May 18, 2013
KIDMONEY: Children as Big Business
By Shelly Reese
It used to be a simple food fight. Armed with a high-pitched whine and data culled from Saturday morning TV ads, Junior attacked. A box of Pop Tarts here. Some Eggo waffles there. How about a nice Hawaiian Punch? It didn't really matter what object of desire was in question. The resultsmore often than notwere predictable: Mom caved, Junior got a sugar-saturated cereal, and, somewhere, a happy marketer gloated.
The rules of combat have changed. What used to be a mere grocery-store showdown has become a multi-front blitzkrieg that invades the information superhighway and infiltrates the bastions of education. As children's spending power and influence over their parents grow, marketers are casting their nets wider. No longer content with the confines of Saturday morning cartoons, marketers are pummeling kids at every turn with a formidable arsenal of techniques and a panoply of products.
Kids are no longer just an entree to their parents. Marketers of computers, hotels, banks, clothing, and groceries are approaching children as a consumer segment unto itself with more than $17 billion in its pocket and a whole lot of spending power in its future. There's not a good consumer goods marketer out there that doesn't address children as either a current or a potential future market, said James McNeal, a marketing professor at Texas A&M University, who has studied children's spending patterns for 30 years. This isn't just an important sector today; it's the market of tomorrow.
Stalking a Growing Market
More than $2 billion is spent on advertising directed at kids, 20 times the amount that was spent just a decade ago, according to David Siegel, general manager of Small Talk, a division of Sive/Young & Rubicam that helps marketers reach kids.
Roughly half of that goes toward television advertising, while the rest is spent advertising on billboards, through special promotions and clubs, on line, in classrooms, and through more than 180 children's magazines, said Rena Karl, editor of the Marketing to Kids Report, a California-based newsletter.
It's not just the $17 billion kids spend each year on everything from computer software to candy, or even the $170 billion adults spend at their behest that marketers are after. In addition to those 187 billion excellent reasons, marketers are targeting kids because demographers tell them they should. By way of comparison, in 1995 the total amount spent in the U.S. on public education was $243.7 billion.
Since 1989 the annual number of births in the United States has hovered around four million, a phenomenon not seen since the 1960s. If current trends continue, one in six Americans will be under the age of 12 by the year 2000. Those are big numbers, and that means big money, said McNeal. The majority of those 51 million under-12 consumers will have working parents who may overindulge their kids to make up for the time they're unable to spend with them and who will not be around to thoroughly monitor their children's purchasing decisions.
Equally important is the rise in single-parent households. Siegel points out that about two-thirds of U.S. kids will have lived with just one parent at some point by the time they reach their mid-teens.
These changes have transformed the child's role in the family. Kids are [now] the main decision makers, said Siegel. They have influence, and they deserve information. McNeal points out that kids influence between 25 percent and 40 percent of all household purchases. That means deciding not only what type of cereal lands on the breakfast table, but alsoas in the case of Siegel's own familywhat kind of computer glows in the den and what model car is parked in the driveway.
The growth in children's influence isn't just a byproduct of their spending more time away from their parents. It's correspondingly a factor of where and with whom they're spending that time. For the most part, time away from parents is spent in day care, school, or latchkey programs, where kidsinfluenced by their peersdevelop their tastes and desires.
The whipped cream on all this: marketers know that grown-up customers who form their brand allegiances in childhood are more loyal than converts who adopt the brand later in life.
Research has shown that brand names are important to kids, because they help young consumers forge and express their identities. If marketers can capitalize on that need for self-expression, if they can woo and win the child, they're likely to enjoy his or her loyalty for the next 70 years.
Powerful New Tools
While all this might sound unsavory, marketers like Siegel argue that they are merely adapting marketing to fit a changing society. Society has changed; why shouldn't marketing? he asked. We don't capitalize on kids. We capitalize on their abilities. We're using their strengths. A father himself, Siegel argues that kids are more discriminating than many adults and that even if a marketer were unethical enough to prey on children's weaknesses, he or she wouldn't be in business for long. With kids, word of mouth is very powerful. If they don't like the way they've been treated or if they don't like a product, it kills [the product] immediately, he said.
Because they perceive kids to be influential, savvy, and discriminating, marketers have moved beyond the predictable techniques that worked for generations and are working diligently to capitalize on frequency and target marketing techniques, in-school programs, and new interactive technologies.
