CBS Sacked by Weak Super Bowl Ad Market
NEW YORK (TheStreet) - This year's dream Super Bowl matchup masks a nightmarish advertising scenario for CBS (CBS) - Get Report, the network broadcasting Sunday's game.
Before the New Orleans Saints put their ravaged city's hopes on their shoulders and Indianapolis Colts quarterback Peyton Manning made his bid for a second title, CBS took the first big hits of
in Miami. Two of the top three Super Bowl advertisers of the last two decades --
PepsiCo
(PEP) - Get Report
(which spent $254.2 million from 1990 to 2009, according to
Kantar Media
) and
General Motors
($80.5 million) -- scaled back or pulled their ads. Then TNS Media Intelligence reported that CBS was selling ads for $2.5 million to $2.8 million, less than the $3 million NBC fetched last year.
Finally, the network found itself embroiled in a political debate after it approved an abortion-related ad from one of its newest advertisers, conservative group Focus on the Family. For years, networks had avoided airing advocacy ads during the
. Requests for comment to CBS weren't returned.
With more than half of the game's viewers tuning in just to see the commercials, according to
Nielsen
, CBS is getting sacked by a Super Bowl ad market that's usually a big score for the game's network host.
"To say that CBS is trying to charge less money than NBC did last year is not true," says Jon Swallen, head of research at Kantar Media, TNS's parent company. "They're trying to maximize revenue, but they're working within a larger advertising economy."
CBS's struggle isn't new. While the network has pulled in more viewers than its rivals in four of the past five years, it lost more than a million viewers during that time as other sources eroded the networks' power base, according to Nielsen.
Meanwhile, a 13% drop in ad sales from 2007 to 2008 pulled CBS's television revenue down 1% last year. Last quarter, CBS relied on increased licensing fees and affiliate revenue to offset a 7% drop in television advertising.
Recent Super Bowl history doesn't bode well for the network. The last time the event's ad prices fell -- from $2.5 million in 2006 to $2.4 million in 2007 - sales also declined from $162.5 million to $153.7 million. That year, the host network dedicated 9 minutes and 35 seconds, or 22% and $46.7 million of its ad time, to self-promotion, more than competing networks in 2006, 2008 and 2009.
In 2007, as now, the unlucky Super Bowl host was CBS. Though the 2007 Super Bowl brought in less revenue than a four-game World Series sweep and the NCAA Men's Basketball Final Four, it was still the year's biggest single-game revenue generator and was considered a highlight by CBS when ad revenue went south a year later.
"The Super Bowl remains the premier television advertising event," Swallen says. "For every sponsor who chooses to drop out, there's somebody waiting in the wings to take their place."
While
Anheuser-Busch Inbev
(BUD) - Get Report
-- which spent $311.8 million from 1990 to 2009 as the Super Bowl's biggest advertiser - will return this year with a game-leading five minutes of ads despite a 2% drop in sales, a band of replacements is filling in for the big boys. Audi, Chrysler,
Honda
(HMC) - Get Report
,
Hyundai
(HYUD)
, Kia and
Volkswagen
have bought in with hopes of keying into GM's old audience.
Dr. Pepper Snapple
(DPS)
, trying to siphon Pepsi customers, is using Gene Simmons from the rock band Kiss in its first-ever Super Bowl ad.
The face of those first-time advertisers is changing as quickly as Gene's makeup in the Miami heat. Though heavy hitters like
Intel
(INTC) - Get Report
and
Viacom's
(VIA) - Get Report
Paramount Pictures remain, the absence of former mainstays like
FedEx
(FDX) - Get Report
has opened the door for ads from vacation rental site HomeAway,
Madden
video game-maker
Electronic Arts
(ERTS)
and
Diamond Foods'
(DMND)
Pop Secret popcorn.
In a residual tactic from the dot-com boom, Swallen says small companies are increasingly using Super Bowl ads as meet-and-greets with the American public. While that's just lovely for the companies and viewers itching to see Chevy Chase and Beverly D'Angelo reprise their
National Lampoon's Vacation
roles in a HomeAway ad, it turns CBS' soft sell into a replacement decision as difficult as going for it on fourth and three within field goal range.
"It matters to the network, because that's money that needs to be replaced," Swallen says. "It's less important to the viewer which brands are in the game than what ads are in the game and if they are entertaining or funny."
-- Reported by Jason Notte in Boston.
Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, The Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.