US Insights

Marketing Madness

Jon Swallen

Chief Research Officer, Kantar Media Intelligence North America

TV 03.14.2016 / 17:30


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NCAA’s March Madness second only to NFL playoffs as most lucrative post-season playoff franchise

Anticipation is building for the annual NCAA Division 1 Men’s Basketball Championship, more commonly referred to as “March Madness.” For players and students on college campuses, there’s the prospect of securing one of the coveted 68 spots and making a run at a championship. For basketball fans, there’s expectancy around filling out brackets and the performance of a favorite team. And for a select group of advertisers, there are high hopes for a solid return on sizable marketing investments in the tournament.

The collegiate basketball tournament has evolved into Marketing Madness. The NCAA has successfully monetized the sporting event through media rights fees and corporate sponsorship payments. It has created a commercial platform for marketers to reap benefits from advertising and promotional programs anchored around the games.

CBS and Turner Broadcasting will again show every game live, with the telecasts spread across the CBS, TBS, TNT and truTV networks. For the first time ever, the championship game will be shown on a cable network (TBS). As in past years, the event will be streamed online, providing advertisers with another outlet to reach viewers. Licensed NCAA marketing partners will also have the opportunity to tightly integrate their products into the tournament through branded placements, experiential events and integrated cross-channel programs.

Modest growth in TV ad spending. Kantar Media estimates that the men’s basketball tournament produced $1.19 billion of TV ad spending in 2015, a 4.8 percentage point increase from the prior year. This figure includes pre-game, game and post-game programming, as well as studio shows. During the past few years, annual spending growth has been pacing at 2% to 5% with about 90 marketers buying air time per year. Starting in 2011, every tournament game has been aired nationally, producing more ad inventory and contributing to the revenue increase versus earlier years.

A leading post-season sports franchise. As measured by national TV ad spending, the NCAA men’s basketball tournament and the NFL playoffs are perennially the two largest post-season sports franchises. These totals are driven by viewing popularity (which affects ad pricing) and the number of games televised. The number of NFL post-season contests is fixed at 11 and the college basketball tournament is fixed at 67. The other pro sports leagues use “best-of” multi-game series and the total number of games can change from year-to-year, affecting ad revenue trends.

Ad rates continue to rise. The price of a TV spot increases during each round of the tournament and peaks with the championship game. Game telecasts attract larger audiences than studio programming and carry a commensurately higher price. Therefore, the average unit cost for an individual advertiser’s package depends on how deep into the tournament it extends and the mix of commercials in studio shows versus game telecasts. The average price of a 30-second unit in the 2015 championship game was $1.56 million, up 5% from the previous year.

Key Numbers

  • $1.19B in TV ad spend was generated by the 2015 tournament

To put the 2015 pricing in perspective, it was 18 percentage points less than the AFC/NFC pro football championship games that determined the Super Bowl participants. But it was significantly higher than the College Football Championship game or the most costly air time in other premium sports events.

NCAA sponsors dominate top ad buyers. The tournament typically contains TV messages from 85-90 different companies. A small proportion hold dominant positions, and each year the top 10 consistently account for more than one-third of total spending. In 2015, this select group invested $444 million to reach NCAA viewers.

The top 10 is also notable for the number of NCAA corporate sponsors it includes. Seventeen companies currently have marketing and promotional arrangements with the NCAA and are granted a wide variety of benefits, including certain category exclusivity around the use of NCAA logos, marks, designations and event tickets. CBS and Turner negotiate and manage these financial agreements for the NCAA. All 17 sponsors purchased TV air time in the 2015 tournament and accounted for more than 40% of total ad spending.

Digital marketing opportunities. In addition to advertising on linear TV, the NCAA men’s basketball tournament has ad-supported digital elements that allow marketers to reach consumers on multiple screens. All the games are streamed online through the branded March Madness Live service. Fans can access ad-supported video casts, real-time scores, statistics and other related content through web browsers and mobile apps. Streaming access to live games airing on CBS is freely available. Access to video streams on Turner networks requires an authenticated cable or satellite TV subscription.

According to Turner Sports, which manages March Madness Live, the 2015 tournament generated record levels of online consumption:

  • 80.7 million live video streams (+ 17% versus 2014)
  • 17.8 million hours of live video consumption  watched (+19% percent versus 2014)

Advertisers cannot buy the March Madness Live audience by itself. Sales are bundled with linear TV ad packages and many of the TV sponsors do not appear in the online video casts.As an alternative, some advertisers seek to leverage the popularity of online tournament brackets by placing digital ads adjacent to this content or by sponsoring contests where fans submit bracket entries and compete for prizes. And of course, general sports and news websites that are destinations for fans seeking scores, schedules and other related content typically get a traffic boost during the basketball tournament and have their own ad monetization strategies.

 

 

 

 

 

 

Source: Kantar Media

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