Sports

Super Bowl ads could be a bargain if the NFL's Covid struggles continue

Share
Key Points
  • Advertisers are nervous about the Super Bowl happening on time after several games were postponed when players became sick with Covid-19.
  • In particular, the Ravens-Steelers game scheduled for Thanksgiving, but eventually postponed to the following Wednesday, saw much lower ratings than a typical Thanksgiving matchup.
  • CBS may be willing to cut deals, say several analysts.
The Kansas City Chiefs celebrate with the Vince Lombardi Trophy after defeating the San Francisco 49ers 31-20 in Super Bowl LIV at Hard Rock Stadium on February 02, 2020 in Miami, Florida.
Ronald Martinez | Getty Images

There's no better advertising spot on television than the National Football League's Super Bowl Sunday. Companies use the NFL's title game to launch new products, campaigns and build consumer awareness.

But with the pandemic impacting the NFL's scheduling, advertisers who are not yet committed could see last-minute discounts for Super Bowl slots.

Kevin Krim, the founder and CEO of advertising metrics data firm EDO, said advertisers have expressed concern over the NFL's postponements of some regular-season games as players came down with Covid-19. They want certainty around the Feb. 7 game.

"The marketers care a lot about predictability," said Krim in an interview with CNBC. "They don't want things to keep changing, and the NFL knows that. The playoffs are too valuable for this to get disrupted."

"Nothing would be more devastating than a postponement," added Dave Morgan of ad data analytics firm Simulmedia. The company uses its metrics to help advertisers measure the impact of national ad slots around network programming.

New York Giants wide receiver Sterling Shepard (87) catches a pass in front of Pittsburgh Steelers strong safety Terrell Edmunds (34) and linebacker Devin Bush (55) during the first half at MetLife Stadium.
Vincent Carchietta | USA TODAY Sports

NFL's nightmare

The NFL's most recent Covid-19 outbreak hit Baltimore Ravens, causing their Week 12 contest with the Pittsburgh Steelers postponement three times.

That hurt NBC. Advertises paid top dollar for the game, which was originally scheduled for Thanksgiving Day -- when everybody is home and eager to watch football -- but eventually got moved to the following Wednesday at 3:40 p.m. ET. Ravens star quarterback LaMar Jackson was out due to Covid-19, further blunting interest in the game.

Krim estimates advertisers lost value on the game. His firm estimated the NFL's 2019 Thanksgiving night game generated $62.8 million for the network, and Morgan added the 2020 contest would have been worth $70 million.

The Wednesday game drew 10.8 million viewers on NBC, compared to last year's regularly scheduled Thanksgiving Day game which drew roughly 21 million viewers. If companies don't get their negotiated viewership value for the ad spots, networks usually compensate with "make goods" – free ad spots elsewhere.

Longtime sports marketing executive Tony Ponturo said advertisers shouldn't settle for the free ad spots because "that's an easy way for the network to pay off – with more units," Ponturo said. "Yes, it's weight, but its not exactly the pressure when you wanted it."

Ponturo, the former vice-president of Anheuser-Busch global media sports and entertainment marketing, noted advertisers want assured dates for NFL games as they too have plans around promotions. Should NFL games continued to get postponed, it impacts their marketing.

"You've got to plan and you're putting pressure against weekly objectives," Ponturo said. "You can have sales promotions going on, you can have retail displays, you can have all sorts of things. And as games move, then its not what you bought."

"That's a huge issue," added Morgan. "Companies time automotive launches. They time pizza specials. You can't move that by a week. You have to have your thousands of franchises already with signage, the materials; they need to have trained teams, and they need to do that in advance."

To combat more postponements around its postseason, the NFL floated keeping teams at in-market hotels and considered a training camp model. But on Wednesday, league commissioner Roger Goodell said the idea has been nixed.

Instead, the NFL will attempt to combat further outbreaks by providing household members of players and team personnel Covid-19 testing leading up to the Super Bowl. Morgan said the training camp model could've calmed potential advertisers looking to strike deals with CBS before the Super Bowl.

"The NFL is going to have to make sure that they hit the date," Morgan said "I've got to believe that they are on top of this. They will control the environments for the players going into the Super Bowl."

CBS prepared to cut a deal?

On the broadcasting side, CBS may need to get creative with its remaining Super Bowl slots.

The ads are worth around $5 million to $6 million. According to Bloomberg, Fox pulled in more than $400 million last year, selling roughly 77 paid ads at approximately $5.6 million each. CBS is charging approximately $5.5 million for 2021 spots, according to sources familiar with the network's NFL pricing.

The network has sold almost 80% of its package, according to Sports Business Journal, and national companies like Toyota have already secured spots. But marketing experts estimated most of the sold slots were already built in deals from pre-negotiated packages.

In order to maintain the ad price for the remaining slots, the media pundits said CBS would likely package the Super Bowl with other NFL or sports programming packages to make it attractive for companies still on the fence.

Ponturo said the move protects CPM (cost per thousand impressions) and CBS gets to "maintain credibility over the Super Bowl price and they've [companies] been given other inventory in order to make the whole CPM work. No one knows what the secret sauce is in order to maintain that unit price but they are all packages to some degree."

But with Covid-19 intercepting portions of the NFL's schedule, Krim said he's not "surprised that CBS hasn't sold as much of the game as Fox or NBC has done in the past." He projected CBS could come in under $600 million in revenue for the game's ad spots, if uncertainty continues around the NFL.

"No one is going to try and close up that last 20% until you're certain," added Morgan.

Lamar Jackson of the Baltimore Ravens, left, stiff arms the Kansas City Chiefs' Juan Thornhill at Baltimore's M&T Bank Stadium on Sept. 28, 2020.
Todd Olszewski | Getty Images

Morgan expects ads to be sold out but it could take until the final days. He said the move could help CBS, too, as the network could save on packaging too much of its content to secure Super Bowl deals.

"They won't go to bargaining until the days before," Morgan said. "There is always money available with alterative pricing models – available the day before [the Super Bowl], literally."

Krim said the 2021 Super Bowl ads could also be impacted by movie studios withholding films. Studios are usually last-minute buyers, holding out until they know films are complete. But with theaters either closed or could be closing again due to the recent Covid-19 spike, that may impact buyers.

Krim said uncommitted companies should "stay close" as discounts could be available late.

"At the right price, particularly, if you can get a discount, then you're going to get great results from an NFL ad," Krim said. "The one thing you do know about the NFL, it is the most engaging thing on TV, followed by the NBA."