#1: I work in adult sales. (I hate telling my friends this because they assume it means I only help sell erotica.) Children's books are not my specialty, but I've taken the liberty of talking to some of the children's sales folks at my house, so hopefully you'll still find some useful information here.
#2: When I say "children's," I generally mean "not adult" (i.e. everything from baby books through YA). I'll break things down further as I go.
Now, children's books are divided in number of different ways, so I'm going to summarize here (hopefully without glossing over anything too much). First, by age range. You can find a more specific breakdown here, but I'm going to use slightly broader strokes. Generally, you've got picture books (children younger than 6), chapter books (ages 6 - 9), middle grade/MG (ages 8 - 12), and young adult/YA (ages 12+). The distinction between MG and YA can be a little blurry, but here's a pretty good explanation. In a nutshell:
• MG protagonists are usually in the age range of 8 - 12. YA protagonists are usually 12 or older.
• The word count for MG is around 20,000 - 40,000, whereas it's 50,000 - 75,000 for YA (as Jessica Faust notes here, these numbers are a little fuzzy, so take this with a grain of salt).
• MG plots tend to center on the protagonist's internal world, whereas YA plots are more complex and are more concerned with the protagonist's effect on his or her external world.
• MG is chiefly read by late elementary/middle school students; YA is chiefly read by high school students and up.
Basically, the MG/YA question boils down to Ramona Quimby vs. Bella Swan (shudder). Which is your protagonist?
Yes, now, sales. Alack, sales are still soft (and are projected to remain so), but it looks like adults are still more willing to spend money on their kids than on themselves, so for now, children's sales are doing relatively well across the board. (Remember yesterday's discussion on paperbacks versus hardcovers? Well, right now children's paperbacks are doing particularly well.) I also encourage you to check out this article on sales by channel. What's a channel, you ask? Well, click and find out.
Yesterday, I also told you to check out the impact of e-books on sales (hint: e-books are the future). Well, it's true for children's books, too! My theory is that this will be especially pronounced among the younger kids as they grow up with this kind of technology and are more comfortable with it.
Now, genre. Based on my conversations with a couple of children's sales specialists, YA fantasy remains the hot market, although traditional MG/YA and MG mysteries continue to do well. I get the impression that picture books are really a tough market to gauge, so I'm not sure I can point to any significant trends there. As everyone knows, vampires are still "in," but I strongly caution you against trying to time the market. Have you ever tried that with stocks? If so, you know what I'm talking about. You end up buying high and selling low. If you're just starting your YA vampire novel now, it probably won't be on shelves for two years, minimum. A lot can happen in two years.
Next, disclaimer: I am not making any legal warranty, explicit or implicit, as to the accuracy of my research. If you end up writing a paranormal romance YA featuring steampunk zombies and it doesn't sell, don't waste your time suing me.
Now that that's over with: projected "hot" trends include zombies and steampunk, so if you're writing along those lines (MG or YA, most likely YA), you're probably in good shape. If you're not, no worries, so long as your book is good. I'm sure traditional epic fantasy YA will continue to do well, and I doubt vampires are going to (re)die in the immediate future.
Finally, average advances:
According to Writing World, the average picture book advance (a few years ago) was $1,000 - $3,000, and it's probably not much different now. In fact, these numbers are more or less comparable to the MG and YA numbers, although YA tends to be a little higher, according to my chat with the children's folks at my house, and the average children's book advance is around $7,500 (as of this time two years ago).
Lo, in summary:
• There is a difference between MG and YA, and it's slightly more complicated than the age of the protagonist.
• Children's books sales are soft, but doing relatively well now. They are projected to do relatively well for the next several years.
• Paperback YA is especially hot. Current trends include vampires and zombies; zombies and steampunk are believed to be next. Perhaps Christian vampires and Amish fiction, as well.
• I'm not sure there's a pattern to the advances, but the ballpark for picture books seems to be $1,000 - $3,000 and MG/YA around $7,500. My best guess: $0 - $8,000 if you're writing any kind of children's book, with a median around $4,000 or so.
Not bad for a non-children's sales guy, no?