With broadband in more than 30 percent of U.S. homes and streaming video increasingly viewed as a viable ad medium, Starcom USA is set to run spots for Lego, Kellogg's and Nintendo on Nickelodeon's Nick.com.
The 15- and 30-second video ads launch today. "We have to be first, especially in the area of kids, to know what [video streaming] is all about," said John Wagner, media director and chief kids negotiator at Starcom.
ESPN and CNN are also developing revenue streams from streaming ads, but the Nick/Starcom deal is the first time a kid-targeted network has entered the arena with major advertisers on board. "We realized how important the Web is for kids," said Jim Perry, svp of ad sales at Nick. The video ads on Nick.com, valued at about $1 million in total, are part of an upfront deal finalized last year.
Some 13 million kids age 2-11 used the Web each month last year, up 3 percent over 2002, according to Nielsen Media Reach. Nick says its site gets about 7 million unique visitors each month.
"Kids are early adopters of technology," said Kim McQuilken, evp of sales and marketing at Cartoon Network, which has experimented with film trailers online and is looking closely at streaming video. Cartoon Network execs said their site averages about 7.9 million unique viewers per month.
Pinpointing the value of these new ads is difficult. But they could carry a higher CPM than TV in certain situations. "Video ads are more interactive and therefore more engaging," said Starcom assistant media director Dan Kopec. "They pop up before you can access what you are looking for, and your face is only three inches from the screen. TV is a more passive experience."
Online ad spending rose 13.8 percent to $4.7 billion through September 2003, according to TNS Media Intelligence/CMR. The company projects online ad spending will grow 12.1 percent in 2004.