Large TV audiences will be tuning in for the Emmy Awards tonight, and many advertisers have the show and other high-profile events circled on their media plans as they’ve made a large investment when choosing to advertise during those show.
Advertisers clamor for opportunities to reach large audiences and expose their brands to the masses. Awards shows such as the Emmy Awards, Oscars, Grammys, MTV Movie Awards can fulfill that need, as do major sporting events such as the World Cup or the Olympics. Such a high-profile advertising opportunity event will naturally cost a premium, but too often advertisers get lost in the excitement of being part of the fanfare and overlook the cost/value equation.
The Olympic Games as an Example
In the world of big sporting events, it doesn’t get much bigger than the Olympics. In the US, NBC’s contract extension for the broadcast rights of the Games from 2022-2032 cost $7.75B. For a network to spend nearly $1.3B for each Olympiad reflects its belief in the ability to monetize the event primarily through advertising sales. NBC charges a healthy premium for spots during Olympic programming and has been expanding its inventory by dramatically increasing hours of content and broadcasting across its cable networks such as CNBC, MSNBC and USA. In 1996 the Atlanta summer games received a total of 171 hours of TV coverage. Fast forward to the 2016 Rio summer games which received a total of 2,000 hours of traditional TV coverage supplemented by another 4,500 hours of web streaming. This is an amazing growth of advertising supply.
The chart below shows the range of media cost premiums Analytic Partners has seen in Olympics buys. On average, the cost premium is 349%, or roughly 4.5x higher than the average rates for the rest of the year. The significance of the premium is in part a function of the quality of the buy during the remainder of the year and differences in daypart, programming and copy length mix. In some categories, large advertisers lock in exclusivity for national buys during the Olympics – for example Coca-Cola in the beverage category. This leaves other beverage companies with the option of local advertising buys which are more expensive without national media efficiencies, surely a part of Coke’s strategy.
How does advertising during the major TV viewing events perform?
Analytic Partners works with our clients to evaluate advertising during major events such as the Olympic Games and measures Return On Investment (ROI) on those placements. To properly understand the performance, we look at both the ability of the media to impact sales performance and other important KPIs (for example new customers). We also look at the cost of the media against the value it delivers.
How does the performance of advertising during Olympic programming, compare against average performance during the rest of the year? Our findings show that advertising during the Games consistently underperforms, by an average of 72%. These premium buys are simply unable to justify the significant cost premium of the media. Our measurement shows the media itself is otherwise highly effective: eliminating cost premiums would deliver a 40% average increase in ROI.
So, what should advertisers expect for advertising during the Emmys? More of the same below-average short-term returns. And once again, it is a function of the cost premium on the media, per rating point, which outpaces the short-term sales lift, per rating point.
The Super Bowl is Super Big
The Super Bowl, another premier event commanding extremely high advertising costs, presents a contrast. The Super Bowl offers extremely high viewership for a single program, that allows advertisers to reach certain particularly hard to reach demographics (for example men in their 20s and 30s). And advertisers have wisely utilized this premium placement to create buzz for the ad beyond the spot itself, and craft strategies seeking to earn PR and additional views in the weeks to follow to extend the impact of the buy. While the Olympic Games provide advertisers the ability to reach large audiences, the extensive and sometimes drawn-out coverage impacts viewer attentiveness and receptivity to advertising, and therefore impacting response.
What is the role of high-profile advertising?
Marketers are attracted to advertising during high-profile events because of the reach of the audience and the ability to anchor a broader marketing initiative, such as new products or a new campaign, around the event itself.
What is paramount is to be clear in the strategy for how it will serve the brand. Marketers considering advertising during major events must be able to answer questions such as how affiliation with the event will help the brand, and whether the advertising will gain significantly better reach within the target demographics. And most importantly, what is the expectation of value it will drive against the brand’s sales performance, and how will that be achieved?
Without a clear mapping for the value on their P&L that advertising during major events, advertisers are throwing money away – money that would be better spent differently towards growing their business.
Curious about how your event advertising measures up? Analytic Partners helps clients optimize their marketing investment through a robust measurement and predictive performance toolkit. Contact us to discuss how we can help you.
– Fred Chassé is a SVP at Analytic Partners and leads our Colorado office