Online kids space getting more competitive

Brands shifting ad dollars into Web sites not aligned with TV

Kids brands are shifting dollars into their digital ad buckets, say industry insiders, which is good news for category leaders Nick.com, Disney.com and CartoonNetwork.com.

But at the same time, per buyers, the digital kids space is far more competitive than just a few years ago as virtual worlds and kids-oriented ad nets attempt to corner market share. Also, non-ad-supported outlets like the iPhone and the Nintendo Wii continue to siphon away kid hours.

Unlike the general market, the online kids ad segment has been historically dominated by TV players Nickelodeon, Disney and Cartoon Network. But according to sources, 50%-75% of dollars being spent on kids Web properties these days are not part of integrated TV packages -- a significant shift from recent years.

Most believe that shift is simply a result of kids' heavy usage of digital media. In fact, most of the major sites in the category claim consistent increases in audience, time spent and video viewing. Per Nielsen Online, Disney.com reached 3.6 million unique kids 2-11 in January, while CartoonNetwork.com hit 1.7 million and Nick.com 1.4 million.

"The usage numbers continue to grow and grow," said Walker Jacobs, senior vp digital ad sales at Turner Sports and Entertainment. "That's really what's driving clients' decisions. It's not some philosophical shift."

"There are many more dollars flowing into online for kids," said Jeff Malmad, director of digital media at MediaCom. "But it's extremely fragmented." Malmad pointed to the popularity of kid-friendly virtual worlds like Stardoll and Gaia, gaming properties like WildTangent and even newer media options like the Wii and iPhone. "It was a lot less chaotic a year ago. Nickelodeon is now competing with some 9-year-old in Singapore that developed an educational app for the iPhone that kids can spend hours with."

Competition is increasing on the Web as well. For example, ad network Betawave, formerly GoFish, is actively packaging and selling the kids/moms end of the Web's long tail. And just last week, Disney rolled out boys-oriented DisneyXD.com to correspond with the relaunch of the Toon Disney cable network. "Everyone is bleeding into each other's space," Malmad said.

Of course, the brutal economy makes things even tougher. "There is definite pricing pressure," said Brad Davis, senior vp online ad sales at Disney Online.

But according to Davis, one thing that helps kids sites is their lesser reliance on display ads -- the softer part of the online market these days. Instead, video and gaming tend to be core ad vehicles for reaching kids online.

"Games are a primary reason to come to Nick.com," said Nelson Boyce, senior vp digital ad sales at Nickelodeon Kids and Family Group. Boyce also theorized that the kids online market enjoys "a bit more stability" since two of its core categories, toys and movies, are generally recession-resilient.

Yet Boyce acknowledged the category isn't what it was a few years ago: "The kids marketplace has been relatively well-defined. Now it's a fight for share. There are more players fighting for the same pool of dollars."
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