Pitching It To Kids

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Sites like Neopets are taking the old concept of product placement to sophisticated new heights. With 11 million users, 39% under 13, Neopets is one of the Internet's most popular and "stickiest" destinations. Users visit on average for 3 1/2 hours a month, according to Nielsen/NetRatings. But unlike sites that generate ad revenues by inserting pop-ups or banners along a page that are easily identified (and ignored), Neopets offers marketers what company CEO Doug Dohring calls "immersive advertising." The company integrates ad messages into the site's content, creating "advergames" for clients based on a product-or brand-awareness campaign. The company then tracks site activity and provides demographic and usage data to customers, offering a window into kids' purchasing habits.

At the Neopia food shop, for instance, Uh Oh Oreo cookies, Nestle SweeTarts and Laffy Taffy candy (along with unprocessed foods) have occasionally been available to buy with Neopoints to feed virtual pets. Kids can also win points by watching cereal ads or movie trailers in the Disney theater. And they can fatten their Neopoints accounts by participating in marketing surveys. Universal Pictures recently ran a survey on the site to assess and build awareness of a forthcoming kids' movie, Two Brothers. Another pitch on the Neopets home page: click through to a website called Dealtime.com and compare such consumer electronics as Sharp and Sony camcorders, getting to know brands in the process.

"It's sneaky," says Clancy Mendoza, mother of Neopets fan Wendy, who forbids her daughter to take the surveys. Even with the more playful features, the marketing messages are seeping through. After Wendy tried a Neopets game with a tie-in to Avril Lavigne's new CD, she told her mom she wanted the music. After an advergame's launch, says Neopets' Dohring, surveys have shown double-digit increases in the number of users who have tried a product embedded in the game.

At company headquarters in Glendale, Calif., posters of Neopets dolls decorate the walls, and dozens of young workers sit in cubicles programming and creating content for Neopia. Speaking in a conference room, Dohring emphasizes that branded content is less than 1% of the site's total. "We're not trying to be subliminal or deceive the user. We label all the immersive ad campaigns as paid advertisements."

But critics say websites like Neopets enable advertisers to skirt TV-industry practices that alert children to commercials with bumper announcements like, "Hey, kids, we'll be right back after these messages." Neopets Inc. press materials declare that advertisers can embed their brands "directly into entertaining site content." The practice isn't illegal, and Dohring says Neopets complies with the Children's Online Privacy Act, which bars companies from collecting personal information from Internet users under 13. Still, by embedding brand characters into games and activities, the ad "just goes unnoticed by the child, much less the parent," says McNeal, a critic of such practices. Democratic Senator Tom Harkin of Iowa plans to introduce a bill this week that would reinstate the Federal Trade Commission's ability to issue rules on unfair advertising to children (the ad industry now abides by voluntary guidelines).