It’s no wonder that ABC was sweating until the writers’ strike ended last week, and with it any threat that Sunday’s Academy Awards ceremony would be canceled. Over the last 10 years, advertisers have spent more than $650 million to appear on the show, with the price of the average 30-second spot soaring 75 percent from $950,000 in 1998 to $1.67 million last year, according to a new report from TNS Media Intelligence. The majority of that money, more than 60 percent, was spent by eight blue-chip advertisers like General Motors, American Express and L’Oreal. In fact, the Oscars have an incredibly high retention rate of advertisers from the previous year, with 75 percent returning. That’s compared with 63 percent for the Super Bowl. Though ratings for the ceremony have declined over the past decade, it remains one of the year’s top-rated shows, and ad clutter is quite low, making it easier for an advertiser’s message to stick out. Last year’s Oscar broadcast averaged just 8 minutes and 5 seconds of commercial time per hour, the lowest level since 1999. Jon Swallen, senior vice president of research at TNS Media Intelligence, talks to Media Life about clutter, retention and why the writers’ strike may have no impact whatsoever on the awards show.

Why do the Oscars have such a high retention level of advertisers?
 
On average, over the past 10 years, 75 percent of the yearly ad spend in the Oscars telecast has come from advertisers who bought time the previous year.
 
The Oscars are a high-profile event with several attractive benefits for the sponsors. There’s the opportunity to build a visible and integrated cross-platform marketing effort anchored by the TV telecast and powered by its desirable audience ratings and demographics.

Viewer interest and engagement during the show is strong, another asset which marketers can leverage. Category exclusivity and an uncluttered commercial environment are further benefits.

And there’s also the fact that ABC, by virtue of its long-term licensing deal with the Academy, is in a position to sell multi-year sponsorship packages. Those are the main factors driving the high retention rate.
 

Is there anything else that comes close in terms of retention?
 
The Golden Globes is in the same neighborhood, averaging in the mid-70 percent range prior to this year. The Grammys have been around 70 percent. The top award shows each have higher advertiser retention rates than the top sporting events – the Super Bowl, World Series, or NCAA Men’s Basketball Tournament.
 

Why are the Academy Awards able to offer such an uncluttered ad environment? How important is that to advertisers?
 
In recent years, the telecast has been averaging 9-10 minutes of network advertising messages per hour. This includes both paid ads as well as promotional spots from ABC. By comparison, a typical hour of primetime network programming contains 14-15 minutes of ad time, with even higher levels on some select programs.
 
It’s understood that ABC’s contract with the Academy has stipulations regarding the amount of commercial time in the broadcast and this is what holds down the commercial interruptions.
 

Are more advertisers using the Oscars to unveil new creative and launch new campaigns than in past years?
 
The Oscars has not yet achieved the status of the Super Bowl as a showcase for the debut of new creative.

Last year, about one-half of the spots in the Oscars telecast featured completely new creative.

What has become more noticeable in the past several years is the use of Hollywood themes in the commercials. Last year, for example, ads from Apple iPhone, Diet Coke and JC Penney each had movie-related themes as the central creative element.
 

Do you think viewership for this year's Oscars will be appreciably up or down from last year? Will the writers' strike have anything to do with that?
 
The long-term ratings trend for the Oscars has been downward, as it has been for network TV in general. Last year’s show delivered a 23.0 rating in households and a 13.4 rating in adults 18-49. And while those levels are about 25 percent lower than a decade ago, it’s still one of the top-rated programs year in and year out.
 
I don’t think the writers’ strike will help or hurt the audience ratings for Sunday’s broadcast. The Academy Awards are bigger than that. But I wouldn’t be surprised to see the 2008 ratings slip by 2-3 percent from last year.
 

Besides the general trend toward declining ratings, what else influences viewership for the Oscars?
 
In any given year, the size of the viewing audience will rise or fall based on the popularity of the films, actors and actresses nominated for the major awards and the current buzz surrounding them. The celebrity hosting the show is also a contributing factor.

There’s a core group that will tune in no matter what – even if it’s just to see the designer dresses and jewelry on display. But the difference between “average” and “exceptional” ratings ties back to popular interest in the nominees and any buzz, whether positive or negative, surrounding them.
 

You find the price of a 30-second spot on the Oscars has increased 75 percent over the past 10 years. Is that simply normal inflation, or is there something else driving up cost so steeply?
 
I’d say a majority of the increase reflects normal price inflation.

But some of it is also attributable to supply and demand economics. There’s a limited amount of ad time in the program. It’s a once-a-year event. Ratings erosion elsewhere makes the available supply of Oscar ratings points even more valuable.

Those factors certainly help support higher unit prices and CPMs.
 

Have other events (March Madness, Super Bowl, etc.) seen similar increases?
 
Ad prices for the Super Bowl have been increasing at a pace similar to the Academy Awards. If you flip it around and look at it from the other direction, the cost of a 30-second unit in the Oscars has consistently been about 35 percent less than the Super Bowl.
 

General Motors has been by far the biggest advertiser in the Oscars the past 10 years. Why is this a good fit for their brand?
 
About half of GM’s historical spending has been for the Cadillac nameplate, with the rest divvied up among its other divisions. Cadillac advertising is targeted towards an urban, upscale demographic and the Academy Awards show traditionally delivers well against this group.