While college hoops fans sweat the five bucks they laid out to enter their office bracket contests, advertisers will be counting the hundreds of millions of dollars spent on commercials and promotions during March Madness.
Companies likely will spend more than $500 million on commercials and sponsorships over the next 15 days, ensuring that the National Collegiate Athletic Association men’s basketball tournament will bring in more television advertising money than any other sports championship in America, including the NFL playoffs and Super Bowl.
“It’s a very valuable property,” said Chris Hornberger, advertising manager for automaker Pontiac, which is sponsoring scholarships and ticket giveaways during the NCAA tournament. “It’s 21/2 weeks, and people are very passionate.”
That passion might lead to a big drop in office productivity, but it’s a big motivator for advertisers who view the tournament as one of the most desirable and lucrative events on television. Since 2000, Pontiac parent company General Motors has spent more than $400 million on television advertising during the tournament, and other major companies such as AT&T, Anheuser-Busch and Coca-Cola routinely spend between $10 million and $20 million each year.
Every 30-second commercial during this weekend’s games alone will represent more than $200,000 in ad dollars spent, and by the Final Four, advertisers will be shelling out more than $1 million for a half-minute spot. Only the Super Bowl commands a higher price.
“There’s really nothing else like it,” said Susan McDermott, a spokeswoman for Coca-Cola, which is in the fifth year of a 10-year advertising deal with the NCAA. “Fans live and breathe and die with their teams. It’s a very desirable audience because they’re watching games and they’re not changing channels.”
All those ad dollars are welcomed with open arms by CBS, which is in the fifth year of a $6 billion contract to televise the tournament through 2014, and has broadcast the tournament live since 1982. During the current television contract alone, CBS has seen advertising revenue rise more than 40 percent, according to TNS Media Intelligence, an advertising research firm in New York. And advertisers are fiercely loyal to the tournament: More than 83 percent of the tournament’s network television revenue comes from returning advertisers, many of whom have multiyear agreements with the NCAA or CBS.
“The NCAA tournament is obviously a big opportunity for us because it’s an extremely visible event that’s spread out over three weeks and reaches much of our target audience,” said Steven Schwadron, a spokesman for AT&T, which sponsors CBS’ halftime show during the tournament.
TNS said viewers of the NCAA tournament are highly attractive to advertisers. They’re young, male and aren’t prone to channel surfing.
“It’s definitely a male-driven audience with a pretty desirable demographic,” said Jon Swallen, TNS’ senior vice president of research. “They’re college educated, tend to be more affluent and are younger. They don’t watch a lot of TV, and when they do, it’s scattered and fragmented. If it [attracts] a hard-to-reach audience, it commands a premium.”
Coca-Cola’s Miss McDermott said the company will introduce new commercials for its brands this week, with extra emphasis on targeting young males with its Coke Zero product. Other companies such as Microsoft, Cingular Wireless (now part of AT&T) and Pontiac have promotional efforts geared toward young people with disposable incomes.
“We feel our cars are for youthful-minded people,” Pontiac’s Mr. Hornberger said. “It’s a perfect tie-in for us because the NCAA is all about performance.”
This year, several companies, including Marriott and Dell, have enhanced their NCAA tournament advertising by sponsoring CBS’ March Madness On Demand service, which allows fans to watch out-of-market NCAA games on their computers using a high-speed Internet connection. The sponsorship allows the companies to run commercials during breaks in the broadcast and create banner advertisements around the viewing window.
The NCAA tournament is undoubtedly one of the most unique events in sports, but it is also unique in the percentage of advertising it brings in compared with college basketball’s regular season. Despite more than 300 regular season men’s basketball games broadcast nationally, about three-fourths of the advertising revenue tied to sport comes during this last month of the season. Last year, the regular season pulled in $165 million in ad revenue, compared with $497 million from the tournament.
Other sports report an opposite split. College football’s postseason bowl games, for instance, represent about 22 percent of total ad revenue for the sport each year. And the NFL, despite massive ratings for its playoff games and the Super Bowl, earns about 80 percent of advertising dollars during the regular season.