Tuesday
Mar092010

Marketers Show It Makes Sense To Spend Dollars During NCAA March 'Adness'

March 9, 2010: If the NFL post-season, including the Super Bowl, is the Mount Everest of advertising dollars spent, then the NCAA Division I Men's Basketball tournament is K2. During March Madness, marketers spend en masse on advertising a figure that is lofty in its height and second only to the spend during the NFL playoffs.

From 2000-2009, more than 280 different marketers spent $4.55 billion in ads on network TV during March Madness, including $589 million on CBS in 2009. During the most-recent NFL post-season, including Super Bowl XLIV, marketers spent more than $750 million on advertising, according to a new report from Kantar Media (formerly TNS Media Intelligence), New York.

From 2005-2009, ad spend during the NCAA Final Four telecasts alone totaled $806.4 million, which was third behind the Super Bowl ($867.7 million) and the World Series ($864.1 million), according to Kantar. The marketing and research firm expects the numbers to be solid in 2010, especially on the heels of two other high-profile and strong sports performances.

“The addition of the Winter Olympics to the first quarter special events mix that begins with the Super Bowl and culminates with March Madness has provided a great opportunity to refocus the attention of marketers on the impact of television advertising,” Mark Nesbitt, president of Kantar Media’s Intelligence sector, said in a statement. 

Last year, the top five categories invested $309.3 million and accounted for more than 52% of the total TV ad revenue during March Madness, with the top ten marketers alone spending a total of $252 million. The automotive category headed the list with $104 million in total ad spend; General Motors, which was the official NCAA automotive partner, lead all marketers with a $70 million ad spend. A victim of the economy and other factors, GM has yielded its "official partner" status to Infiniti for the 2010 tournament, although it will maintain some activation. Sheraton dropped out as an NCAA partner last year.

Infiniti, the luxury car division of Nissan, has already started to activate behind March Madness but did not reveal how much it would spend in total advertising. Other NCAA corporate partners are AT&T, Capital One, Coca-Cola, Enterprise, The Hartford, Hershey's, LG, Lowe's, Kraft and State Farm. This year's tournament begins with  "Selection Sunday" on March 14 on CBS. The play-in game is on ESPN on March 16, with CBS coverage beginning March 18 through the Final Four games, April 3-5, this year at Lucas Oil Field in Indianapolis.

After automotive, the Top Five advertising categories on network spend in 2009 were beverages ($68.1 million), restaurants ($66.7 million), telecom ($38.2 million) and motion pictures (32.5 million). Among individual marketers, the companies behind GM in network ad spend during the 2009 tournament were AT&T ($34.7 million), Coke ($31.2 million), Lowe's ($19.3 million), beer companies Anheuser-Busch InBev ($18.6 million) and SABMiller ($18.3 million), State Farm ($18.3 million), Daimler ($14.9 million), Pfizer ($13.4 million) and Microsoft ($12.7 million), according to Kantar.

By comparison, dot-com-related companies had the most ad space on CBS during Super Bowl XLIV, followed by automakers, beer (where Anheuser-Busch has category exclusivity on the Super Bowl network broadcast), technology and motion pictures.

The economy has reared its ugly head in other ways during March Madness beyond the NCAA and CBS having to finding a new partner to replace GM and losing Sheraton. The total 2009 revenue of $589 million was an 8.5% decline from the prior year and the first drop since 2001. CBS also sold 6% less ad time and signed 21 fewer advertisers, 81 vs. 102 in 2008, and 45 fewer advertisers than the 126 in 2007, per Kantar. But CBS obtained comparable ad pricing in 2009 as in 2008, topped by an estimated $1.2 million for a 30-second spot during the championship game and $700,000 during the two semi-final games last year.

Kantar's report offers that while network spend may have dropped, spend in other areas is on the rise. In 2010, CBSSports.com will again offer “March Madness On Demand”, a free online video player that provides live, on demand streams of all tournament games.

According to Kantar, "The ad-supported webcasts offer presenting sponsors another platform to get their commercial messages in front of viewers . . . Online viewership is heavily concentrated in the first two rounds of the Tournament when multiple games are taking place simultaneously and fans are seeking the flexibility to view the action from out-of-home locations or watch games not being telecast on their local CBS affiliate."

The report stresses that "though growing rapidly from a small base, the digital ad revenue is still a fraction" of that generated by the traditional TV broadcasts.

None the less, “Considering the importance and presence of the NCAA tournament in digital media, marketers also have the opportunity to harness the potential of integrated cross-platform promotions," said Nesbitt. "For the advertising industry, it’s really a unique environment and should help to set a positive tone for the rest of the year.”

Besides network TV and online advertising, Kantar notes that "CBS has additional revenue opportunities from the radio, publishing and merchandising rights it controls, as well as the sale of TV ad time on its owned and operated stations."

An area of key concern for CBS is the exclusive TV rights deal the network has had with the NCAA since 1982. The current 11-year, $6 billion pact between CBS and the NCAA has three years and $2.1 billion remaining, with CBS paying the NCAA a license fee of approximately $610 million. The NCAA can, under terms of the contract, opt-out by July 31 and "invite new bids in a quest for higher rights fees," per Kantar.

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