Investment in advertising for children is growing, but tight regulations mean that many demand-side platforms, including The Trade Desk and Yahoo, shy away from transacting on children’s inventory. As a result, some kids-focused publishers, such as HappyKids, are losing out on potential revenues of hundreds of millions of dollars annually.
According to December data by advertising intelligence platform MediaRadar, ad investments in children’s content and programming increased by 50% in 2022 in the U.S., reaching $1.6 billion.
The industry’s second-largest programmatic bidder The Trade Desk doesn’t accept bids on child-directed inventory, across various channels, including streaming and digital video, “based on a mature understanding of COPPA (Children’s Online Privacy Protection Act),” the company told Adweek.
“This is disappointing as CTV demand can sometimes run against inappropriate and unsuitable content due to lax terms of service and inventory vetting,” said Vikrant Mathur, co-founder of HappyKids, an advertising-based video-on-demand kids and family-themed channel.
For safety reasons, content on kids’ and family apps is typically heavily vetted so brands can be sure their ads run across brand-safe content. Additionally, regulatory restrictions, such as COPPA, require these apps to follow specific privacy and data protection policies, designed to reassure advertisers. However, many media-buying platforms aren’t transacting on the inventory because of COPPA, thus preventing publishers from generating millions of dollars of revenue.
“Between COPPA, proposed federal legislation like COPPA 2.0, and other state laws coming into effect, the trend in the marketplace is to be more protective towards children’s privacy, and it’s a trend with which The Trade Desk agrees. In light of this trend, buying child-directed inventory has not been a priority for our advertising clients,” a company spokesperson told Adweek. Yahoo did not respond to requests to comment.
In December, MediaRadar found ad spend promoting children’s products and services—including toys and games, entertainment, and personal care–hit $1.6 billion through 2022, up from $630 million in 2021. When broken down, 70% of the spend went to digital channels, including streaming, 29% to traditional TV, and 1% to print.
“This is a growth category,” said Todd Krizelman, CEO, MediaRadar. “Even as other verticals have seen a pullback in spend, investments in children’s content and from children’s brands have grown substantially year-over-year, particularly in digital.” The decline in the use of identity-based advertising and the benefits of contextual targeting capabilities in children’s content have spurred interest among advertisers.
Money on the table
The rise in ad spend on children’s content is partly due to viewers migrating away from cable and more advertisers using CTV as a linear extension of their TV buys, “because they are unable to reach these millennial families through traditional television,” said Mathur.
Meanwhile, an upsurge in co-viewing taking place on streaming apps “presents brands with an opportunity to connect with both kids and parents in an environment that sparks conversation and engagement resulting in better outcomes. As a result, you see not only toy brands but also others in categories such as consumer packaged goods, retail, quick service restaurants, and beyond, embrace streaming,” he added.
When it comes to ad spend directed towards streaming, it is often unknowingly diverted to publishers that are low-quality, remnant, or brand-unsafe, said Mathur, pointing to reports from measurement companies like DoubleVerify and watchdog organizations Check My Ads.
“If the streaming publishers were able to better monetize this inventory through programmatic pipes, [MediaRadar’s] number could very easily be doubled. That is really the opportunity we are looking at,” said Mathur.
Need for balance
While there’s enough premium, brand-safe inventory, Jeremy Haft, CRO of data technology company Digital Remedy, urges for a balanced approach to automated buying.
“Scale via programmatic supply will help aid in efficiency; however, there may be areas of diminishing return as a brand may either be bidding themselves or competing for the same high-performing inventory,” he said. “Finding the middle ground between cutting the supply path down, open exchange, direct deals, delivering the right creative strategy, and constantly optimizing to the right mix will alleviate challenges across the programmatic pipeline.”