For much of the past decade, the NFL TV ad market was a bit like the housing bubble of the aughts. Each year, those companies with football rights could count on hefty double-digit increases in returns each year, while using the NFL’s robust ratings increases each year to leverage their network’s weaker-performing sports at the time, like baseball. “While your subconscious will tell you this can’t last forever, many of those who enjoyed the benefits of that housing craze and were flipping homes and taking profits never thought the party was going to end,” says Mark Evans, svp of advertising sales for Fox Sports. “So when the ratings did plateau and then decline somewhat over the last year and a half, everybody in town was like, wait a minute, this isn’t supposed to happen!”
While NFL TV advertising has never cratered like the real estate market did, it was hit with plenty of upheaval last season. The second straight year of ratings declines (regular season NFL games averaged 14.9 million viewers, according to Nielsen’s live-plus-same-day ratings, a 10 percent drop from 2016’s 16.5 million audience) came hand in hand with the growing controversy over player protests during the national anthem, stoked by President Trump himself. Midseason, some anxious advertisers even threatened to pull their NFL ads if in-game protest coverage continued—though none actually followed through. The ratings drops resulted in a higher number of makegoods, which ate into inventory and led to the unthinkable: a year-over-year decline in TV NFL ad revenue for NBC, CBS, Fox and ESPN, from $2.45 billion during the 2016-17 regular season to $2.42 billion last year, according to Standard Media Index. Including the playoffs and Super Bowl, ad revenue fell 3.9 percent year over year, dropping from $3.56 billion to $3.42 billion.
But as a new NFL season gets underway, a surprising thing has happened during this year’s upfront and scatter markets. Despite last year’s controversy and uncertainty, advertising demand for NFL games is as strong as ever. For NBC’s Sunday Night Football, “we booked more than we planned, and at a higher rate of change than we planned, says Dan Lovinger, evp of advertising sales, NBC Sports. “There were no negative impacts as far as we could tell.” CBS is also “in really good shape” and doing “slightly better” than last year with its Sunday afternoon package, says Jo Ann Ross, president and chief advertising revenue officer, CBS Corp. (Sales for the Super Bowl, which CBS will air in February, are also on par with the last time the network broadcast the game three seasons ago.) With similar reports from the other networks, look for the average 30-second spot during regular season games—which was $505,000 in 2017, according to Standard Media Index—to go even higher this year.
This comes even as the national anthem/protest controversy lingers this season. Case in point: Nike’s two-minute “Crazy Dream” spot—which aired during the season’s kickoff game last Thursday—featuring former NFL quarterback Colin Kaepernick, who sparked controversy by sitting, then kneeling during the national anthem to protest racism and police brutality. (Kaepernick is now suing the league, accusing the NFL of colluding to keep him off the field.) NFL owners temporarily instituted a new policy in May, which is now being reviewed and possibly reworked, that would fine protesting players, and Trump continues to revisit the hot-button issue (“As far as the NFL is concerned, I just find it hard to watch, and always will, until they stand for the FLAG!!” he tweeted last Wednesday).
However, TV ad sales execs and buyers alike say that the controversy doesn’t seem to be an ongoing concern during negotiations, aside from some clients keeping their distance from inventory early in the first quarter, and no advertisers have pulled out of football as a result of that. On the contrary, more brands are gravitating toward the NFL, which still boasts some of TV’s largest audiences as ratings fall across all of linear television. Sunday Night Football remained the No. 1 broadcast prime-time program last season among adults 18-49, with a 6.2 rating in the demo, while Fox’s Sunday afternoon America’s Game of the Week package was again the most-watched show last season, averaging 22.7 million viewers.
“Demand for our clients is actually up, and the NFL has become more enticing. I’ve had clients asking more about shifting some prime into sports than in previous years,” says Carrie Drinkwater, executive director, integrated investments, MullenLowe’s Mediahub. “It remains one of the great venues for national TV. Even with the ratings down, you’re still getting millions of viewers each week to tune in, and you still have the passion there.”
