It has taken five years, but CBS has developed the NCAA Men’s Basketball Tournament into a multimedia package that stands to become a template for television companies trying to wring revenue from broadcast, satellite and Internet coverage of sports.
March Madness generates more advertising sales than any other postseason sporting event including the Super Bowl, according to TNS Media Research. CBS executives say the NCAA Tournament didn’t reach full fruition until they integrated the broadcasts through company-owned outlets, as well as through partners such as DirecTV, the No. 1 satellite TV service, and YouTube, the biggest video-sharing site.
“We’ve finally been able to take all of our assets and apply them to this property,” said Chris Simko, senior VP of sports sales and marketing and director of CBS Sports Properties. “Because of this we are able to provide advertisers with strong returns on investments because we are able to offer them a marketing approach and audience reach beyond the traditional broadcast model.”
In advertising revenue on television alone, CBS is expected to pull in more than $500 million this year from the NCAA Tournament, according to TNS Media Research. That number, an all-time high, represents an increase of about 70 percent from 2000. Ad time for the tournament is estimated to cost north of $100,000 for a 30-second spot in the opening rounds and as much as $1.2 million for commercial slots in the Final Four, sources familiar with the matter said. Even ads for the pre-tournament pairings program sold out of ad time with 30-second spots running around $75,000, those sources said. Current sponsors include Pontiac, State Farm, Lowe’s, AT&T and Kraft.
For marketers, those broadcast spots are only one element of a CBS package that offers additional brand-building value through satellite TV and the Web. Those opportunities were born of CBS’s 1998 acquisition of the digital rights for the tournament for $6 billion.
The company recently renewed a partnership with DirecTV for NCAA out-of-market games that will provide the satellite TV company with content for its NCAA Mega March Madness package. CBS also provides another outlet and an additional 8 million sets of eyeballs through its CSTV channel.
Eric Shanks, executive VP of entertainment for DirecTV, said ad inventory quickly sold out for the games.
“We’re excited this year,” Mr. Shanks said. “Not only will every game be broadcast in HD, but subscribers of the package won’t have to pay extra for it. Already the number of subscribers purchasing the package has surpassed our expectations, even with the availability of games on the Internet.”
That Web offering comes on CBS SportsLine, which doubled bandwidth capacity this year to handle visitors to its March Madness On Demand package. Last year, 1.3 million users registered for the service, watching 19 million video streams.
CBS SportsLine last year drew 20 advertisers for March Madness On Demand, generating about $4 million in ad sales from the webcasts. This year the feature is expected to bring in around $9 million from about 30 sponsors.
“It’s another watershed because what we are seeing is the emergence of the first true broadband video sports programming franchise,” said Will Richmond, president of research firm Broadband Directions. “All the elements to developing a programming franchise — huge and rabid audiences, motivated advertisers, strong awareness and widely available delivery technology — have fallen into place. … I expect other sports leagues, both minor and major, will be eagerly trying to emulate their success.”
Meanwhile, CBS tapped Pontiac to sponsor the CBS Sports NCAA Tournament Channel on YouTube.
“The NCAA continues to look for new and creative avenues to promote and enhance the game of college basketball and the NCAA Division I Men’s Basketball Championship,” said Greg Shaheen, NCAA senior VP of basketball and business strategies. “YouTube will allow both the NCAA and CBS to reach a broader audience and will provide increased exposure for the men’s basketball championship.”
“The success of CBS with the NCAA is all about our aggregation of assets and assigning value to all of these things we are doing,” said CBS’s Mr. Simko.
Michele Greppi and Daisy Whitney contributed to this story.