Children’s advertising struggles as viewers switch to tablets and on-demand services

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As children's TV viewing patterns change, CNBC spoke to advertising experts about how the industry needs to adapt to changes.

Less and less children are watching traditional television broadcasts. Instead, they are watching on-demand content via tablets and other devices, or spending more time on video games, putting them out of reach of traditional advertising.

Liz Duff, head of broadcast at media agency Total Media, discussed the scale of the problem.

"When you look at the stats for it, live TV viewing for kids has dropped by just under 4 percent this year, it was 3 percent last year. I think we can definitely see there's a shift, I don't think it's happening as drastically as some commentators are saying," she told CNBC during a phone interview.

"TV is still the best way to deliver reach at scale and that audience is still there. They're still consuming TV content, they're just consuming it on different platforms," she added.

The rise of on-demand services such as Amazon Prime and Netflix is a main factor behind the shift in viewing patterns. Also, more and more young people are watching content on YouTube: data from Futuresource Consulting published in September found only 13 percent of U.K. children aged 3 to 16 did not watch something on YouTube in a typical week, while 49 percent spent three or more hours watching content.

"There's still a massive demand for that type of content, but people just want to tailor it to when they're ready to view it, rather than being dictated to by the TV scheduling," Duff said.

"Young audiences definitely are moving away because there're just so many increases in the alternative entertainment sources and particularly the more 'snack-able' type of entertainment."

Revenue from children's advertising is still massively important, according to Duff.

"It is key to the market and the TV channels will want to protect it as much as possible, but they are also aware that audiences are watching in different ways and different types of content."

Will Collin, founder of creative communications agency Naked Communications, made the point that children are continuing to consume entertainment content, rather than television programs. The distinction means that while children are watching entertainment on other platforms, or spend more time on video game consoles, they may not be reachable for traditional television advertisements.

"There is obviously a migration from viewing live on broadcast TV on a TV set, to viewing on demand," he said in a phone interview. "There's a lot going on and the whole entertainment space is in a state of flux and children are at the nose cone of change, because they don't have any established behaviours they are evolving away from."

"The net effect of all of that is a diminishing inventory of traditional advertising breaks to target children, in some respect mitigated by a growing inventory of video on-demand advertising and YouTube pre-rolls," he said.

Will Collin's advice for the industry was that it needs to rebalance its advertising budgets to better reflect the audience's viewing habits.

"It's always been true that advertising budgets, media budgets, follow the audience's eyeballs. However, there's often a lag. Old habits die hard so people need to adapt and embrace new platforms," he said.

Fundamentally, according to Collin, children's TV advertising is getting quite messy.

"It used to be quite simple, it no longer is simple and not only is it no longer simple, nor is it stable. It is in a constant state of flux."

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