Pitching It To Kids

Chirita isn't feeling well. A furry green creature with four legs and a pair of wings, she has come down with a case of the Neomites, a common affliction in the mythical online world of Neopia. The Neopian pharmacy sometimes stocks a cure, but it's pricey, costing about 330 Neopoints. What's Chirita's owner, Wendy Mendoza, 10, of Atlanta, to do? One way to rack up the points would be to play any of the 110 free games on Neopets.com, trying activities like bumper cars or chemistry for beginners. Then again, Wendy could also score by hunting for secret images in the site's virtual McDonald's, trying her hand at the Lucky Charms Super Search game or watching cereal ads in the General Mills theater — earning 150 points a commercial. Wendy visits the site several days a week. "I like playing on it better than watching TV," she says.

Wendy may not realize it, but in Neopia she's the target of the latest twist in children's marketing — a burgeoning and increasingly controversial business. In the past decade, corporate America's annual budget for advertising products and services to kids has more than doubled, to an estimated $15 billion. The pot of gold: $600 billion in family spending that children under 13 are said to influence, along with $40 billion in pocket money that they spend on purchases from candy to clothes, an amount projected to hit nearly $52 billion in 2008, according to the market research firm Mintel. As many a besieged parent can attest, children's marketing seems to be raining down everywhere, from the Internet to video games to coloring books. And with kids increasingly splitting their time among all manner of media, not to mention extracurricular activities, "marketers are targeting children younger and younger in every way they can," says James McNeal, a children's marketing consultant based in College Station, Texas.

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Is the ad parade getting out of hand? Consumer advocates say it is, claiming that an explosion of ads for junk food, aimed primarily at children, is fueling the obesity epidemic. (The food industry's lobbying group, the Grocery Manufacturers of America, denies that claim, saying there's no definitive data linking advertising to obesity.) Another issue: that the lines between advertising, entertainment and educational materials are increasingly blurring, as you may have noticed if you have seen schooling materials like the Pepperidge Farm Goldfish Counting Fun book or toys like the Play-Doh George Foreman Grill. "It's unfair. Children don't even know they're being advertised to," says Susan Linn, author of Consuming Kids: The Hostile Takeover of Childhood.

Even professionals devoted to marketing seem concerned about some of the brand-building tactics. According to a poll of youth marketers conducted by Harris Interactive earlier this year, 91% of those surveyed said that kids are being pitched to in ways that they don't even notice, and 61% believe that advertising to children starts too young. At what age do they think it's O.K.? A majority of the pros in the poll think it's appropriate to start advertising to kids at age 7, even though they feel that children can't "effectively separate fantasy from reality in media and advertising" before age 9 or make intelligent purchase decisions before 12. A recent study by the American Psychological Association confirmed that children under 8 have a tough time distinguishing ads from entertainment. But don't expect those findings to kill the product-placement party. "Kids' marketing just grows as businesses realize that children have more purchasing potential than any other demographic," says consultant McNeal, who advises FORTUNE 500 firms on marketing policies.