NY times article Webkinz

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					                           Media & Advertising

Shift Away From Ad-Free Has a Price
Published: December 13, 2007

WHEN children log onto, the popular virtual world for
children who buy Webkinz stuffed animals, they can send messages to their
friends, decorate their virtual rooms and take trivia quizzes.

The home page. Movie ads had been running on the right side of the page, but were
withdrawn Wednesday.

Now, they may also see advertisements.

The Webkinz site began running movie ads on its site in October, with ads
for “Bee Movie” and later for “Alvin and the Chipmunks.” The ads run on
the right side of the home page after users log in. The Campaign for a
Commercial-Free Childhood, an advocacy group based in Boston, is
demanding that the site remove the ads.

“One of the reasons why parents buy Webkinz for their children is the
expectation that the site will be free from advertising,” said Susan Linn, the
campaign’s director. “It’s disappointing that the site is choosing to
maximize revenue at the expense of children.”
Webkinz dolls were introduced by a Toronto-based private company called
Ganz in the spring of 2005 and have quickly become one of the most
popular toys among the elementary-school set. The company uses the
stuffed animals as a roundabout way to charge for online content. Instead
of asking parents to pay for the Webkinz site by entering a credit card
number online, Ganz packages access codes for the site with stuffed
animals and trading cards sold in stores.

Other companies, like Mattel and Russ Berrie, have copied the approach.
Traffic on Webkinz’s site grew by more than 800 percent over the last year,
totaling 7.29 million unique visitors in October, according to Nielsen
Online. Its closest competitor, Club Penguin from Disney, had 3.88 million
visitors in that period.

Ganz did not respond to multiple requests for comment Wednesday. After
the Boston group and The New York Times tried to contact Ganz on
Wednesday, the “Chipmunks” movie ad disappeared from the page.

Webkinz appears to be in the process of changing its business model. Its
stuffed toys are sold at mass retailers like KB Toys, so parents no longer
need to hunt them down at small specialty stores. Ganz has been decreasing
the number of sales representatives that sell to small stores, and some small
stores are starting to promote other toys, like Russ Berrie Shining Stars,
which also come with a companion virtual world, said Lutz Muller, the
owner of the Klosters Trading Corporation, a retail research firm that
surveys retailers and others in the toy industry.

Mr. Muller suggested that Ganz might be repositioning Webkinz as a mass
product so that it could sell the brand to a larger corporation. He said he
thought many parents would not allow their children to visit the Webkinz
site if they knew it contained ads.

“Parents will be very upset,” Mr. Muller said. “There you are paying a lot of
money for a piece of plush that probably cost Ganz 15 cents.”
When Webkinz ran ads for “Bee Movie,” a computer-animated movie
starring Jerry Seinfeld, the site also ran tie-ins, with offers for things like
bee costumes that users could put on their virtual pets.

Parents, many of whom also play on the site after their children go to bed,
began to notice the ads right away. A blog,, put up
an angry post in October, and dozens of other people posted comments in

Jacqueline Rupp, a mother of two in Philadelphia, said she would stop
allowing her children to use the site if Ganz did not stop all advertising.

“I bought into the Webkinz phenomenon because there wasn’t mass
marketing on the site,” said Ms. Rupp, adding that she has spent more than
$300 on Webkinz toys in the last two years. “If you’re putting out $15 for
the Webkinz doll, you are paying for the ability to have something ad-free.”

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