NFL Shortfalls Dampen November Ad Spend Results

By Jack Myers TomorrowToday Archives

When the Federal Reserve recently raised interest rates, it signaled a belief that the financial health of America is on an upswing. But within the television economy, there are signs that not all is merry and bright.  Key advertising sectors that count on holiday consumer spending for revenue growth plunked down less on television advertising during the month of November than they did in 2015. One trouble spot was largely responsible for that: National Football League games.

To fully appreciate the significance of the NFL games in the overall revenue picture, consider this: When all ad revenue is counted for the broadcast and cable networks during November, there is an average -2.4% decline versus the same month last year. But when NFL spending is excluded, overall TV spend was up 5.3%.

NFL ad spend was riding high in October despite ratings declines, as Madison Avenue continued its love affair with live sports. But there was the dull sound of a proverbial second shoe dropping as revenue followed the ratings' downward trajectory in November.

Some big NFL factors were in play. First, there was a makegood problem, as networks gave up free units to advertisers when their ratings guarantees for earlier games fell short. And secondly, two out of three broadcast networks televised fewer games in November 2016 than they did in the same month last year.

On the positive side, Hillary Clinton spent more than $2.2 million on NFL games during week nine of the season (beginning Nov. 3). And Donald Trump spent almost exactly half that amount during the same week.

Here's a network scorecard:

  • NBC was fortunate to have the same number of games this November as last, six.  And its unit prices were up an average 10%, to $720,949. But the audience deficiency units (ADUs) were largely responsible for NBC's 17% decline in NFL revenue, year over year (YOY).
  • CBS's NFL revenue was down 26% YOY due to three factors. First, it aired one less game in November, down to eight. Secondly, 20% of its NFL inventory was allocated to ADUs. In comparison, it gave up 11% to ADUs last November. And thirdly, CBS's unit pricing was down 1%, to $455,090.
  • Fox was the most challenged with NFL revenue, showing the largest decline of the three broadcasters, down 34%.  On the flip side, it had the highest unit cost rise, 21%, to $642,559. The biggest issue here was three fewer games, down to six. Its ADU percentage grew fairly modestly, from 20% last November to 25% this November.

The good news, for TV networks in general, was that some retailers moved big money back into television after some questionable experimentation with digital during the last holiday season.

Some of the retail spending flowed to NFL telecasts: Discount stores and online retailers spent 9.1% more on the NFL this year than last, and food produce and dairy was up 82%, although the volume was low.

In three retail sectors, the NFL's revenue performance was decidedly below TV networks as a whole:

  • Specialty retailer revenue was up 7.6% overall, but down 22.9% with the NFL.
  • Toys and video games were off 9% overall and down a breathtaking 56.2% with the NFL.
  • Department store revenue rocketed up 16.6% overall, but was down 21.5% with the NFL. The department stores, along with specialty retail, spent most with the news channels: 49% for both.

Needless to say, turbulence among regular advertisers as politicians spent heavily prior to the election has to be factored in. That's now out of the way, but the football ratings remain a concern. So there's a strong likelihood that December results, along with the full fourth-quarter numbers, will also exhibit some shortfalls.

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