As we approach the end of the year, we’re covering trends from key markets in 2022. We’ll recap the state of each industry over the past year, the ad strategies of its biggest players, and what we predict 2023 will hold.
After a steady decline in birth rates over the past 30 years—and an all-time low in 2019—the second Baby Boom is here.
Following a pandemic-induced decline in 2020, birth rates jumped in 2021. This increase continued into 2022 and was “the first major reversal in declining U.S. fertility rates since 2007.”
The surprise increase should put advertisers for baby and children’s products in a position to spend, but not so fast. Supply chain challenges and a potential recession are putting some advertisers in a pickle.
We looked at our data to find out how they’re approaching the rollercoaster and what could be in store for 2023.
MediaRadar Insights on Baby/Children Advertising in 2022
Baby Boom v2 has ignited the spending of most advertisers promoting baby and children’s products.
Through October, these advertisers, including those from Kimberly-Clark, Nestle, and Spin Master, increased spending by more than 50% YoY to $1.2b.
Except for June, which decreased by 12% YoY, budgets jumped every month; the average monthly investment increased by more than 56% YoY.
While Q1 and Q2 saw increases of 51% and 41% YoY, respectively, spending went into overdrive in Q3, increasing by 89% YoY and 73% QoQ.
It’s hard to pinpoint the driving force behind the Q3 increase, but given the timing, it could have something to do with parents returning to the office and the ongoing baby formula shortage.
Top Baby/Children Advertising Categories in 2022
Through October, advertisers promoting toys/games, diapers, dolls, food, and apparel were the biggest spenders, combining to invest more than $796mm or 64% of the spending from the industry.
Advertising for toys/games, which represented 33% of the industry’s ad investment, increased by 57% YoY, with all quarters rising by at least 60% YoY.
Top spenders included advertisers for Kirkbi (LEGO), Spin Master (Kinetic Sand, Paw Patrol, etc.), and ZURU, who spent nearly $211mm, or 52% of the category’s investment.
Advertisers for Kirkbi, LEGO’s parent company, increased spending on a mix of TV, print, and digital ads by 157% YoY.
For Kirkbi, the jump comes following sustained growth over the past two years.
In 2021, LEGO’s revenue increased by 27% as sales soared during the pandemic—and not just from kids. Adults are buying toys for themselves, too.
Growth continued into 2022, with sales increasing by 17% in H1 as consumers flocked to pick up models from Star Wars and Harry Potter.
Interestingly, despite attention from older, digital-first generations, spending on digital ad formats decreased in April, with allocation shifting heavily to traditional ones.
ZURU, the company behind Bunch O Balloons™, X-Shot™, Rainbocorns™, and Mini Brands™, increased spending, too, investing all of it in digital media.
That said, it’ll be interesting to see how ZURU spends in light of a heavy shift into consumer goods and the need to promote those products to compete with the likes of Hasbro.
Ads promoting diapers, which accounted for 14% of the baby/children advertising, increased by 33% YoY, thanks primarily to a 128% YoY increase in Q3.
Spending continued into Q4, with October’s budgets increasing by 203% YoY.
Advertisers for Kimberly-Clark—think Huggies, GoodNites, and Pull-Ups—and Procter & Gamble—think Luvs and Pampers—were responsible for 97% of the category’s investment.
But the two industry giants are spending in different ways.
Through October, advertisers for Kimberly-Clark decreased spending by 6% YoY.
For Kimberly-Clark, the decreased ad budget comes amid inflation and ongoing cost-cutting efforts to fend off additional price hikes. This comes after an earlier announcement proclaiming the “ROI is there” for investment in marketing-led innovation. This flip-flop situation illustrates the volatility that these advertisers will have to deal with throughout 2023.
The decline also comes in the wake of the departure of Zena Arnold, chief digital and marketing officer. Interestingly, a company spokesperson said they wouldn’t fill her position, which could offer a glimpse into the company’s mindset.
Before Arnold left, she worked to combine the company’s first-party data with other digital platforms and data sources, i.e., retail media, which could point to a shift in the company’s strategy in 2023.
