Should the NFL Worry As Super Bowl Ad Buying Lags?

SMITH BRAIN TRUST — Fox was unexpectedly scrambling this week to sell the last remaining in-game commercial spots for the Feb. 5, 2017, matchup between the New England Patriots and Atlanta Falcons — a development that has perhaps gone under the radar among Super Bowl storylines. Typically, 90 percent of the commercial airtime is sold by October, as advertisers look to stage a presence during one of the year's most-watched television events. 

This year, however, Fox didn't hit that benchmark until December. Is the lag a harbinger for the league and its broadcast partners? Three experts at the University of Maryland's Robert H. Smith School of Business offer a range of explanations, including this one: The delay in filling ad slots reflects how digital media is increasingly diverting eyes from traditional telecasts.

Backfired Gamesmanship

Derrick Heggans, adjunct professor in the Smith School's Department of Logistics, Business and Public Policy and a former NFL assistant counsel for broadcast operations and policy, gives more immediate factors for the slow ad-buying. He says networks televising the Super Bowl typically hold a few spots until a late date. "This leaves an opportunity for 'surge' pricing to get a premium for the last few spots," he says. Indeed, a Fox representative told Bloomberg News this week that the network had "held a couple more (slots) than we thought in case it was Dallas or the Packers." The Dallas Cowboys and the Green Bay Packers recently were ranked by the Pro Football Hall of Fame as the two most popular NFL franchises. 

The gambit, says Smith School marketing professor Henry C. Boyd III, could have positioned Fox to bump up the prices ($5 million per 30 seconds on average) of the available slots with a Packers-or-Cowboys matchup with the Patriots. "Ultimately in sports viewing, we're drawn to a compelling story," Boyd says. "We saw this play out with the Chicago Cubs in the World Series."

Still a Big Deal, But...

Game-day ads are pricey. And not everyone agrees on whether they're worth the price. The game still holds alure for some brands looking to make a splash or launch a new product — 84 Lumber, this year, for example, or Monster.com or GoDaddy.com in recent years. Other advertisers are thinking twice. "A decision to pass on being a repeating or returning Super Bowl advertiser could result from a new chief marketing officer or media buyer simply looking to exercise a philosophy different from that of a predecessor," Heggans says.

Review the last 10 Super Bowls and you'll find consistent patterns of advertising participation, Heggans says. "How many viewing events other than the Super Bowl garners a 40-plus Nielsen rating, and for what other program can a network charge $5 million for 30 seconds?"  

Nonetheless, digital and social media more and more are the elephant in the room during discussions about advertising during Super Bowl and network TV game telecasts. "Companies are moving larger and larger percentages of their advertising budgets online, because increasingly that's where the eyeballs are, as we have seen with the NFL's ratings decline," says Roland Rust, distinguished university professor and the David Bruce Smith Chair in Marketing.

Ad spending on original digital video programming has more than doubled since 2014, according to Frontline Marketing. And 80 percent of marketers are expected to increase their focus on digital advertising this year. "The Super Bowl is never a good buy based on cost per thousand impressions. Advertisers pay a premium for one of the few advertising media vehicles that still gets a large reach," Rust says. "Increasingly that means that advertisers with more targeted marketing plans don't buy the Super Bowl."

The NFL continues to loom large in America, but the audience is following the game in changing ways. "A growing segment of fans who follow the NFL does so by way of various channels" Boyd says,  including the commercial-free NFL Red Zone channel and online sites catering to fantasy football players.

"These followers tend not to lock into a single game in a traditional telecast. And when you think of how millennials significantly represent this kind of NFL watcher, they're a lot different from their parents, who tend to be fully committed to one team and conditioned to watch that team from opening kickoff to the final gun."

Having football followers on different platforms means creating different ways to reach them, Boyd says. "As a marketer, you're going to start pushing your advertising budget in those directions with a mindset that it's going to help position the brand five years out, 10 years out."