Sports Ad Sales Continue to Increase

FB-ATL-Matt-Ryan-insideMany have been proclaiming that the days of television will soon come to an end. They harp on this notion that live sports are the only thing allowing broadcast television to remain on air. While this is far from being true, new data does, in fact, suggest that sports are accounting for an increasing percentage of the industry’s sales.

Kantar media recently released a report that shows thats sports oriented programming generated upwards of $8 billion across NBC, Fox, ABC, and CBS from 2014 to 2015. This number accounts for more than a third, (37%), of these networks’ total revenue over those years. This $8.47 billion is a marked increase from 2010 when live sports generated less than $6.5 billion for the big four networks.

According to the report, CBS accounted for nearly $3 billion of this, an eleven percent increase from their number last year. Fox and NBC finished second and third, respectively. ABC, which is the only network amongst these four that doesn’t broadcast NFL games, raked in about $1 billion. However, it should be noted that the Walt Disney Company owns both ABC and ESPN. Last year, ESPN sold more than $2.4 billion in ads.

The largest spenders for sports broadcasts include companies in the Auto, Telecom, and Beer industries. Chevrolet, Budweiser, Verizon and Geico were the four largest spenders last year, each shelling out upwards of $250 million according to the report.

Of the fifty most watched broadcasts of the last year, forty-five of these were NFL matches, twenty-four of which did not even take place during primetime. That stat alone demonstrates the NFL’s dominant position amongst US sports.

These numbers really shouldn’t come as a surprise to anyone who keeps up with the industry. Beyond that of a few award shows and highly successful dramas, sports programming is the only segment that almost always attracts a huge live-audience.

Pandora to Alter Ad Strategy

Many thousands of viewers enjoy the music selection Pandora has to offer. With randomly assembled playlists and a limitless supply of artists and tracks, the service draws thousands upon thousands of users every day. With that level of exposure, Pandora is one of the premier players in the music streaming industry. Debuting their latest program to bring in additional revenue through ad campaigns, Pandora is looking to tune up their business.

Pandora CEO, Brian McAndrews

Pandora CEO, Brian McAndrews

Using their newly created ad exchange, Pandora is privately auctioning off ad space to companies they have a history of working with. Using a system of over 350 customized targeting matrices, Pandora is able to match a specific ad to the listener most likely to benefit. By doing this, Pandora hopes to eliminate unnecessary ads cluttering the user’s experience, and increase positive response to their clientele’s campaigns.

Choosing only to work with established businesses who’ve worked with them in the past, Pandora hopes to build a more reputable advertising base without allowing third-party programs to muddy the waters. “In order to be able to transact with transparency as well as target first-party data, you have to have a direct relationship with Pandora to buy into the marketplace,” said Jack Krawczyk, VP Product manager at Pandora. By flooding their popular program with unnecessary advertisements, Pandora would not only turn away listeners, but damage a brand that’s been building for the past decade.

Prior to the inclusion of Pandora’s ad exchange program, companies primarily used banner ads to attract attention back to their sites. While this did work in some respect, the numbers were small, and most ads went unnoticed by the majority of mobile users. Pandora believes that this change in direction will increase the level of in-app purchases performed by mobile Pandora users. With a rate of $34.92 in revenue per 1000 mobile listeners to the $58.04 of PC users, Pandora hopes the new approach will help increase the functionality of their mobile advertisements.

Though interruptions are rarely welcome while listening to music, Pandora is doing its best to avoid increasing what few ads are present. Instead, by focusing on more user specific, analytically driven ad placement, Pandora hopes to improve the listening experience for everyone involved.

Digital Ad Revenue Soaring

According to Laurie Sullivan from MediaPost.com, the Internet Advertising Revenue or IAB recently released a report showing that the American digital advertising revenue increased by more than fifteen percent in 2014. Last year, total revenue in this space was just below the $50 billion mark. $14.2 billion of this came in Q4 of 2014, which was a 17% increase from the previous quarter.

increasesalesIf you take a closer look at this data, you will see that ads in social media rose an incredible fifty-seven percent to over $7 billion in 2014. The growth of this number over the course of the year is even more impressive. Of this $7 billion, $4.1 billion came in the final six months of 2014. Over the last three years, the compounded annual growth rate sits at a remarkable fifty-five percent.

David Silverman for PWC notes how brands have finally determined how to make money from the investments they have made in social media over the last few years. The market for this platform has really matured.

Sullivan reports that the cost per click for advertisements that appear on social media sites such as Twitter, Facebook, etc. have increased in recent years. Sullivan also points out that these higher prices could influence how brands allocate their money in the future.

Brian Wieser, an analyst form Pivotal Research Group, believes that the numbers, if you dive into the data, indicate something else. The lion’s share of the growth can actually be attributed to that of Google and Facebook. If you remove these two tech giants from the data, digital advertising revenue only experienced a marginal increase.

In this article, Sullivan also reports that investments in the mobile space increased twenty-five percent last year, and now sit higher than $12 billion. Search remains the leader in advertisement revenue with it accounting for nearly $20 billion in 2014.