TVN Focus On Advertising | March Madness A Costly Cancellation
The NCAA’s decision to cancel the three-week long Division 1 Men’s Basketball Championship tournament because of the coronavirus pandemic not only cost CBS and Turner Sports more than $1 billion in ad revenue, but also negatively impacted some 70 advertisers, many which were to use the TV event to launch new spring campaigns.
No one can fault the NCAA for wanting to ensure that the “March Madness” games in cities across the country did not contribute to the spread of the virus, but no one can doubt that the networks will be seeking a way to recover this massive lost revenue opportunity that brings in more ad dollars than the Super Bowl and possibly the Olympics.
Under the NCAA TV rights deal, CBS and Turner Sports are paying $770 million each year to televise the tournament through 2024. Then the rights fee increases to $1.1 billion a year through 2032.
The networks were not initially commenting on possible remedies, but media consultant Brad Adgate, who spent 18 years at media agency Horizon Media where he was SVP and research director, believes the NCAA should wave this year’s TV rights fee and extend the deal through 2033.
“The NCAA should extend the deal one more year so the networks can make up these lost ad dollars on the back end of their current contract,” he told TVNewsCheck.
Adgate added that while advertisers had not actually spent those tournament ad dollars that they had committed to, some create commercials each year with themes specifically tied into the tournament. If those spots can’t be used elsewhere, the NCAA should be the one to reimburse them for those costs, he said.
That could be done, he opined, by the NCAA offering advertisers in-stadium or arena signage at future sports events.
“There’s no bad guy here,” Adgate said, and he agrees the NCAA did the right thing by canceling the tournament. “But when $1 billion is allocated to be spent on advertising and the networks lose that, and advertisers lose the opportunity to reach millions of viewers, there needs to be some remedy,” he said.
Adgate believes that because a large number of the advertisers in the tournament have long relationships with the networks, but also are NCAA corporate partners, that some types of financial remedies will be reached.
“I’m sure the war rooms at both the agencies and at CBS and Turner Sports are busy already trying to develop a strategy to resolve the lost ad opportunities,” Adgate said.
He added he doesn’t expect any advertiser to openly complain about tournament cancellation because that could create a backlash among consumers. “They won’t play hard ball in public,” he said, “but will work with the NCAA and the networks quietly for a solution that will placate everyone.”
While none of the media buyers were available immediately after the tournament was canceled, TVNewsCheck spoke with Jeff Gagne, SVP, strategic investments at Havas Media, before the decision was made but when it appeared that the tournament was going to be played without live arena audiences.
While it was unknown how TV viewers would react to games shown in arenas devoid of spectators and what impact that might have on ratings, Gagne said he expected the networks to honor their ratings guarantees despite the changing circumstances and thought they would.
“I believe that CBS and Turner are all fair and honest people and there will be advertisers that need help in times like these, so hopefully everybody does the right thing,” Gagne said, adding, “I get the sense we’re all in this together.”
Also speaking with TVNewsCheck prior to the tournament cancellation, John Bogusz, CBS VP of sports advertising and marketing, affirmed that if the tournament were played without live fans and the ratings were negatively impacted, CBS would indeed honor its guarantees. Although he believed that if fans could not attend the games live, they would instead watch on TV and that would boost ratings.
All that speculation is moot at this point.
March Madness Big Spenders
According to iSpot.tv data a total of $942 million was spent by advertisers in the 2019 three-week March Madness tournament. Advertisers spent $579 million on CBS, $232 million on TBS, $94 million on TNT and $37 million on truTV.
For the 2020 tournament, Bogusz said the committed ad dollar volume increased by a “double-digit” percentage that would have pushed the total over $1 billion, perhaps in the $1.1 billion range. He would not confirm a specific dollar total.
What makes the cancellation of March Madness a major disappointment is that the tournament sold all of its available advertising by the first week in February this year, the earliest ever that advertising sold out.
“I don’t remember us ever being sold out by early February,” Bogusz said.
Competition Fueled Spending Hikes
A major reason for the early sellout and the increase in ad dollars is the intense competition in two major categories of advertisers in the tournament — insurance and automotive.
In the insurance category, GEICO, which is an NCAA corporate partner, and according to iSpot.tv spent $36.3 million in the tournament last year, had increased its ad dollar commitment this year.
But sources familiar with the situation said that was because Progressive and State Farm, neither official NCAA sponsors, each increased their ad commitments, as did Northwestern Mutual. Progressive grew its commitment from $27.9 million in 2019, State Farm boosted its commitment from $16.8 million and Northwestern Mutual hiked its spending from $13.2 million.
In the auto category, NCAA “corporate champions” Buick and Nissan also increased their spending along with GMC and Ford. CBS’s Bogusz said a couple of new advertisers also joined the tournament roster. Buick spent $42.5 million last year, Nissan spent $27.5 million, while GMC spent $18.9 million and Ford spent $12 million, according to iSpot.tv data.
Jon Diament, EVP of Turner Sports ad sales, said spending commitments also grew in the QSR category from returning advertisers, as well as from some new ones.
And two new NCAA corporate partners, Invesco and Great Clips, also registered ad campaign dollars in the tournament, while Corona joined the NCAA tournament beer category with new commercials featuring former NBA star Kenny Smith.
Capital One and AT&T, both NCAA corporate champions, also grew their spending commitments for this year’s tournament. AT&T had spent $68 million last year, the largest NCCA tournament telecast spender, while Capital One spent $31 million.
Also lost with the cancellation of the tournament was the digital ad dollars committed. According to Turner Sports’ Diament, between 80% and 90% of advertisers who bought linear TV ads also bought streaming digital ad packages. And each was given separate digital audience guarantees.
The sellout of the March Madness telecasts was even more impressive this year because it is an expensive ad buy with CPM pricing much higher than other entertainment TV programming.
Why The Interest?
So why did advertisers clamor to get their ad dollars down? Havas’ Gagne says it’s a younger, more educated audience and advertisers can also target harder-to-reach male viewers.
He said ad clients also like the involvement they can get as advertisers, being able to attend the games live. Although obviously that did not happen this year.
Gibbs Haljun, total investment lead for Mindshare USA, says soft ratings in entertainment television has also driven more clients to look at live sports programming.
“The NCAA tournament is a huge event,” Haljun said, “and it is helped by the fact that it goes on for an extended period of time. For advertisers it is a special opportunity.”
Gagne said while an advertiser may pay $5.5 million for one 30-second Super Bowl spot, for that same amount of money that advertiser can get a frequency of ads across three weeks beginning with the early rounds and going into the Final Four weekend.
And whether the championship game is televised on CBS or Turner, which rotate coverage each year, Haljun says clients still want to be in that game regardless.
“It’s a sustained megaphone for advertisers,” Gagne said.
Unfortunately for all involved, advertisers will now have to wait until next year to take advantage of that megaphone once more.
Editor’s note: This story has been updated to correct the spelling and title of Gibbs Haljun, total investment lead at Mindshare USA.