Procter & Gamble
Unlike Kimberly Clark, advertisers for Procter & Gamble (P&G) increased spending by 69% YoY, with much of that going to a digital-heavy strategy to promote Pampers.
Despite posting its biggest sales gain in 16 years, consumer cutbacks—and ad budget reductions—are unavoidable.
While advertisers for P&G have less work with, at least in the short term, their impact on the company’s bottom line won’t fade—it’s just hitting differently.
In 2023, their focus will be on efficiency, which will mean shifting from linear TV to digital channels and moving marketing activities in-house.
Through October, spending to promote dolls increased by 78% YoY to nearly $100mm.
More than three-quarters of those dollars came from Mattel and MGA Entertainment (L.O.L. Surprise!, Rainbow High, etc.), which collectively increased spending by 23% and 166 YoY, respectively.
MGA Entertainment spent big to promote its L.O.L. Surprise! Dolls via a mix of digital and TV media, with peak spending coming in March, April, and October.
But one of the company’s most headline-grabbing moves in 2022 didn’t come in the real world.
Instead, it took place in the Metaverse.
In January, MGA Entertainment dipped its toes into Web 3.0-style marketing with “MGA coin,” which it created “to incentivize kids to interact with the brand online through apps, websites, games and on social channels.”
As experimental as this may seem, the meta-move is becoming fairly commonplace as kids’ brands promote NFT drops and crypto rewards—a move no doubt indicative of their premium on Millennials and Generation Z consumers.
Despite a 4% YoY decline in Q2, food advertising increased by 19%.
While Q2 was down, spending increased by 17% and 23% YoY in Q1 and Q3, respectively.
The top three spenders in this category were Abbott Laboratories (PediaSure, Similac, etc.), Nestle (Gerber, etc.), and Mead Johnson & Company (Enfamil, etc.). Advertisers for Mead Johnson & Company made the biggest waves.
Mead Johnson & Company
Through October, advertisers increased their investment by 80x from the same time last year. Nearly all of that (98%) went to promote Enfamil.
For Mead Johnson & Company—and pretty much every advertiser in this category—the surge in spending comes amid ongoing formula shortages.
That said, spending was impacted significantly, with substantial decreases coming between March and June, which lines up with the height of the shortage.
With formula shortages expected to continue into 2023, these advertisers will likely remain on the sidelines.
Advertising for kids’ apparel increased by 219% YoY.
After increasing by 475% YoY in Q1, increases came in Q2 and Q3 by 96% and 163% YoY, respectively.
Spending continued into Q4, with budgets rising by 444% YoY and 8% MoM from September as parents geared up for the school and holiday seasons.
Driving these increases were advertisers from TechStyle Fashion Group’s FabKids, Gap, and Sun Capital Partners (Gerber Childrenswear and Onesies), who combined to spend $33mm, or 57% of the category’s spending.
For Gap, the increase comes following declining sales during the pandemic and subsequent spike in inventory; its advertising strategy—across all categories—reflects this.
At the same time, the launch of its store on Amazon illustrates its forward-thinking mindset and willingness to evolve.
The evolution is necessary for Gap and other players, including Sun Capital Partners (increased spending by 195% YoY) and TechStyle Fashion Group (increased spending by 14x YoY).
Neil Saunders, retail industry analyst and managing director of Globaldata, said, “Spending on kids is one of the last areas most parents cut back on, so softness at Gap and Old Navy suggests that some households are under significant financial strain.”
Ongoing financial pressure will undoubtedly affect how these advertisers spend in 2023. But with the kids wear market expected to grow, don’t expect them to sit idly for long.
Growing Pains Are Inevitable
Spending from baby/children advertisers trended up for most of 2022. Given the inflation and looming recession, the spending reflects how these advertisers will deal with the uncertainty 2023 will bring.
Unfortunately, there are factors outside of their control—factors that’ll impact their strategies.
Supply chain issues, for example, will influence how Mead Johnson & Company promotes its formula. At the same time, relentless financial pressure will impact the spending habits of those promoting toys/games and apparel.
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