When is a kids’ online game actually an ad?

November 2, 2012

Last spring, the International House of Pancakes launched an online children’s game that was inspired by the Dr. Seuss classic “The Lorax.” IHOP appeared to be serving up a hearty portion of advertising to children, too.

That was the conclusion of the ad industry’s own standards police, the Children’s Advertising Review Unit, which said IHOP’s placement of menu items and its logo within the game made it too much like a commercial. The panel recommended last month that the firm disclose its marketing intentions to its young users.

But IHOP disagreed, saying the game was just for fun and didn’t fit the traditional definition of an ad.

“We did not consider the game in question to be an advertising vehicle,” the company, a unit of DineEquity, said in a statement, adding that it tries to be “sensitive to the issue of advertising to children.”

The episode highlighted an increasingly thorny debate on how to monitor advertising aimed at children when they are confronted with so many new forms of marketing online.

If even the ad industry can’t agree on the definition of an online ad, who can?

Kids spend more time than ever in front of screens beyond the living room television. Advertisers have responded with sophisticated ad campaigns that can start on the TV and then move to apps, social media sites and online games.

And federal regulators are struggling to keep up.

So far, the Federal Trade Commission doesn’t regulate advertising to kids on these new platforms, except to ensure that marketing messages aren’t false or misleading. The Federal Communications Commission limits ads on television but doesn’t police the Web either.

That worries children’s advocates, who say that the FTC and FCC may make distinctions but that to kids, a screen is a screen is a screen — and everything on it looks like entertainment to them.

“There is a great deal of research that shows children don’t distinguish between content and advertising,” said Kathryn Montgomery, a professor of communications at American University and an advocate of children’s media protections. “Now on digital, there is the opportunity of more blurring of those lines, and the industry is pushing to keep definitions of online advertising broad and unclear.”

Through these new digital channels, companies hope to cash in on some of America’s biggest spenders. “Tweens,” or children ages 8 through 12, are estimated to spend $43 billion a year out of their own pockets — and that’s beyond the goods worth $155 billion or so that the kids pressure their parents to buy for them.

The IHOP Lorax promotion, for example, began with a TV ad that encouraged children to visit IHOP.com to participate in a sweepstakes promotion. Once they were on the site, the kids could see a video about a Lorax-inspired IHOP breakfast and play the “Save the Truffula Valley game,” which promised that players who did well would get closer to “treating yourself and the Lorax to a delicious Lorax’s breakfast at IHOP!”

Other companies follow the same strategy, where newspaper, radio, television and Web sites are used to get young users familiar with brands and products that they may buy on their own or pester their parents to buy.

Kellogg’s Crunchy Nut cereal campaign earlier this year began with a TV tease introducing a new comical superhero described as “the man in yellow tights.” Viewers were instructed to go to Facebook to learn more about the character and cereal.

“They have the strategy of reaching lots of kids by constantly bombarding them with brands,” said Angela Campbell, a clinical education and communications law professor at Georgetown University who has filed a complaint accusing McDonald’s and Subway of violating child privacy laws with their “tell-a-friend” Web games. “They want children to develop positive emotions about their brands early on.”

That’s also the case, ad industry experts say, with a new crop of informational advertising.

Procter & Gamble’s “Being Girl” Web site, for example, has been lauded by the ad industry for creating a new category of online marketing with its portal chock-full of useful information and social networking tools tailored for developing girls. The site has articles about what girls can expect with their first period, how to talk with parents about menstruation, and the stages of physical development. It also advertises its Tampax and Always products — not only in what are clearly ads but also in casual references within advice columns.

Amid the swirl of marketing pitches, public interest groups say, there is lax oversight of digital marketing toward children. The FTC follows the lead of the Children’s Advertising Review Unit, the self-regulatory body that monitors the Web and TV to ensure that ads are properly disclosed as marketing material to consumers.

When CARU can’t get its industry members to agree to its actions, it refers cases to the FTC. In the case of IHOP’s Lorax game, the promotion ended by the time CARU announced its findings.

“From the FTC standpoint, advertising can’t be deceptive, and we think it is deceptive if an ad is not identified as an ad,” said Mary Engle, an FTC attorney.

Fresh concerns about advertising to children online have reignited discussion of how children are more sensitive to marketing than adults.

CARU’s panel of academics and former regulators says marketers have “special responsibilities when advertising to children or collecting data from children online. They should take into account the limited knowledge, experience, sophistication and maturity of the audience to which the message is directed.”

Two decades ago, federal regulators recognized this difference and decided to put time limits on ads during children’s television shows; the current limits are 10.5 minutes per hour on weekends and 12 minutes per hour on weekdays. The FCC also requires programmers to announce when a children’s show is about to break for a commercial.

But determining just what content is an ad is much harder online than on television. On the Web, companies are able to embed marketing practices in more subtle ways. On Everloop, a social media site for children, brand campaigns are embedded into forums and pages on the site. Children can choose to become fans of pages such as designer Paul Frank’s, in the same way a Facebook user can “like” Coca-Cola or Nutella fan pages.

One possible solution is printing disclosures. At the top of the colorful HappyMeal.com site, McDonald’s displays in tiny letters: “Hey kids, this is advertising!” The site has 30 games for children, along with banner ads and promotions for its menu.

But the label is easy to miss, critics say. “It’s unclear how useful these disclosures are. Their target audience often doesn’t even read,” Campbell said.

Cecilia Kang is a staff writer covering the business of media and entertainment.
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