Adds David Campanelli, co-chief investment officer, Horizon Media: “Ratings trends are a concern, but relative to the rest of TV, the declines are par for the course, and the average ratings are still very high. So we have seen a consistent interest in the NFL.”
That approach explains why TV ad sales teams did not get overly concerned as NFL ratings fell during the past two years. “It never dawned on us that this was some sort of catastrophic problem. It was something we just had to figure out and deal with, and we have,” says Lovinger.
The networks and buyers say the ratings drops were caused by several factors, including the wider availability of football in additional windows, such as the higher-profile Thursday Night Football package, which has gone to Fox for the next five years (see sidebar) and the occasional Sunday morning games in London. They also cite the unusually large number of injuries last year to several of the league’s top players—“having half the quarterbacks in the league hurt didn’t help,” says Tony Taranto, svp of NFL sales for CBS—the struggles of high-rated teams like the New York Giants and Dallas Cowboys, as well as the effect of Hurricane Harvey, which dented viewership in the start of the season as affected families in Texas and Louisiana dug out. Protest-related fallout, in contrast, had “a minimal impact” on the numbers compared to those other factors, says Drinkwater. Given everything that occurred in the NFL last year, “I’m surprised it wasn’t deeper year over year,” admits one exec of the ratings declines.
Not surprisingly, several networks are holding out hope that ratings will rise, or at least stabilize, this year. “I believe if the games are well-played, it’s possible to see the ratings rebound,” says Lovinger.
All of the networks secured CPM hikes for their NFL games this season, though some—including CBS and Fox’s Thursday Night Football package—adjusted ratings guarantees down to be more in line with recent ratings and reduce the likelihood of makegoods eating into their ad revenue later in the season.
The NFL ad sales teams also have a new ad revenue source to count in this year: For the first time, the networks also have mobile streaming rights to the games in their respective packages, which had previously been exclusive to Verizon Wireless. “So now we have additional audiences accessing Monday Night Football to deliver to our clients,” says Wendell Scott, svp, sales and marketing, ESPN.
And next year could be even more lucrative: As more states legalize sports gambling, most execs expect to see a surge of national advertising from sports gambling brands by next season. “You’re going to see a much more measured rollout as opposed to the wild West that daily fantasy was” when DraftKings and FanDuel were briefly ubiquitous during NFL games before several states sued those brands over the legality of daily sports gambling, says Evans. “We do feel that gold rush is coming, and you’re going to see significant advertising growth.”
Fox’s big Thursday Night Football play
For the past three years, NBC and CBS had split the Thursday Night Football rights via an uneasy arrangement in which they competed against each other for the same ad budgets on the same program. “It makes it hard to set the terms you want to set on your own. You always have to think about what the other guys are doing,” says NBC Sports’ Lovinger, while John Bogusz, evp, sports sales and marketing for CBS, notes, “It’s great having the game on Thursday night, but the economics of it just did not work.”
But it’s a whole new game now, as Fox Sports outbid NBC and CBS to land Thursday Night Football rights for the next five years (11 games will air on Fox; the rest of that package is broadcast on the NFL Network). The company has replicated the approach to its Sunday afternoon NFL package, where its marquee sponsors—including Ford (pregame show), Visa (halftime show) and Lowe’s (The OT)—have been entrenched for more than a decade. It worked with brands to establish long-term footprints in the prime NFL Thursday Night Football real estate, striking deals with Verizon (pregame show), Toyota (halftime show) and Buffalo Wild Wings (postgame show), as well as presenting sponsor Bud Light.
Buyers are optimistic about Thursday Night Football, given what appears to be the strongest Thursday schedule ever and a consistent, long-term home in Fox. “All those incumbent advertisers that held those pregame and postgame positions forever, it’s nice to have the ability to step in and create something for different advertisers in the space,” says buyer Drinkwater, who notes Fox is also “trying something new” with unique commercial lengths and other innovations that her clients are taking advantage of. Explains Fox Sports’ Evans: “We want these new broadcast partners not just to be happy week one and year one, but to hopefully be there for as long of a ride as our guys on Sunday are.”