Cautious Ad Spenders Open Their Wallets For March Madness

With an uncertain economy over the past several months, brands at all spending levels have been cautious and holding back on their TV ad spending dollars.

One media agency ad buyer went so far as to describe current primetime broadcast and cable entertainment ad spending as “falling off a cliff.”

Even live TV sports has seen a softening of ad spending over the past few months, although not at the hefty levels of non-sports programming.

However, when March Madness arrives on March 14 and the national champion of college basketball is crowned three weeks later on the night of April 3, the tournament is expected to have once again taken in more than $1 billion in ad revenue for its TV partners CBS and the Warner Bros. Discovery networks TNT, TBS and truTV.

Obstacles Overcome

Ad selling for this year’s NCAA Division 1 Men’s Basketball Tournament’s 67 game telecasts did face some obstacles. Some sales deals were finalized later than in years past, with advertisers holding onto their dollars closer to tipoff time.

“There is not a lot of money in the market right now,” says one media buyer. “There are pockets of categories where spending is strong, but others where it isn’t. There is just a lot of hesitancy in the marketplace right now.”

But in an event where 127 different brands aired at least one national TV commercial during the live March Madness games last year, according to iSpot.tv, if someone wants to pull out, there are plenty of others to move in. And they have.

In fact, GEICO recently left as an NCAA corporate partner but was quickly replaced by Dick’s Sporting Goods, keeping the NCAA corporate partners at 17.

And there is talk that perhaps the NCAA will be adding a few more corporate partners prior to the start of the tournament next week. And those are the advertisers, along with the NCAA corporate champions, who tend to spend the most across the entire tournament.

Ad Buyers Sold On March Madness

“Sports is still the best way to get mass reach on television and the sports audiences are still stronger than anything else on TV,” says one media buyer.

While another buyer adds: “March Madness gives advertisers audience levels they cannot find anywhere else.”

Last year, just the Top 10 biggest spenders in the tournament alone allocated $247 million in advertising, according to iSpot data.

“The sports marketplace continues to hold up extremely well in the current economic environment,” says John Bogusz , EVP, CBS Sports Sales, Paramount Advertising. “We are very excited for the tipoff of March Madness.”

Bogusz says the networks have surpassed their goal for linear ad dollar sales and Jon Diament, EVP of advertising sales, Warner Brothers Discovery networks, says digital ad sales are also just about sold out.

In addition to the linear TV telecasts of all 67 games in the tournament, viewers can also watch the games on various digital platforms and screens.

Holding Back Ad Avails

The tournament usually will not totally sell out of ad avails because the networks want to hold back some ad inventory in case viewer guarantees are not met as the tournament airs and makegoods have to be awarded to advertisers.

But as the tournament proceeds, scatter ads still available will be sold as guarantees are met.

“We do hold back some ad units,” Bogusz says. “Our goal is to deliver for all our advertisers the total number of ad impressions they bought.”

Bogusz says there are a few scatter ad units available across the tournament that can still be bought.

“The first weekend is very tight, the second weekend has some more avails left, but the Final Four weekend is basically sold out,” Bogusz says.

Strong ad categories he says are automotive, quick service restaurants, insurance and the movie studio category, which has finally made a comeback in spending following the COVID drought.

Big Ad Spenders

The networks did not name specific brands that bought advertising in this year’s tournament, but most of the big spenders, many which are NCAA corporate champions and partners with multi-year deals, will be back.

Last year’s Top 10 March Madness tournament spenders allocated $247 million in advertising. Top spenders included AT&T Wireless ($52.3 million); GEICO ($27.1 million); Buick ($26.5 million); Progressive ($25.2 million); Nissan ($24.7 million); GMC ($23.8 million); Invesco ($18.4 million); Capital One ($16.8 million); Google ($15.8 million); and Coca-Cola ($14.4 million).

AT&T will again sponsor the halftime shows of all the games, while Capital One returns as sponsor of Tournament Central, the studio show between games.

Capital One will also, as it has since 2015, feature a series of newly created commercials starring Charles Barkley, Spike Lee and Samuel L. Jackson. Capital One’s creative agency has put together five or six new spots that will air throughout the tournament.

“It has brought great buzz for them during the tournament each year,” says one buyer familiar with the spots.

Ad Prices Up

According to media buyers, despite the softer economy and potential hesitancy to allocate too much money on advertising, brands that did March Madness deals have paid average price increases on a cost-per-thousand viewer basis of between 4% and 6%.

Beyond that, however, depending on what round and what day and time the games are televised, some price hikes per 30-second spot reached even higher single-digit increases.

That’s because any advertiser that wants mass reach for its brand at this time of year pretty much has no choice but to jump into the March Madness fanaticism.

It is otherwise a slow time for advertising possibilities with the NFL season over. The NBA and NHL regular seasons are winding down before rejuvenated interest arrives with the playoffs. Baseball has yet to begin its regular season.

“Price increases have actually been moderate this year,” says one media buyer, “but they would have been much higher if the economy and marketplace was stronger.”

But that doesn’t mean CBS and the WBD networks did not fill up their coffers. Buyers say about 50% to 60% of the total March Madness advertising is sold as part of multiyear deals and a growing number of advertisers also bought March Madness ad time in last year’s May upfront. Still, that doesn’t mean those upfront deals could not have been cut back.

As for this year’s ad unit pricing, buyers say early round game pricing varies from $75,000 to $150,000 per unit or the daytime and fringe-time games, but primetime games in the early and middle rounds can cost $500,000 and up.

Spots in the semi-final round run about $1 million per 30 seconds and commercials in the championship game will cost about $2 million per 30 seconds with some costing more than that.

March Madness Audience

More and more media agencies are prodding their ad clients to look not only at linear TV viewership, but also TV ad impressions. And March Madness produces a mega amount of linear TV ad impressions over its 67 telecasts.

According to iSpot.tv data, household TV ad impressions for the 2022 tournament on CBS, TNT, TBS and the other Warner Bros Discovery networks that carried the games was 24.2 billion.

And the audience also has some characteristics advertisers are looking for — a much younger median age audience than primetime broadcast and cable TV, as well as a more upper-income audience with harder to reach younger males, but also a high percentage of females.

The Future

Selling ad units for 67 40-minute college basketball games at various prices, along with digital platform options, is a massive undertaking each year. And it is made a bit more complex in that two different media company sales departments are collaborating to sell the advertising.

But CBS and WBD (previously Turner) have been doing it for 12 years, and even the media agencies they are negotiating with and selling to see very little to find fault with.

Some of it has to do with the massive public acceptance of the event and legalization of gambling across many states that has further grown viewer interest in the tournament (even though, ironically, the NCAA does not allow the networks to sell ads to gambling services during the telecasts).

One media buyer summed up what most of his colleagues at the various agencies feel about March Madness as an ad vehicle for clients.

“We recommend the NCAA Tournament telecasts for any size client,” he says.

As for clients who have been in the tournament for a while now, he adds, “Advertisers continue to see it as something they can’t cut from their annual spending.”

And that bodes well for March Madness going forward.