Kids and ads: Do they mix?
"[Advertisers] have to learn how to do it right ... because one day parents will be able to turn them off," said Idit Harel, Founder and CEO of MaMaMedia, a site offering activities, games and other content for kids.
Leaders of the most prominent Web businesses for kids gathered Monday and Tuesday here at Jupiter Communications' Digital Kids '99 conference to discuss how to make money in the growing online children's market, without using marketing and e-commerce tactics that will scare parents.
One of the bolder positions on the topic is taken by JuniorNet, a subscription-based site that doesn't use advertising at all.
"Some parents are still looking for that 'Leave it to Beaver' neighborhood where their kids can wander without being solicited, and that goes for the Web, too," said JuniorNet CEO Alan Rothenberg. "Because of that, some parents have made the choice to pay for a service so that their kids won't see ads ... We don't believe in advertising to kids."
Sign me up!
Jupiter's research seems to support JuniorNet's assumptions: A 1998 study showed that more than half of parents with online-savvy kids would be open to paying for subscription services that monitor content and chat for kids, with more than a quarter indicating a strong willingness to pay.
The opportunity is still there.
"Safe environments need to develop online," said Jupiter analyst Anya Sacharow, citing the pioneering example of Disney (NYSE:DIS) Online's subscription-only Daily Blast. "Parents are willing to pay for services for kids if they'll get a safe environment."
MaMaMedia's Harel says the site will eventually offer parents the option of paying for a version of the site that doesn't contain ads. But she believes advertising, if done right, can be an engaging and harmless addition to a kids' site.
Advertisers are interested in kids online because it gives them a chance to build a far deeper association with a child than would be possible with a 30-second TV spot, Harel said.
Question of responsibility
Not everyone believes kids' sites have the option of absolutely turning down advertising dollars. Sony Online Entertainment (NYSE:SNE), for example, relies entirely on ads to support its mostly teen-oriented kids' sites.
"Advertising to kids and teens is not a new area," said Chris Tice, Sony Online senior vice president for advertising and sales. "It's not a question of do we market to this demographic, it's how do we do it responsibly."
Even paid sites such as Disney's Daily Blast generally include carefully-screened advertising, industry observers noted.
Kids' cable network Nickelodeon is introducing a site this fall that will attempt to address parents' need for "safe," monitored content. But "Project Nozzle" will support itself through advertising and e-commerce. Nickelodeon's position is that parents don't mind advertising per se -- just marketing directly to kids, or ads that blur the line between marketing and content.
"Parents don't want to be misled," said Kris Bagwell, senior vice president with Nickelodeon Online. "They want to see that here's the content, and here's the advertising. It's about disclosure."
The best business approach, going forward, is probably openness to all kinds of revenue streams, said Jupiter's Sacharow. Ad-free subscription content "will be part of a tiered content model, not a dominant revenue stream," she predicted.
An e-commerce future
Most kids' sites say they are experimenting with e-commerce for kids, which is becoming more plausible with emerging e-wallet and barter systems.
Kids' commerce is, in fact, a booming market at the moment, with commerce pioneer Amazon.com's (Nasdaq:AMZN) launch this week of an online toy store.
(See: Amazon to add free music and toys)
Nickelodeon's Project Nozzle will break new ground by incorporating its own toy store within a content-oriented site; commerce features will come from Red Rocket, an educational toy dealer recently purchased by Nickelodeon parent Viacom.