US Insights

Oscar takes home ad-spending gold

Jon Swallen

Chief Research Officer, Kantar Media Intelligence North America

TV 02.17.2015 / 18:00

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Rising rates, less clutter, more churn distinguish Academy Awards TV advertising

With 2015's Super Bowl and Grammy Awards behind us, the stage is set for TV advertising's next high-profile event: the 87th Academy Awards on February 22. Although the live event does not inspire the hype surrounding its TV commercials that is a defining characteristic of the Super Bowl, the Oscars is still an elite franchise for marketers. The glamorous show still draws a sizable viewing audience, which in turn attracts an array of advertisers willing to pay hefty prices for the opportunity to reach a media-savvy crowd that also typically skews more female than sporting events.

According to Kantar Media's latest examination of Academy Awards advertising, significant trends include upward movement in ad pricing and revenue; less ad clutter compared to other programming; fewer companies renewing their ad buys, with more advertiser attrition leading to more openings for newcomers each year; and a variety of digital tactics used by media companies to create interest in Oscar-related content and offer marketers a way to target Oscar enthusiasts.

Oscars ad pricing trends upward.  In 2014, the price of ad time in the Academy Awards rose for the fifth consecutive year. The average cost of a 30-second unit in 2014 was $1.76 million and total revenue reached $95.0 million, both all-time highs. The robust pricing reflects advertiser demand for live TV events that can generate strong engagement in social media coupled with the desirable demographic profile of the viewing audience.

The Academy Awards, Grammy Awards and Golden Globes are three comparable award ceremonies, all focused in the entertainment space and usually occurring within weeks of each other. While the Academy Awards occupies the higher perch, the Grammy Awards has recently been narrowing the gap on ad revenue and pricing.

Ad time is increasing.  The Oscars still offers sponsors a less cluttered environment compared to other TV programming, although this advantage has been diminishing over the past decade. From an average of 6-7 minutes per hour of network ad time during 2005-2009, the level rose to 9-10 minutes per hour during 2010-2012, and has jumped yet again to nearly 11 minutes in each of the past two years. Interestingly, about three-fourths of the increase has been attributable to extra promotional announcements from ABC.

As reference points, the Grammys and Golden Globes have each averaged about 14.5 minutes of national ad time per hour during the past few years. Regular prime time entertainment programming typically has 14-16 minutes of national ads per hour.

Holding power. Strong viewer engagement with the awards ceremony and fewer commercial breaks does not completely prevent viewers from avoiding ads. TV tuning data collected by multiscreen measurement provider Rentrak compares each commercial's rating to the average rating for the entire telecast to produce an Audience Retention Index (ARI) indicating the relative value of the ad spot.

Key Numbers

  • $95M Total 2014 Oscars TV ad spend
  • 10:58 Total 2014 Oscars ad time

The 2014 Academy Awards registered an average ARI of 94, meaning the average commercial had an audience 6% smaller than the program itself. Viewers who tune away to another channel when the ads appear and then return to the show sometime later primarily cause the drop in audience between program and commercial breaks.

Spots airing before 10:00 pm ET generally had the highest scores. There was a small decline in ARI scores during the hour between 10:00 pm and 11:00 pm, and then a pronounced fall-off after 11:00 pm, even though the awards for Best Actor, Best Actress and Best Picture were handed out during this segment.

Of course, even with reduced viewing for ad messages, sponsors can still reach a compelling number of viewers through the Academy Awards due to its large audience.

Big spenders. During the past five years, the top five advertisers in the Academy Awards have spent nearly $200 million in the telecast, accounting for 49% of total ad revenue. JC Penney and Samsung stand out for their continuing participation and the amount of their investment.

Hyundai was the exclusive auto advertiser from 2009-2013 and Coca Cola held the non-alcoholic beverage sponsorship from 2006-2013. General Motors and Pepsi took over these vacated positions in 2014.

Two other well-known advertisers stand out for their loyalty and longevity. McDonald's has appeared in the program every year since 1992 and American Express since 1993.

More attrition. Ten years ago, the Academy Awards had a stable core of sponsors that were in the telecast year after year. Typically, about 75% of sponsors returned the following year and 25% dropped out, creating opportunities for fresh faces to step in. The recession of 2008-2009 ushered in a period of higher turnover and by 2011, only 45% of advertisers were returning from the prior year. This statistic improved sharply in 2012-2013 (62% returning in both years) before collapsing back to 43% retention in 2014.

Lapsed marketers who came back into the show after a self-imposed hiatus picked up most of the vacated ad time in 2014. Only two first-time advertisers appeared in 2014, the fewest in more than a decade.

Growing digital footprint. Although the Academy Awards is still predominately a TV advertising event, there is significant digital ad activity around the ceremony, as well.

ABC is the most active player, using digital media to generate audiences for both its TV and online content, which it can then monetize through advertising sales. ABC places rich media and display ads on targeted web sites in the two to three weeks leading up to the Oscars to promote and build interest in the broadcast. The network typically executes a paid search ad campaign to direct traffic to its online coverage of the event.

ABC sells display and video ads on and in a companion mobile app. Primary 2015 sponsors of these digital platforms are Discover Card, JC Penney and Samsung.

Other web publishers create content around the awards to help generate traffic, which is monetized through ad sales. For sites that cover the entertainment and celebrity industry, popular approaches include announcements of the nominations, predictions and fan voting for winners, red carpet activities, and critiques of celebrity fashion and coverage of post-Oscar parties. Food-oriented web sites have also gotten into the game with articles on hosting an Oscar-themed party at home and recipe ideas.





Source: Kantar Media

Editor's Notes

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