In the grocery aisles, where hundreds of products targeted at kids are introduced annually, the drive to reach kids has resulted in campaigns for products like Kick soda (Your little sister drinks Mountain Dew) and Pepsi (Be young. Have fun. Drink Pepsi.).
Apparel retailers, stung by a slowdown in sales to adults in recent years, saw kids age four to 12 increase their spending on clothing from less than $750 million to about $2.5 billion in just three years, between 1992 and 1995, according to James McNeal. In an effort to maximize that niche, companies such as the Gap and Guess are spinning off new brands such as GapKids and Baby Guess, while designers such as Ralph Lauren, Adrienne Vittadini, and Marithe & Francois Girbaud have added children's lines. Department and discount stores, including JCPenney and Kmart, have created kids' clubs and kids' advisory boards, and Bloomingdales sends children a special mail-order catalog.
Not to be left out, service companies are also targeting kids. Hyatt Hotels' Camp Hyatt, a decade-old program that offers special rates, menus, and activities, has spawned a slew of competitors' knock-offs. Health clubs and airlines are likewise tailoring programs to kids.
Kids are a particular favorite of marketers in the software, computer accessories, and edutainment arenas, where, McNeal estimates, they influence at least 60 percent of all purchasing decisions for the home.
The kids are the only ones [who understand] what computers are about because they have them in school, said Karl. Parents are the ones who have been dragging their feet about learning this stuff, so it's been the kids propelling the market.
Into the Classroom
Because kids are at the forefront of many buying trends, marketers are trying to sell to them at every turn, and the classroom is by no means off-limits.
Kids spend roughly 20 percent of their time as classroom captives. Marketers know where to find themlike fish in the proverbial barreland how to set their sights. Techniques vary widely, but marketing in the classroom has become omnipresent, according to a Consumers' Union report released last year. Prepared over a two-year period, the report, Captive Kids: Commercial Pressures on Kids at School, highlights the most popular techniques currently used to infiltrate the classroom.
In-school marketing runs the gamut from bulletin-board advertisements to educational materials bearing corporate logosand corporate perspectiveson issues such as the environment and nutrition. Contests, promotions, and incentives are other frequently used in-school marketing devices.
For example, Fuji Photo Film Co. directs more than $1 million of its advertising and marketing budget toward kids, through promotions like Kids in Gear, which enables school soccer teams to buy equipment in exchange for proofs of purchase. Similarly, banks such as Twiglet Bank in Miami and First City Bank of Austin, Texas, attract children through savings programs set up at schools. More than 16 million students in almost 25,000 schools use their free book covers, Concept Marketing Services, Inc., told the Consumers' Union. Those covers, emblazoned with logos from 50 different advertisers including Nike, McDonald's, and Hershey, pitch everything from sneakers to food.
Then there's Channel One, a daily ad-bearing news program for students in grades six through 12, which airs in more than 12,000 schools. Broadcast free to schools that agree to make it a mandatory part of the curriculum, Channel One offers schools use of a satellite dish, VCRs, and television sets. For supply-starved schools, which otherwise could not afford such equipment, those are powerful pros. There's no question Channel One offers students and teachers, especially those in economically disadvantaged areas, access to important learning tools.
The controversy surrounding Channel One, however, involves the advertising that underwrites it. Two minutes of every 12-minute news program are devoted to advertisements for kid-oriented products such as candy, soda, and sneakers. Advertisers are willing to pay a premium for the 30-second spots because they're aired in a setting where children can't change the channel, leave the room, or turn off the TV.
Critics say that those advertisements outweigh any benefits Channel One might offer for a host of reasons. Some say the network compromises a school's integrity to educate and cedes control to an outside party. Others say the ads often contradict the lessons schools are trying to teach. Still others argue that advertisements seen in the classroom convey an artificial aura of authenticity and credibility simply because of the setting. It takes away from classroom time, it legitimizes selling student audiences to advertisers as a means of financing public educationthe contentions are numerous and adamant.
Arguments for in-school commercialism center on a common theme: need. As long as [these companies] deliver something valuable to the child, there's nothing wrong with marketing in schools, said Siegel. With education getting more and more expensive, I think it's good. It's like anything else in advertisingjust like free programming on the networkspeople like [the fact that] they get a lot of things for free because of it. Not even critics of in-school advertising debunk that point.
