of everyone who stuck by us.”

A big part of Nick’s presentation will be the
network’s new app, joining rivals Disney and
Cartoon Network in chasing kids and their newfangled
mobile devices.

While Saturday mornings on the broadcast
networks once dominated the business, it now
accounts for only about 2% of kids gross ratings
points, and cable dominates. “As budgets
have decreased in the kids space, the broadcast
players have seen less demand overall,” says
Starcom’s Bowe. Cable had the run of the category
for more than a decade but is facing stiff
competition from digital players. Netflix, Amazon
Prime and Hulu Plus subscribers consume
plenty of kids content and have eroded ratings.

Perry is nevertheless expecting a strong
kids upfront for cable. “The movie studios are
coming back. You saw resurgence in December
with the toy category,” he says. Perry says
Nick is nearly sold out for pre-Easter, has only
a few expensive spots left in its Kids’ Choice Awards, and cancellation options are way
down. “I’m feeling good, Perry says.

Similarly, Rita Ferro, executive VP, Disney
Media Sales & Marketing, says Disney had
a strong fourth quarter. Budgets and pricing
look good in scatter. “We are very optimistic
about what this upfront could be,” she says.

Nickelodeon’s competitors are taking different

Instead of a big New York event, Turner
Broadcasting’s Cartoon Network is doing a
road show of individual presentations for
advertisers and agencies. The network has already
held about 20 presentations, according
to Joe Hogan, executive VP of young adults ad sales at Turner. “We are getting questions
about how kids are interacting with our
brands across multiple screens and what folks
can do with us from a licensing and merchandising
perspective,” Hogan says.

0225 Upfront Kids Chart Correx

The network is pitching a balanced and consistent
schedule as well. “It’s important for folks
to put their fair share of investment on Cartoon
Network,” Hogan says. While not venturing a
guess as to how big the overall kids market will
be, Hogan says that unlike past years, “the big
difference is the momentum that we have is
real, and the gap is really closing.”

Disney is holding its upfront event March 12.
The children of buyers and clients are invited, like last year. “Not everyone has a 4-year-old,
and the reality is when clients are there and
they see the reaction and the engagement that
kids have with our talent and our content,
nothing sells it better,” says Ferro.

Ferro adds that while Nick remains the leading
ad vehicle for reaching kids, “the fact that
Disney Channel passed Nickelodeon last year
to become the No. 1 channel across all the key
kids demos was really important for us.”

Disney is pitching sponsorships on its noncommercial
Disney Channel as well as spots
on commercial networks like Disney XD. The
company also has websites, a radio network
and new Watch Disney tablet apps to sell. “We
really integrate across all of the platforms and
all of the businesses,” Ferro says.

As Nickelodeon stumbled last year, upstart
networks picked up some of the slack. Disney
XD, The Hub and Sprout each posted doubledigit
ad revenue gains.

The Hub, a joint venture of Discovery Communications
and Hasbro, threw an upfront
event last year. This year, the net is doing
one-on-ones. “We always felt—especially being
still new and so small, but growing—that
having the ability to sit with clients, understand
their business, crafting ideas, has been
beneficial,” says Brooke Goldstein, senior VP
of ad sales.

And the number of clients buying The
Hub to reach young kids and moms watching
classic characters like the Care Bears together
has grown from 70 a year ago to more
than 140 today, Goldstein adds.

“I think it’s going to be a strong upfront,” she
says. “More advertisers are looking for outlets
with content they feel comfortable with.”

Sprout is also approaching the upfront on a
one-on-one basis. It plans to have a fall slate of
original programming to announce for the first
time, including The Chica Show’s return, says
president Sandy Wax. The net reports ad revenue
was up 20% last year—even more if Sprout’s
Saturday-morning block on NBC is counted.

“Look at the networks that are growing—
it tends to be the upstarts,” Wax says. “And
some of the more entrenched bigger guys, like
some of the Nickelodeon networks, are still
seeing some ratings softness. We’ve got such
a strong ratings story and such a strong brand
story that we’re really optimistic.”

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