Should we advertise as part of the NCAA Men’s Basketball Tournament? That’s the question I recently heard that got me thinking. Why would a company be one of the 80+ that officially participate in this year’s March Madness? A multi-faceted decision, the answer really is “it depends.” From company to company, marketing strategy ultimately guides such a decision. But that didn’t feel good enough to me, so although I’m not a media buying insider, I thought it would be interesting to investigate how to value a March Madness commitment.
According to Kantar Media, 2014 resulted in $1.13B of measured media around March Madness, which represents a 10% CAGR since 2005 and a 2% increase from 2013. Using those numbers, and assuming that measured media represents between 80% and 90% of overall media spend, based on viewership data reported by the NCAA, 2015 has the potential to generate between $1.29B and $1.56B in total media spend. Assuming viewership remains flat at 102M uniques, a complete takeover of March Madness would cost between $12.60 and $15.29 per unique individual reached. Pretty good investment in my opinion, but a complete takeover of the three week event isn’t realistic. So let’s take a look at potential incremental numbers. To do this, we need to consider total viewing time and potential exposure to advertising content.
CBS and Turner Broadcasting, the media partners for March Madness, reported an average of 377 minutes of viewing time per unique individual reached. That represents a whopping 38.45B minutes of programming. But programming is a combination of game play and advertising. Assuming an average basketball broadcast is 2.5 hours, includes 15 minutes each for pre-game, halftime, and post-game analysis, and allows for 18 commercial breaks (4 broadcast timeouts each half and 5 timeouts each per team), approximately 81 minutes (54%) of the broadcast is available for ad exposure. That represents 20.77B total minutes, or between $0.062 and $0.075 per exposed ad minute. If we further break that down into 15 second spots, an advertiser would have to pay $0.015 and $0.019 per viewed spot. Not so bad, but how would that compare to a less targeted run-of-network (RoN) type digital ad?
Assuming a $1.00 CPM (for simple math purposes) for a viewable RoN ad, and an average of 5 seconds of exposure per ad, an advertiser would pay $0.003 per 15 seconds of exposure. If broadcast ads could be individualized in a similar way, a big if, then the 2015 March Madness spots would cost between 5.16 and 6.26 times more than viewable RoN ads based on brand exposure. Seems like a good multiple for such a targeted, engaged audience. Even if we discount the expose further by 33% for the NCAA ads, because most of the ads can only be personalized based on geography, we’d still only pay a 15x to 18x multiple over RoN ads.
What this basic assessment tells me is that if the NCAA March Madness audience is a good fit for a brand, and the brand has available working capital, the three-week event represents a good relative investment in terms of awareness and exposure. And when digital amplification is considered the investment gets even better.
For those interested in the numbers, here’s a table of my calculations:
2014 Measured Ad Sales $1,134,000,000
2015 Measured Ad Sales (2% Growth) $1,156,680,000
2015 Measured Ad Sales (10% Growth) $1,247,400,000
2015 Total Ad Sales (2% Growth, 10% Unmeasured) $1,285,200,000
2015 Total Ad Sales (10% Growth, 20% Unmeasured) $1,559,250,000
Total Unique Viewers 102,000,000
2015 Cost Per Unique Viewer (Low Ad Sales Growth) $12.60
2015 Cost Per Unique Viewer (High Ad Sales Growth) $15.29
Total Unique Viewers 102,000,000
Minutes Per Unique Viewer 377
Total Minutes Viewed 38,454,000,000
Game Broadcast in Minutes 150
Pre-game Analysis in Minutes 15
Halftime Analysis in Minutes 15
Post-game Analysis in Minutes 15
Total Analysis Time in Minutes 45
Commercial Breaks 18
Time Per Commercial Break 2
Total Commercial Break Time in Minutes 36
Total Analysis and Commercial Break Time in Minutes 81
Ad Exposure Potential as % of Game Broadcast 54%
Total Minutes of Ad Exposure 20,765,160,000
2015 Cost Per Viewer Minute (Low Ad Sales Growth) $0.062
2015 Cost Per Viewer Minute (High Ad Sales Growth) $0.075
2015 Cost Per Viewer Ad Spot (Low Ad Sales Growth) $0.015
2015 Cost Per Viewer Ad Spot (High Ad Sales Growth) $0.019
Run-of-network Ad Cost in CPM $1.00
Attention Per Ad in Seconds 5
Cost Per Minute of RoN Ad Exposure $0.012
Cost Per 15 Seconds of RoN Ad Exposure $0.003
Ratio of Low Growth NCAA Ad Spot to RoN Ad Exposure 5.16
Ratio of High Growth NCAA Ad Spot to RoN Ad Exposure 6.26
Ratio of Low Growth NCAA Ad Spot to RoN Ad Exposure after Discount 15.47
Ratio of High Growth NCAA Ad Spot to RoN Ad Exposure after Discount 18.77