From...

May 6, 1999
Web posted at: 8:43 a.m. EDT (1243 GMT)

by Bernhard Warner

(IDG) -- How do you get past the sticky issue of marketing kids' products on the Internet without exploiting children? The answer may lie in the company you keep.

Consider the approach taken by Kmart, which this week launches its biggest e-commerce initiative to date. The No. 2 retail chain is turning to some unlikely Internet pros to get the job rolling: the Children's Television Workshop (CTW), creators of Sesame Street. With help from Elmo and Big Bird, Kmart has grand plans to sell car seats, strollers and, eventually, kids' apparel in a new online boutique, Baby of Mine.

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To get a boost for its store launch, Kmart will be an exclusive sponsor of CTW's Baby Workshop, a site for expectant parents that also launches this week. Kmart will be the lone advertiser on Baby Workshop, which means it gets links from CTW's site to its store and will be included in Baby Workshop's Web contests and promos.

Like CTW's other sites for families and kids, Baby Workshop is designed in the high-minded, educational mold of CTW's TV programming. The site features parenting and prenatal-care tips from medical professionals, scholars and parents. But Baby Workshop is also unmistakably commercial. Most pages include a Kmart banner ad and two other buttons that link to both Kmart's homepage and Baby of Mine.

Tina Sharkey, group president of CTW Online Services, stresses that the alliance between Kmart and CTW is a sponsorship arrangement. CTW, a nonprofit organization, didn't help build the Kmart store and doesn't get a cut of sales generated through the site. "We would never integrate editorial and merchandising," she says. "This is a media sponsorship, not an advertorial."

CTW's Baby Workshop is explicitly focused on parents, so advocacy groups won't hold it to the same protectionist standards they use for kids' sites. Elizabeth Lascoutx, director of the Children's Advertising Review Unit, an arm of the Council of Better Business Bureaus, says she was unaware of either the Kmart store or the CTW site. But she's confident CTW will get Kmart up to speed on the appropriate ways to market and merchandise children's products on the Net.

Peggy Charren, founder of the advocacy group Action for Children's Television, says such distinctions may be more important on the Internet "because a click on a sales pitch feels a lot like a click for an educational opportunity."

In terms of traffic, CTW Online trails the Disney and Nickelodeon sites. Nonetheless, Sharkey says the strong reputation CTW carries with parents has attracted some top-tier advertisers, including IBM, Hewlett-Packard, Ford, SmarterKids.com and eToys. Their objective is to tap into the enticing market of young families.

"No doubt about it, the Sesame Street brand is very important" to Baby of Mine's launch plans, says Marisha Geraghty, divisional VP of Kmart Electronic Commerce. For more than a year, Kmart has held the exclusive license for selling Sesame Street-branded infant and toddler apparel in its stores. And Kmart decided to make its first big e-commerce splash with Sesame Street.

In promoting the launch of its online boutique, Kmart turned to CTW not only to attract the so-called "networked family" demographic, but also to rely on CTW's expertise in navigating the tricky waters of marketing children's products. CTW's Sharkey knows how controversial marketing to children can be and is a big proponent of self-policing rather than regulation.

Charren fears CTW's commercial ventures could tarnish its image. "I worry about the public perception of [CTW's] commercial sites," she says. "People wrongly associate [CTW] with a public broadcasting" company.

The crux of the issue is the perception that marketing messages should be clearly differentiated from children's programming. Internet programming is less linear and requires more explicit labeling of advertisements. For example, an eToys banner ad on CTW's Sticker World site is marked with bubble letters noting, "This is an ad."

"The goal is to have advertisers on the Web create bumpers equivalent to those on TV like 'We'll be right back after these messages' or 'And now here's a word from our sponsors,'" Lascoutx says.