The Consumers' Union polled 21 educational associations to learn where they stand on the debate. The strongest opponents to commercialism in schools are the National Education Association (NEA), the National Parent Teacher Association (PTA), and the Association for Supervision and Curriculum Development (ASCD). Many of the other organizations said the decision of whether or not to use the material should be left to the individual districts, teachers, and supervisors, but none actively encourages commercialism in schools.
No one is saying in-school commercialism per se is desirable, the Consumers' Union report points out. Rather, they're looking at it as a means to an end. We believe the debate would not exist, in fact, if schools weren't chronically underfunded and forced to accept help from companies willing to give it.
Brave New World?
While commercialism in schools has come under the microscope, the attention paid to it has paled in comparison to the furor in recent months surrounding marketing to kids on the Internet.
By most estimates, only four million U.S. kids currently have access to on-line technologies. But that number is expected to climb to about 15 million by the year 2000. That makes the Internet a fast growingand completely unregulatedway of reaching kids.
Since its inception, the Internet has been a laboratory for communication and information gathering. As those tasks are at the core of modern marketing, it's no surprise direct marketers have been intoxicated by the technology. While that's led to widespread criticism, the loudest complaints center on marketers' approach to kids.
In a March 1996 report, for example, the Center for Media Education, a Washington, DC-based nonprofit organization, lambasted marketers for micro-targeting kids on line and called for government limits. The report, which was released after six months of research, accused companies of invading children's privacy by offering prizes for personal information to be used for marketing purposes. Similarly, it accused marketers of electronically tracking on-line use to develop consumer profiles of kids. It also criticized advertisers for merging programming and commercialsa practice strictly regulated on TVinto seamlessly woven electronic playgrounds, such as the Nabisco Neighborhood, Frito-Lay's Dreamsite, and Kellogg's Clubhouse, where kids can play with spokescharacters.
Kids in the lucrative cybertot category, as the Center has dubbed them, are so anxious to frolic with Tony the Tiger, Snap, Crackle, and Pop, or Cheetos' Chester Cheetah, that they're willing to give out personal information about themselves and their families, said Shelley Pasnik, co-author of the report.
Oftentimes, people confuse technological sophistication with maturity, she said. Simply because a child is the only one in the house who can run the VCR doesn't mean she can process and understand a marketing message.
Children for the most part don't understand what privacy is, and marketers [on the Internet] are teaching them, either implicitly or explicitly, to share information about themselves so that they can fulfill their immediate gratification and win some prize. We don't know what long-term effects might be felt.
Concern over on-line marketing to children has become so great that the Direct Marketing Association (DMA), the industry's largest trade group with more than 3,600 member companies, testified on the subject before the Federal Trade Commission in June 1996. The DMA said that while many responsible companies have marketed products and services to kids and their parents for years, growing use of the Internet has blurred the definition of what is appropriate communication. The DMA is committed to implementing principles that ensure marketers' communications with children and parents are appropriate, responsible, and provide choices for limiting collection of information for marketing purposes, said Pat Faley, the DMA's vice president of consumer affairs.
Still, Faley conceded, what little control can be exercised over on-line marketingfor the momentbelongs to parents. Software packages such as Cyber Patrol, Net Nanny, and SafeSurf can help parents limit both access to certain Web sites and the communication of information about a household that a parent deems to be too personal.
In the future, she noted, Platform for Internet Content Selection (PICS) technology, which is currently being developed, may help parents in their policing efforts by enabling them to subscribe to a third-party rating system that would limit a child's access to inappropriate sites.
That's simply not good enough, said Pasnik, who thinks obtaining parental permissioneven if that is logistically difficult at this pointshould be central to marketing to kids on line. We really have no problem putting the burden on the company, she said. After all, they're the ones who are going to profit from this in most cases, not the child.
The goal of all this isn't to squelch marketers' First Amendment rights, said Pasnik, but to safeguard kids and heighten awareness of a practice thatby all accountsis rapidly becoming an entrenched element of our society.
These media are quite new and techniques are being created, she said. Habits are starting to be formed and, from here on, the practice will grow exponentially. Our goal is to bring our concerns to the attention of the public so we could create some rules of the game.
Illustrations by Brenda Grannan.
Shelly Reese is a Cincinnati-based freelancer specializing in education and family issues. She frequently writes for academic journals and for magazines such as Parenting and Healthy Kids. When she's not actually writing, Shelly's preaching about its importance to students at Thomas More College in Crestview Hills, KY, where she is an adjunct faculty member.