David Kiley Anyone who watches the Nickelodeon (VIA) cartoon SpongeBob Squarepants knows that the cute title character is absorbent and bright yellow. But how flexible is he? That question is being put to the test these days as his valuable brand equity is stretched between those who want the popular character used to promote health, fitness, and nutrition to children, and those who see him as the perfect pitch-sponge for fatty, salty, sugary food that kids love to eat.
The Center for Science in the Public Interest says SpongeBob contributes to childhood obesity by hawking Kellogg's (K) Pop Tarts, Kraft (KFT) Macaroni & Cheese, Oscar Meyer Lunchables, in addition to cookies and fast food. Yet his Nick-masters are busy enhancing Spongey's pro-fitness image. And these efforts are rightly drawing barbs that SpongeBob, or at least his handlers, are trying to straddle both sides of the obesity debate and sending mixed messages to kids.
"NICKTRITIONAL" LABELS. SpongeBob and his fellow cartoon stars are being used to promote better eating habits and exercise by way of programming, public-service style ads, and Web-site content. But Nickelodeon has been simultaneously benefiting from the royalties derived from SpongeBob, as well as Dora the Explorer, touting the high-fat, high-salt, and high-sugar stuff that nutritionists say is contributing mightily to the obesity and type-2 diabetes swamping young kids.
To make the scene more confusing for kids and parents, SpongeBob, which drives about $1 billion a year in licensed goods, is now featured on Kraft Macaroni & Cheese and Nabisco Fruit Snacks in new "Nicktritional" labels, doling out advice such as drinking lots of water and playing games like soccer for exercise. These are just the first products carrying Nicktritional labels, which Nick hopes expands to more Kraft products and to other food companies as well.
Nicktritional labeling is an idea driven by Nickelodeon, anxious to avoid becoming a lightning rod for childhood obesity. Nick spokesman David Bittler admits that its efforts, like SpongeBob touting healthy living habits, are sending mixed signals. He says the kids' entertainment giant has been jawboning advertisers for over a year, trying to get its characters onto healthier offerings.
FEARING REGULATION. "We have been in dialogue with all of our food partners for the past year," says Bittler. "We want a portfolio of 'better-for-you products.' We have offered incentives. But it's hard to do and slow going."
That's in part because some of the licensing deals with companies like Kraft, Kellogg, and Burger King are long-term, with plenty of time left on them. But it's also because food companies have found that kids respond to the marriage of their favorite cartoon characters on food they like, even if that dish is on the food police's hit list.
Nick executives have tried, without success yet, to strike a licensing deal with food companies that have fresh fruit and vegetables to sell. Marketers, at least for now, say it doesn't pay to license expensive cartoon characters to advertise healthful stuff on kids programming, because the audience doesn't respond. "I can't write a return-on-investment business case -- unless it's purely for PR [public relations] -- for advertising fruit or whole-grain crackers on Nick or any other kids program," says one food company executive who asked not to be identified.
MARGINAL CHANGES. Kraft is making some moves to at least give the impression that it's out to help the cause in fighting childhood obesity. But at the same time, it has joined an alliance of food companies whose mission is to fend off regulation and legislation that would limit the products that could be marketed to kids as some European countries have done. "We're trying to improve the nutritional profiles of our products all the time, and we're working hard at it," says Kraft spokesman Larry Baumann.
In January, Kraft said it would shift advertising of a handful of products deemed at odds with prevailing nutritional guidelines for kids away from TV programming aimed at children under age 12. But this move seems, at best, to be on the margins of the debate. The food items that won't be pushed on TV programs will still be on the Internet, in magazines, and outdoor media aimed at the same under-12 audience. And the cartoon characters will still be all over the packaging when children go shopping with mom and dad.
Furthermore, media experts say those kids are increasingly logging on to the Net and watching recorded TV via DVDs and TiVo, anyway. "Even as they cut back on some TV advertising, they're still getting the ads across to the same kids in other media," says one executive at a Madison Avenue media buying company.
DISTURBING TREND. When it comes to producing and marketing better-for-you food to children, says industry veteran Steve Silk, most companies just don't see the payoff. Silk, the CEO of Chef Solutions, Lufthansa's nonairline prepared food business in the U.S. and Canada, is uniquely qualified to speak candidly about the behavior of food companies in the debate over children, nutrition, food, and marketing. He's former president of ConAgra Frozen Foods (CAG), which markets Healthy Choice, as well as former CEO of Estee, an outfit that develops and markets food to diabetics. Silk is also the former CEO of United Weight Control, a company that developed hospital-based weight-loss programs for obese individuals.
ConAgra, says Silk, has a "Healthy Choice Equity Council." On the board in the meeting room, he recalls, is a map of the U.S. And in states that have a critical mass of obese children, the map is shaded black. "The number of states that got shaded in over the last five years is really disturbing," he says.
Problem is, "corporations are here to produce profit and to produce what consumers want. And history shows us that the more they produce what's socially responsible, the less profit they see," says Silk, who nevertheless is working on a plan to reformulate the prepared mayonnaise-laden salads produced by Chef Solutions. Food companies have a relatively stagnant revenue stream and have, by necessity, a short-term view of improving margins. And, says Silk, who also worked at General Foods and Lea & Perrins: "There isn't a lot of support in the room for putting development money against socially responsible food products."
GOD-GIVEN FLAVORING. The challenge, he says, is for food companies to devote the funds to make healthy food taste good. This is not an insignificant technical challenge, says Silk. "It's much cheaper to put fat and salt into food than real expertise."
"It's true, sugar is cheap," says Janice Hart, assistant professor of food science and human nutrition at Michigan State University. Big food companies, says Hart, have a lot of issues to consider, from preserving food so it lasts in packages for long periods of time to regular profit and loss. McDonald's (MCD), she notes, is having success with salads and apple slices. "They're making the foods available. If people still choose the fries, what are you going to do?"
Silk says a nutritionist he knows once told him that "God made fat to make food taste good." Based on his travels in the food business, he says, "All those food technologists know that the more fat and the more sodium you add -- and it's cheap to do that -- the more you help the flavor."
And when it comes to kids and forming eating habits at the earliest possible ages, it also helps to employ their favorite cartoon characters as salespeople. So, unless Nick gets tough with its food advertisers, we're going to see just how many different directions a Sponge can be stretched. Kiley is Marketing edtior for BusinessWeek in New York