NBA ad sales data show true cost of canceling games
While negotiators were scrambling late last week to reach an agreement to end the four-month-old NBA lockout, an analysis of newly released data show the total amount spent by advertisers last season, excluding the NBA Finals, was $627.7 million, a figure that the networks would be hard-pressed to match if there is a significantly altered season.
Given the strong ad sales market for televised sports and the popularity — and ratings growth — of the league last season, advertisers were expected to pay up to a 10 percent increase in ad rates. That could have pushed total ad sales revenue this season to close to $700 million given a full 82-game NBA schedule.
The league has canceled the first two weeks of the NBA’s regular season, but late last week officials were in a negotiating frenzy to try to salvage a full season. Last season, advertisers spent $42.2 million on NBA game and pregame programming in November and $61.4 million in December for a total of $103.6 million across the league’s three national television partners (Turner, ESPN and ABC) during the first two months of the season, according to new research by Kantar Media. The figures do not include ad sales on shoulder programming.
Even with a potential loss of NBA games, media buyers said they expect to spend roughly the same amount with ESPN and Turner during the fourth quarter of 2011 as the networks replace the games with other programming. But the networks face a far bigger challenge in holding NBA ad sales revenue if any work stoppage rolls through December. The most lucrative ad sales month last year was in May with $170 million in advertising spent during the NBA playoffs.
“From a national standpoint, there will be minimal NBA ad sales displacement in the fourth quarter of this year. But we will start to get worried if there is still no resolution by December,” Jeremy Carey, U.S. director for Optimum Sports, said as labor talks were occurring in New York. Optimum Sports represents several clients buying into NBA national broadcasts. “What you will see is college hoops and hockey in the NBA windows.”
The longer the lockout, the bigger the advantage for ESPN in offsetting any loss of NBA ad sales, industry analysts said.
“Putting together a replacement package for the NBA is easier for ESPN than Turner,” said Brad Adgate, senior vice president and director of research at Horizon Media. “ESPN has the live sports content and Turner will turn to its drama and movies to make up for NBA programming.”
Already, competition for the displaced NBA advertising dollars is growing, with syndicated male-skewing entertainment programs — like “South Park” or “American Dad,” for example — trying to poach those dollars.
“Marketers are not just looking for viewers but for viewers who buy their products,” said Mitch Burg, president of the Syndicated Network Television Association. “[Non-NBA syndicated programming] becomes a more valuable opportunity.”
Last season, the top five NBA advertising sales categories were the automotive industry at 18 percent of the total ad sales, followed by restaurants (12 percent), mobile and tablet (8 percent), beer/liquor (8 percent), and movies (7 percent), according to Kantar Media.
According to separate research by Nielsen, Ford Motor Co. was the NBA’s top national broadcast advertiser with $19.3 million in spending during the 2010-11 regular season. Yum! Brands Inc. was second with $16.9 million spent on NBA national sales last season. Yum! Brands owns Taco Bell, which is an NBA marketing partner.
ESPN and Turner will offer advertisers alternative programming to offset the loss of the first two weeks of the NBA schedule, which was set to begin Nov. 1 with a doubleheader on TNT, starting with the defending NBA champion Dallas Mavericks playing the Chicago Bulls followed by the Los Angeles Lakers playing the Oklahoma City Thunder.
“Turner has a diverse portfolio of brands and platforms, and we are providing our advertising partners with a broad range of alternative programming options during the lockout,” said Turner Sports President David Levy.
ESPN was to begin its NBA coverage Nov. 2. The network will use live college football and college basketball games to fill any programming gaps caused by the lockout. Last week, ESPN2 used coverage from the Pan American Games in place of a scheduled preseason NBA matchup. ABC does not have any NBA programming until Christmas Day.
“We are working closely with our advertisers and are prepared to re-express dollars currently committed to the NBA to other properties,” according to an ESPN statement.
Sponsors largely have committed to run a full season’s worth of advertising, but they gained the option of pulling back their spending or shifting it into other programming with the news that the season’s first two weeks were canceled.
Turner earlier this month offered its recent MLB playoff coverage to ad buyers as a replacement for NBA games lost to the lockout, a source said. Now, the network is including programming on TBS, TNT and its Adult Swim network to NBA ad buyers as an alternative to the lost games.