e-marketing to children

[Gary Ruskin]

Commercial Alert				September 21, 2000

Following is a rare glimpse into the shrouded world of conferences on
marketing to children.  Kudos to the San Francisco Bay Guardian for
getting the story.

http://www.sfbg.com/News/34/51/51ogdigi.html

Dot-com marketers descend on S.F.
By A. Clay Thompson, San Francisco Bay Guardian

If you have children, be afraid. Be very afraid. Internet marketing
gurus are busy cooking up online schemes to drain kids' piggy banks –
not to mention their parents' credit cards.

Spending a few hours at "Digital Kids," the two-day e-marketing confab
held in San Francisco Sept. 12 and 13, made that crystal clear.
Sponsored by Jupiter Communications, a leading tech consulting firm, the
forum brought the heavyweights of the dot-coms-for-kids set to the posh
Argent Hotel to talk shop and pitch product.

Surrounded by some 400 new-economy players – think young white people in
semicasual attire punching data into PalmPilots – I caught the keynote.
"In simple terms we all know that kids are surfing the Web in record
numbers – but translating this traffic into profits is quite a different
matter," offered speaker John Barbour, a Scot who heads ToysRus.com. "I
can see a number of you thinking right now, 'Wow, with all these kids
surfing the Web, there's got to be a lot of cool business
opportunities.' "

But right now minors account for only 1 percent of online toy sales,
Barbour lamented. "Most kids and teens don't have credit cards to make
online purchases," he said.

Luckily for Barbour and colleagues, a host of savvy start-ups like
Rocketcash.com and MainXchange.com are tackling that problem by offering
kiddie e-commerce services. Rocketcash is a debit system – mail in a
check or money order and start spending at more than 100 online stores,
including Backstreet Boys Direct and DesignerOutlet.com! The site offers
"RocketFuel Reward Points" for big spenders.

MainXchange boasts auctions, a Wall Street game, and even real
stock-market investing, as well as e-money. To broaden its reach beyond
the home PC, the company is working with schoolteachers to get its
stock-trader game into the classroom. "We're in schools in 44 states,"
marketing vice president Gayle A. Keck told me. "I was surprised at how
interested even younger kids are in the stock market. They really are
like little stockbrokers."

At a panel called "Learning for Profit: The Web and Educational
Content," Tom Kalinske, president of Knowledge Universe, kicked off the
discussion with discouraging statistics: "Only 10 percent of high school
graduates can write a coherent, grammatically correct paragraph." The
silver lining: with parents spending $19 billion annually on learning
products, "the kids business," as Kalinske dubbed it, is booming.

These "sad facts," Kalinske said, "lead up to a huge market opportunity"
for companies such as Knowledge Universe and BigChalk.com. Knowledge
Universe – a $1.8 billion outfit bankrolled by junk-bond ex-con Michael
Milken – sells a huge array of educational products, many of them
computer-based. BigChalk's site aims for kids, librarians, teachers, and
parents, offering a workable, semi-organized search engine and online
shopping mall.

BigChalk, like many of the dot-coms on display at "Digital Kids," hopes
to fill its coffers with taxpayer loot by selling Web-based teaching
products to school districts. But BigChalk CEO John Lynch complains,
"This is not a market opportunity without its challenges. The school
building is actually viewed as sacred ground not to be defiled by crass
commercialism. And that's not the view just held by the majority of
teachers; that's the view held by the majority of educators and the
majority of parents, too."

The day after Lynch's speech a group of 80 educators and youth
advocates, including professors from UC Berkeley and Stanford, released
a 99-page report arguing that wiring classrooms is a waste of money that
actually hinders learning.

Dan Pelson, CEO of Bolt, a teen chat room destination, said his site had
sculpted chats to provide market research for Ford, a major advertiser.
"When they [young people] get in there and say, 'The Ford Focus sucks,'
that is invaluable to Ford," Pelson told listeners.

While almost all the panelists were highly caffeinated Caucasian alpha
males like Pelson, the company show-and-tell booths upstairs were
staffed by bouncy young women. Virginia Ginsberg, a P.R. flack for Your
Own World, showed me the company's playful, preteen-focused CD-ROM –
which promptly crashed. The "interactive environment" features
constantly updated banner ads 
on nearly every page.

"The advertisements make a lot of parents uncomfortable,"Ginsberg told
me. But, she said, Your Own World gives kids an out: click on the
banners, and they mutate into video games or animated movie trailers.

Later, at a panel titled "Targeting Teen Shoppers," another executive
sounded the battle cry: "We are here to suck the money out of their
pockets!"

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Gary Ruskin | Commercial Alert 
1611 Connecticut Ave. NW Suite #3A | Washington, DC 20009
Phone: (202) 296-2787 | Fax (202) 833-2406
http://www.essential.org/alert/ | mailto:gary@essential.org
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