January 11th, 2008
Sports Catching More Ad Dollars
By Alana Semuels
Los Angeles Times
Live events make it harder to skip commercials. The writers strike contributes to the trend.
The late shows may be back on the air, but except for reality programs prime-time TV is mostly in reruns for the foreseeable future. So what’s an advertiser to do?
One answer: Think sports. Sporting events have been seeing increased interest from companies looking to promote themselves during shows that will be watched live, rather than recorded and viewed later, sans commercials.
With digital video recorder use on the rise and the Writers Guild of America strike in its 10th week, “sports is the only thing that’s fresh,” said David Lubars, chairman and creative director of ad agency BBDO North America, which represents FedEx Corp., PepsiCola North America and others that bought ad time during the upcoming Super Bowl.
The Super Bowl, airing on Fox on Feb. 3, is always a big event for advertisers, who start buying spots as early as March. For the 2008 game they went especially fast, said Neil Mulcahy, executive vice president of advertising sales for Fox. The network had only eight spots available at the beginning of November, a time of year when it typically has dozens left for sale.
The writers strike, which began Nov. 5, “could have been the final push” that spurred advertisers to buy early, Mulcahy said.
Prices are up too: The most-expensive 30-second spots sold for $3 million, people familiar with the situation said, up 15% from $2.6 million last year. Last year’s top prices were up just 4% from 2006.
Returning Super Bowl advertisers include General Motors Corp., Go Daddy Group Inc. and Anheuser-Busch Cos., with 10 spots for its Bud, Bud Light and other brands, according to Spotbowl.com, a website that tracks Super Bowl commercials, which are often as popular with the millions of viewers as the game itself.
“The audience is impossible to reach otherwise,” said Bob Parsons, chairman and chief executive of Go Daddy Group, whose GoDaddy.com registers Internet domain names.
The ads likely to draw attention this year will star both celebrities—Brad Pitt for Dell Inc., according to Spotbowl.com, and Derek Jeter for PepsiCo Inc.’s Gatorade—and nobodies, such as the band that wins Doritos’ Crash the Super Bowl Contest and gets its song aired during an ad break. (Music videos and audio clips are submitted and people vote online.)
The games leading up to the Super Bowl also are hot, with some 30-second spots during the divisional playoffs fetching $750,000 and some advertisers paying as much as $1 million for half-a-minutes during the National Football Conference championship game, people close to the matter said.
At Fox, demand for advertising time during baseball games and NASCAR events is stronger than usual this year, Mulcahy said, and prices for commercial time during college football’s just-completed Bowl Championship Series selection show were 15% higher than in 2006.
And it’s not just Fox. Spending on TV sports was up 26% in 2006 from the previous year and 44% from 2003, according to TNS Media Intelligence, which doesn’t have 2007 numbers yet.
“Live sports are 99% TiVo-proof and advertisers are guaranteed to get the ratings they signed up for,” Mulcahy said.
Another indicator that advertisers are turning more and more to sports is that in 2006 and 2007 all-sports network ESPN had the largest market share of gross ad revenue of all cable networks, surpassing 2005 leaders Nickelodeon and MTV, according to SNL Kagan, a research firm.
The interest has motivated networks to expand their offerings. ESPN and the NFL Network have started showing more high school sports events and have created a few of their own, including last weekend’s ESPNU High School All-American Game at Disney’s Wide World of Sports Complex near Orlando, Fla., which was broadcast on ABC. (ABC and ESPN are owned by Walt Disney Co.; ESPNU is ESPN’s 24-hour college sports network.) On the same day, the U.S. Army All-American Bowl, also featuring high school players, ran on NBC.
Spike TV broadcast the finals of the World Cyber Games, a sort of e-games Olympics that took place this year in Seattle, and DirecTV created the Championship Gaming Series World Final for PC and console players and aired it on its entertainment channel. The series “was extremely popular with advertisers,” including Dell and PepsiCo’s Mountain Dew, said Steven Roberts, senior vice president for new media and business development at DirecTV. “This is one of the best ways to reach the highly sought-after young male demographic,” he said, adding that the gaming series beat out other shows targeted at that demographic at the same time.
E-gaming, martial arts or poker don’t command the viewership of college basketball’s March Madness or the race for professional ice hockey’s Stanley Cup, “but the demographic is tight and appeals to advertisers,” said David Carter, a sports marketing consultant and executive director of the USC Sports Business Institute.
In the fall season, ratings for many prime-time television shows were dismal or lower than advertisers had been promised by the networks—another prop for live sports. “There absolutely has been more money spilled over into the sports department,” said Sam Sussman, senior vice president at the media buying agency Starcom.
Sporting events are also the ultimate product placement venues. During NFL pregame shows on Fox, for instance, the State Farm Insurance logo covered the field, something Fox calls an “enhancement” that is awarded to companies that buy a lot of commercial time.
At Professional Bull Riders events, Ford Motor Corp. gets prominent display: A regular stunt features a Ford truck dragging a tier of bleachers full of fans into the ring. That kind of exhibition pays off, according to research conducted by Bonham Group, a sports marketing firm in Denver that found that bull riding fans are more likely to buy things from companies that are Professional Bull Riders sponsors.
Ad revenue grows 10% to 20% each year, said Sean Gleason, the bull riding group’s chief marketing officer.
“It’s part of the continued recognition by major corporations that sports is a great place to spend their money,” he said.