A pro football game on a Wednesday afternoon is rare. Advertisers getting a pricing discount for NFL games is also usually unheard of.
But it’s happening.
TV networks are feeling the strains of disappointing NFL ratings, as they are forced to restructure deals with advertisers to make up for the smaller audience, and their opportunity to make money off remaining games during the lucrative holiday season narrows.
NBC made the unusual move of lowering the price it charged advertisers that already had committed to run in a Baltimore Ravens vs. Pittsburgh Steelers game planned for Thanksgiving night after a Covid-19 outbreak on the Ravens forced the game’s postponement to the following Wednesday.
Some networks also have considered letting advertisers pay less for commercials during NFL games and other programming than they originally pledged.
Meanwhile, a large amount of the remaining commercial time available in games is being given to marketers as compensation for the underperformance so far, leaving little ad time that can be sold in the final quarter of the season. Such so-called make-good commercials are given if a network underdelivers on the audience it promised an advertiser.
NFL games provide TV’s most in-demand and expensive ad inventory, because they regularly gather the largest live audiences at a time of increasing audience fragmentation.
But this year, NFL ratings have taken a hit as pandemic-related postponements have pushed some games to less desirable times and the coronavirus has sidelined some star players. Unexpected competition from other sports leagues whose seasons were delayed from earlier in the year also has taken a toll on ratings.
Last NFL season, not including the playoffs, networks that broadcast the games generated $3.6 billion in TV ad revenue, according to Kantar.
A Hard Thanksgiving
NBC was perhaps the hardest-hit this Thanksgiving, typically a big day for NFL viewership. The Ravens-Steelers game, which originally cost advertisers an average of $1 million for 30 seconds of commercial time, drew only 11 million viewers, almost a 50% decline from the audience for last year’s Thanksgiving game on NBC.
Some Thanksgiving advertisers that appeared in the NBC game on Wednesday didn’t pay at all, instead accepting the commercial time as a make-good for games earlier in the season that delivered disappointing ratings, according to people familiar with the matter.
“We’ve worked with every one of our partners individually to find what works best for them,” an NBC Sports spokesman said in an email. “We will have delivery solutions for all of our NFL advertisers this season.”
CBS said it isn’t adjusting ad pricing for its NFL broadcasts and continues to transact selectively in the scatter market.
“Even as surefire as the NFL has been—and the last couple years, NFL ratings stood up much better than network prime-time ratings—we are now in a situation where the NFL is declining.”
— Gibbs Hajun, investment lead at WPP ad-buying firm Mindshare
Networks tend to overpromise and underdeliver when they sell advertising, since they can usually easily make up for any ratings shortfalls with make-goods. Even with make-goods factored in, there typically is still plenty of valuable inventory available for last-minute buyers in what is known as the scatter market.
This year, that is harder to do with sports advertising because so many events and games have been canceled or postponed. The end result is that there isn’t enough commercial inventory to cover make-good requirements and avoid a pileup of IOUs, according to ad and media executives.
Adding to the challenge is that while sports ratings are down, entertainment programming is experiencing far greater declines, which means networks often can’t make up for the sports shortfalls by putting advertisers into their prime-time schedules.
Through the first 13 weeks of the season, TV and digital NFL ratings were down 7% across the broadcast and cable networks that carry games, according to Nielsen data. Viewership among men in the 18-49 and 25-54 age categories that advertisers target during games was more significantly affected.
While NFL ratings are down, the games are still attracting millions of viewers and providing a bright spot in an otherwise gloomy TV ad market.
And the demand is there from marketers. This year, since much of the remaining inventory is being used for make-goods, some brands vying for an available NFL commercial spot are being asked to pay premiums as much as 50% over what they would pay before the season, when they tend to get better rates, said one ad buyer. It is a significant increase over past years’ scatter-market premiums.
Much of the ratings drop is attributed to the 2020 presidential election coverage siphoning away viewers and the pandemic’s wreaking havoc on the league. Aside from reschedulings and some sidelined stars, the league has faced a backlash from some fans over its social justice efforts, including its embrace of Black Lives Matter. These factors are compounded by the secular decline of traditional TV viewing, where ratings have been eroded by the uptick in ad-free streaming services.
In one more wrinkle, the networks would have liked the option to use NFL inventory for make-goods after other sports’ own ratings struggles.
But NFL ratings would have had to be up 15% to make up for underdelivery in other sports, including baseball and college football, said
president of Dentsu’s media-buying group Amplifi.
Since that didn’t happen, networks have been more creative with make-goods, in some cases considering pricing adjustments often referred to as cash back, as well as digital inventory and sponsorship opportunities, he said.
“Even as surefire as the NFL has been—and the last couple years, NFL ratings stood up much better than network prime-time ratings—we are now in a situation where the NFL is declining,” said
investment lead at
PLC ad-buying firm Mindshare. And with ad-free streaming up, advertisers don’t expect ratings to make up for this season’s shortfalls anytime soon.
In some cases, that means cash back or a larger percentage of make-goods re-expressed into different opportunities such as sponsorships and social platforms, Mr. Hajun said. “Everything is on the table.”
Corrections & Amplifications
The Dec. 2 football game between the Baltimore Ravens and Pittsburgh Steelers averaged 21.1 million viewers. An earlier version of this article incorrectly implied the game averaged 33 million viewers. (Corrected on Dec. 12.)
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