NFL: Commercial Appeal
The unveiling of the NFL’s regular-season schedule last month offered advertisers a glimpse into a conditional future, a pass-happy new reality seemingly predicated on the containment (or outright vanquishment) of the coronavirus. Distilled from a base spirit teeming with some 50,000 possible permutations, the league’s 2020 TV roster is a potent tipple, one that should kindle a giddy sort of buzz in fans who decide to dive back into the sales funnel this fall.
While the NFL’s iron-jawed determination to grind its way through the pandemic has spawned a sort of infectious optimism in the league’s media partners, the process of selling off the in-game TV inventory has yet to begin. Much of the initial pokiness has to do with the structure of the upfront bazaar, that hectic summer window during which broadcast and cable networks book some $20 billion in advance advertising commitments. If more than a half-century of precedent is any guide, the media agencies should begin registering their clients’ ad budgets with the networks this week, thereby opening the door to the ritual haggling over pricing and ratings guarantees.
Of course, the conventional approach does not apply this year. Media buyers have cautioned their network sales counterparts that a global pandemic is no time to ask marketers to lock in their ad spend for the next six to 12 months. Instead, many of the major agencies are pushing for a shift to a calendar-year cycle. And while such a strategy would seem to work to the advertisers’ advantage, anyone who sits out the upfront in the hopes of picking up a lot of remnant NFL inventory in the fall is in for a rude awakening.
“We are counseling our ad partners that they’re going to want to come to us earlier rather than try to grab whatever may be left in September,” said one ad sales boss. “I don’t want to mince words here — if you don’t buy our games now, you’re going to face a big premium in scatter.”
According to Standard Media Index estimates, the average rate for a 30-second in-game spot in all 256 NFL broadcasts last season was $424,000 a pop. In a sufficiently strong scatter market, that figure would reach as high as $500,000. And that’s merely the blended average for the regional and national games. Get cold feet while shopping for one of the big coast-to-coast Sunday broadcasts on CBS, Fox or NBC and suddenly you’re exchanging anywhere from $800,000 to $900,000 for a half-minute of airtime.
Aside from the elevated unit cost and the not-inconsiderable risk of a sellout, the marketer who decides to test the waters in scatter must also forfeit any claims to a ratings guarantee. If your media plan calls for 22.2 million ad impressions and your in-game buy generates 14.7 million, that under-delivery is now your CMO’s problem. One of the key advantages of investing in the upfront is that advance buys are insured by guarantees; when the network fails to live up to the agreed-upon target, relief is provided by way of audience deficiency units, or “make-goods.”
Another aspect of the upfront that makes TV a far less risky proposition is the cancellation option, which provides advertisers with the leeway to pull out of up to 50% of their advance commitments before the start of a new financial quarter. Among the major advertisers that have exercised their options to pull out of their third-quarter TV commitments are Pepsi-Cola and General Motors, a move that could see both companies reinvest in the fall.
There’s another reason to support the thesis of buying early. With production of scripted fare on hold since early March, there are no pilots for buyers and advertisers to screen, and there likely won’t be any new episodes of returning series for fans to dig into come fall. In other words, there isn’t much of anything to sell at the moment, and this industrywide dearth of content is likely to only further pump up demand for the NFL.
Even if the networks somehow manage to generate a full complement of new prime-time programming in time for the fall, general-entertainment fare isn’t going to move cars off the lot. While there are a number of ways to quantify the NFL’s dominance of television (last year, the league accounted for 23 of the top 25 most-watched TV broadcasts, and 78 of the top 100), arguably the most impactful analysis involves the networks’ commercial ratings.
According to Nielsen’s C3 data, during the just-ended 2019-20 broadcast season, when NFL games were removed from the equation, not a single network managed to average even a 1.0 rating in the adults 18-49 demo. In other words, in a hypothetical world without football, fewer than 1% of the under-50 set most prized by advertisers actually watched the commercials on CBS, NBC and Fox.
“There really is no substitute for the NFL,” said one national TV buyer. “If you have deep pockets and are looking for big reach, your choices in the fall are the NFL or piecing together some top-drawer college games or, if the opportunity presents itself, buying deep into the World Series.”
If sports is the only thing keeping the lights on at network TV, the NFL is a category unto itself. And yet despite what’s certain to be a lively marketplace, some advertisers that are sufficiently concerned about the logistics of a fall kickoff have been inquiring into a few rather unconventional considerations.
“The uncertainty is a killer,” said one network ad sales exec. “Not so much the ‘What if they can’t get things rolling on schedule?’ but ‘what if there’s an outbreak and a franchise gets shut down in October, November?’ Or ‘What if something happens’ — and anything can happen! nobody knows what’s going to happen! — and ‘the season can’t be resumed? Or it comes back, but now it’s so late my entire marketing plan is shot. Then what?’”
Although the sales capos have declined to go into any detail about what they can do to assuage the fears of their advertisers, the byword for this moment is “flexibility.” Should anything derail or otherwise disrupt the NFL season, an unofficial (and unprecedented) fourth-quarter cancellation option would be extended to the in-game marketers. If necessary, this concession would prove to be quite a departure from the legacy upfront arrangement, in which fourth-quarter buys are inviolable.
“As valuable a property as the NFL is, this isn’t the time to hold anyone’s feet to the fire,” said one network executive who sits on a bundle of fall football inventory. “We’re going to get through this thing, and we want you to be with us when we’re on the other side.”
Since the NBA closed up shop on March 11, a number of free-spending categories have all but disappeared from the airwaves. According to iSpot.tv estimates, fast-food dollars across ABC, CBS, Fox, NBC and ESPN are down 50% versus the year-ago period, while auto ad spend is down 66% and beer is off by 59%. Shuttered movie theaters and scuttled release dates have practically wiped out all studio investment, and but for a few make-good units on ESPN, the airlines are grounded.
If the NFL returns on schedule, much of that spend is expected to be reallocated in kind. Meanwhile, wireless and insurance TV buys have been as robust as they were this time a year ago; discounting CBS, which was hit hard by the cancellation of March Madness, the insurance providers during the quarantine have spent 10% more on the primary TV networks.
And with the return of a handful of closely-monitored sports events, the market is beginning to rouse itself back to life. After closing the TV tap for the better part of seven weeks, Coca-Cola on May 17 got back into gear during Fox’s coverage of the NASCAR Cup Series race from Darlington. And such was the urgency to get in front of a live sports audience that the decidedly non-endemic IBM snapped up two 30-second units in the same broadcast.
Until the NFL ad market starts humming along at full bore, the league’s network partners must simply endure the ambiguity of this strange new world. Uncertainty creeps in at the most unexpected moments, but the consensus view is that it’s perhaps best to acknowledge the strangeness and then move on.
“Once we know the details about Sunday nights, you’ll be the first to know,” said Linda Yaccarino, chairman of advertising sales and partnerships for NBCUniversal, during last month’s virtual upfront presentation.
A week later, it was the unflappable Jim Nantz’s turn to let down his guard. Speaking on a Zoom call with his NFL on CBS partner Tony Romo, the play-by-play veteran wrapped up an overview of the CBS Sports portfolio with an almost imperceptible verbal shrug: “We got ’em all — let’s hope.”
Anthony Crupi is a freelance writer based in New York.