Advertising MADNE$$

March Madness is a Spring tradition that consumes the American culture unlike any other.  Some things about March Madness seem to never change.  There have been great buzzer-beaters, Cinderella stories, and Pittsburg broken hearts and brackets all over the country.  March Madness is an advertiser’s dream come true.  The tournament grabs the attention of Americans across many demographics and for years big brands have spent millions on advertising to reach that audience.  CBS has been the proud home of the tournament for years and their broadcast format has turned March Madness into the second largest advertising revenue generator (Second only to the Super Bowl).  So why did CBS change everything if it wasn’t broken?

Shortly after CBS announced that they had inked a 14 year contract with the NCAA for $10.8 Billion, they also announced that for the first time each game of the tournament would be broadcast in its entirety.  CBS partnered with Turner and has broadcasted games on CBS, TNT, TBS, and TruTV.  Gone are the days where we watch our local games until Greg Gumble pops on our screen to transition us from one fantastic finish to the next.  Now we get to flip feverishly on our own to catch as much basketball as we would like.  

As I was flipping around from channel to channel looking for live action, only to find commercials, I began to ask myself many questions; where is Greg Gumble? What is TruTV? WHY PITTSBURGH!?!? Why would CBS share the broadcast rights for an event that they just paid $10.8 Billion for?  The answer to why CBS would share the broadcast rights is simple; its advertising dollars. The NCAA Tournament generated $613 million in ad revenue in 2010, which means under the new contract CBS will take a loss of over $160 million per year.  Well, the initial ratings are in for 2011 and the aggregate ratings for the Tournament are up a whopping 24% from last year.  Currently advertisers pay $100,000 for a 30 second commercial during the tournament and $1,000,000 for a spot during the Final Four.  A ratings boost of 24% will allow CBS and its partners to demand even higher prices for 30 second Ads in the future.  In the past, if fans were stuck with a game that was lopsided, their only options were to either sit and watch a boring game or flip to another program.  

The power to decide which game they want to watch has kept Americans glued in to the tournament like never before.  Anecdotally, I have watched more tournament games than ever before, but I have also watched more commercials too.  Greg Gumble isn’t transitioning me from game to game anymore.  This year it’s GMC, Power Aid, Miller Lite, among others.  Under the new format, everyone wins.  NCAA gets $10.8 billion, CBS hopes to get more than that, and fans get all the basketball they could ever want.