Moneyball for Advertisers: The Future of TV Sports

Let39s start with the impact of fragmentation on TV sports ratings World Series average ratings declined from 328 to 81 between 1980 and 2019 However that was a real cultural shift not just more viewing choices The popularity of watching baseball on TV itself declined possibly because viewers particularly younger ones didn39t appreciate the chesslike strategy going on beneath the seemingly slowmoving surface of the sport according to marketing guru Bob DeSena For the faster action game of football Super Bowl and NFL ratings are down relatively slightly over the past ten years while college football has shown greater erosion a study by Larry Novenstern and myself shows that average ratings from 2008 to 2019 have declined by about halfIn the face of smaller audiences what happened to the prices of buying ads in TV sportsStandard Media Index SMI a global source of advertising spend and pricing data shows that while the average paid 30s unit costs for all programs on broadcast TV declined about 22 between 2014 and 2019 cable prices down 21 live sports on broadcast TV prices declined 12 over that period cable 32 Also if you extend the analysis into the pandemic year 2020 you find that ironically broadcast TV live sports ad prices were down only 35 from 2014 It was more important to advertisers during COVID in 2020 to get those sports spots and so they paid more from themWe all know that if audiences are getting smaller while prices are staying flat or only contracting slightly negotiated CPMs for sports have to be going up and they have always been high to begin with So we might expect to see advertisers lowering their allocations to sports as a result of escalating CPMs NFL Regular Season eCPMs are on par with broadcast prime per this SMI reportHowever SMI shows that in the first half of 2021 TV sports including live and all other sports programming accounts for 26 of all adspend on US television up from 21 in the same period in 2019 In the technology category it is 44 of adspend up from 33 in 2019 In fact in every single vertical sports TV spend is a larger allocation of the total TV budget now than it was preCOVIDHow do we explain this striking shift to sports Part of it is of course the reduction in new entertainment content readiness as a result of COVID but it39s more than thatBrad Adgate has done his usual definitive article in Forbes this time zeroing in on how strongly TV sports is coming back from COVID in terms of ratings and advertiser spending and in his article he quotes my saying that a good part of the reason for this is ROITV sports boosts viewer attention to ads plus heightening the viewer39s emotions and this results in greater advertising effectiveness per dollar despite high CPMs ROI supersedes CPM because the CPM is already reflected in the amp8220Iamp8220 of ROI Once the ROI is proven higher as in this case the buyer need not think about the CPM anymore Sports has been validated over and over again by numerous researchers and again by the 22 trillion sales vs 48 billion advertising Bill Harvey Consulting ROAS study sponsored by FoxIn the BHC ROAS study TV live sports was 84 above average in ROAS return on ad spend NFL was 25X the average ROAS for QSR 92 above average for Auto and 89 above average for CPGAt our request IRI has kindly granted us the right to publish their own analysis of CPG TV sports average ROISports is even more effective than this for ads that contain psychological factors aligned with sports such as Achievement Competency Fitness Heroism and Power as analyzed by RMT DriverTagsSports rights fees paid by networks have been skyrocketing despite ratings CPMs ad prices and COVID Between 2001 and 2019 total revenue to all NFL teams went from 428 billion to 1526 billion according to Statista Amazon just bought exclusive streaming rights to NFL Thursday night games for 1 billion per season that39s 67 million per game Now that the FAANGs are into it expect the rights fees bids to escalate mightilyIn the first week of the new college football season Fox reports the first five games average audience is up 80 over the comparable average in 2019 Kicking off Fox39s 2021 College Football CFB Week 1 coverage on Thursday night Ohio State vs Minnesota averaged 63 million P2 linear TV viewers the most watched Week 1 CFB Thursday game of all time on any network Through five telecasts the 2021 Fox College Football season total linear audience 42 Million P2 is up 80 versus the comparable seasontodate average in 2019 23 million P2 That was also the third most streamed Fox CPB regular season game of all time with an average minute streaming audience of 133863 P2 CFBONFOX social accounts drew more than 25 million views in Week 1 up 171 over Week 1 of the 2019 season and the mostviewed regular season week in CFB in Fox social history The CFBONFOX Twitter handle enjoyed its mostviewed week in the account39s history with 181 million views smashing the previous record of 9 million set during the 2019 season ahead of Michigan vs Ohio State That Saturday39s video of quotJump Aroundquot from the Penn St Wisconsin telecast is the mostviewed video in CFBONFOX Twitter history with more than 95 million viewsYou can see from these results that the sports TV wave is far from cresting It is just beginning to build Streaming will be where a lot of sports TV goes as all TV eventually goes that way Larry Novenstern for many years the head of sports media at BBDO making some of the biggest sports buys in the business for top clients is bullish on the marriage of sports and streaming saying about streaming quotThe consumer is in charge of what they want to see and pay forquot In the current transitional media world the impact of TV sports ripples from linear and streaming across to all forms of social media merchandising influencer marketing and word of mouthAssociating your brand with sports has longterm brand bonding effects not just impact on short term sales performance for advertisers as shown by a series of studies conducted for WarnerMedia by Kantar and by Dynata This extends beyond those who watch the game in which you advertise when the brand uses the association with the NCAA for example across its advertising everywhere the brand39s standing rises among sports fans For example where such ads ran across one media platform a creditbanking brand achieved an 11 increase in being perceived as quota brand that shares my passion for sportsquot which when the ads linking the brand to NCAA ran across two media platforms eg TVdigital went to 32 Across two platforms the lift was 33 for quotMakes me likely to consider the brand the next time I apply for a cardquotBrad Adgate for many years the head network television researcher at Horizon and today a Forbes regular columnist and media consultant has this to say quotDespite a drop in ratings when sports are compared to other genres the declines aren39t nearly as steep Sports are watched by many in real time which still accounts for something There are sponsorship opportunities strong fan engagement and a desirable audience for many Despite the escalating cost in rights fees that programmers pass along to advertisers sports will continue to be a must buy for dozens of bluechip marketers Additionally there will be a steady flow of new advertisers and product categories driven by technology that will increase demand With streaming opportunities also available the future looks very brightquotNow that the 2020 Census has shown that minorities sooner than previously expected will collectively be the majority soccer will become a major US sport Women39s sports are a greenfield for the growth of TV sports Future technologies such as the invention by a former top military technology Israeli gent which allows viewers to choose their own camera angles to future virtual reality games in which you can play your favorite athlete and rerun a play he fumbled to show him how he should have done it are in the worksHang on for a wild ride and keep your eyes on where the puck is goingMy new partner in sports marketing Larry Novenstern and wellknown television business guru Brad Adgate now a Forbes columnist contributed to this reportClick the social buttons to share this content with your friends and colleaguesThe opinions and points of view expressed in this content are exclusively the views of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated writers

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Moneyball for Advertisers: The Future of TV Sports

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Bill Harvey

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Moneyball for Advertisers: The Future of TV Sports

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