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March Madness an Advertising Bonanza Worth $545MM

As sports fans eagerly await March Madness - the NCAA Men’s Division I Basketball Tournament - advertisers are also anticipating the 19-day event, which ranks among the top sports marketing shindigs, with network TV ad sales projected by TNS to reach $545 million, reports MarketingCharts.

Commercial spots will air during 65+ hours of telecasts on CBS, for the financial stakes are high: This year the network is paying the NCAA a base license fee of approximately $529 million covering exclusive TV, digital, radio, publishing and merchandising rights for the tournament.

“As a sports marketing event, the collegiate basketball tournament is part of a Final Four alongside the Super Bowl and the Summer and Winter Olympics,” said Jon Swallen, SVP of research at TNS Media Intelligence. “The popularity of March Madness extends to a broad, diverse cross-section of the population and this makes it a valued opportunity for certain marketers.”

Below, current statistics and trends on March Madness advertising, provided by TNS Media Intelligence.

An Advertising Bonanza

Over the past 10 years (1998-2007), advertising during the NCAA tournament has translated into $3.83 billion of network TV spending from nearly 300 different marketers. (See table.)

For the 2008 edition of March Madness, network TV ad sales are projected to reach $545 million, up from $519.6 million last year.

Outpacing the Competition

The post-season NCAA Tournament brings in more national TV ad revenue than the post-season playoffs for professional baseball, professional basketball or college football: view table here.

Only the National Football League playoffs, which includes the Super Bowl, are more lucrative.

The Price of Advertising

Among the major televised sporting championships, only the Super Bowl commanded a higher average advertising rate ($2.385MM) in 2007 than the NCAA Men’s Basketball championship game ($1.256MM) - view ad rates.

College hoops has higher ad pricing than the major college football bowl games, the NBA championship, and the MLB World Series.

Top Advertisers

March Madness has a core group of TV sponsors that invest heavily in the broadcasts year after year. On average, 81 percent of the tournament’s network TV ad revenue has comes from returning advertisers, an above-average retention rate versus other top sporting events.

General Motors has consistently been the top TV advertiser in the tournament, spending an average of $70 million annually during the past five years and accounting for 15 percent of total ad spend in the CBS telecasts.

GM’s outlays from 2003 to 2007 were nearly as much as the next four largest advertisers combined: see Top 5 TV Advertisers.

The three leading TV advertisers - General Motors, Coca-Cola and AT&T - pay additional fees into the NCAA’s “Corporate Champions” program, the organization’s top sponsorship level, giving them additional opportunities to build marketing programs around March Madness and other NCAA sports.

Audience Ratings

TV ratings to last year’s tournament were on par with the averages over the past 5 years. The championship game was seen in whole or in part by 40.3 million viewers. More than 130 million people tuned in at some point during the tournament.

Over the past several years, audience ratings to the opening weekend (Rounds 1 & 2) have been consistent. As the tournament progresses to its third and final weekend, viewing naturally increases, as seen in this graph.

But the gain fluctuates from year-to-year, depending on fan interest in the specific teams and matchups.

Online Streaming

In 2008, CBSSports.com will again stream live tournament games over the internet, making them available on demand and free of charge to PC users with a broadband connection.

The ad-supported webcasts offer presenting sponsors another way to get their commercial messages in front of viewers. Ad units include billboards around the perimeter of the viewing window and video ads integrated into the streams.

Though growing rapidly, the online video audience is still dwarfed by the traditional TV broadcast audience, accounting for less than 1 percent of the combined total viewing.