Why Oscar night
is so hot with advertisers
Though ratings are down, spots for Sunday's show are sold out
By Diego Vasquez
Feb 22, 2012
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| 'The Artist': Even with ratings down the Academy Awards remains the top non-sports draw on TV |
Viewership for the Oscars has been sliding for years, and last year's ceremony was down nearly 4 million from the previous year. But ad pricing for the ceremony has been on the rise. This year's show, which airs this coming Sunday on ABC at 8 p.m., drew a record $1.7 million per 30-second ad, according to Kantar Media, up from $1.55 million last year. Ads also sold out early, with two returning sponsors, J.C. Penney and Hyundai, expected to spend the most. And while viewership for the show has declined, it's still usually the No. 1 non-sports telecast of the year. Last year's program averaged 37.9 million total viewers, and the show reaches a large number of upscale women, which makes it a popular buy among advertisers. Jon Swallen, senior vice president of research at Kantar Media, talks to Media Life about why Oscar ad prices have risen, what it says about the economy, and why the audience is so desirable.
Why did Oscars pricing see a dip during the previous few years?
Part of it was the recession, everybody was spending less money and paying lower prices. The recovery for the Oscars has been a little bit slower, it's a big-ticket purchase. It's about the second most-expensive inventory on TV after the Super Bowl. And the ratings are much harder to forecast, they bounce around a lot more.
Also, a lot of the ad sales for the Oscars take place before the list of nominees is known. It's generally accepted that the list of nominees will have an influence on ratings.
If there are a lot of commercially popular films nominated, you may get some extra audience. But for advertisers you've got to put your money down before that. So I think that has also made the bounce-back in pricing prod a little more slowly.
Why is it up this year, despite the fact that viewership for last year's show was down?
There is an embedded base of advertisers in the Oscars, such as Hyundai, J.C. Penney and Coca-Cola, so the network always has a committed based. Pricing is going to be determined by what the demand is for the remaining inventory.
While ratings have eroded, it's still one of the-top rated programs on TV, especially if you take out all the sports stuff. And against women it's near the top of the pack. Large audiences are scarce and becoming scarcer.
What sort of advertisers (upscale, certain ad categories, etc.) flock to the Oscars and why?
Because of the smaller amount inventory, eight to 10 minutes per hour, you don’t get as much diversity.
You've got a couple of key sponsors that purchase multiple units in the show, which further reduces the potential for diversity. You’ve got a heavy female skew and an affluent skew, so it appeals to brands that want to reach affluent middle-age or older-age women.
If you look at the cars Hyundai sells, they have price points from about $15,000 to $50,000, and I'm pretty sure they're going to be advertising their $30,000 or $40,000 cars, not the $15,000 models.
Outside of the three perennial sponsors, what else pops up most frequently is financial services, such as American Express and MasterCard.
Why have we seen more first-time advertisers in the Academy Awards in recent years? Will that continue this year?
I don't know how many first-timers are going to be in there this year.
But the ad recession in the 2008-2009 period, the Oscars were very susceptible to it. So a couple of perennial sponsors dropped out, GM and L'Oreal, both of which had multi-minute buys in the program.
Hyundai takes over the auto sponsorship, but the other ad time that was given up has been recycled over the years. The ad recession freed up inventory, and that's continuing to cycle through and turn over. Because we're only talking eight to 10 minutes an hour, for a new advertiser to come in, and old one has to drop out. And the recession accomplished that.
What sort of correlation do Oscar ad rates and demand have to the overall health of the economy?
Ad pricing is certainly sensitive to the advertising economy because it has such a high price tag.
But I think because it is such a high price tag and carries relatively more risk on a dollar for dollar basis, that's what makes it a difficult decision for advertisers. So the fluctuations in pricing partly reflect those variables, and those are independents of the ad economy. The ad economy reflects overall supply and demand, but there's more that goes into the decision to buy or pass on the Oscars.
Why is the Academy so adamant about avoiding clutter? Surely it could make more money by selling more spots.
I've always thought they're leaving money on the table.
I don’t know how much they're getting in rights fees from ABC, or what the revenue sharing arrangement might be, if there is one. But clearly the rights contract is limiting the amount of commercial time. Where's the Academy getting the money from, the license fee or the ad revenue? I don't know the answer to that.
So, if I asked why the Academy insists on a low commercial load, as the arm of the film industry it clearly reflects their perception that they are about art and not about commerce.
How much do online ads generate for the Oscars compared to offline?
This is still heavily a TV screen event. In the past couple years the second and third screens have evolved, but they're still a very small portion of total revenue. And the web site or online experience is largely being packaged in and sold to advertisers in the TV broadcast.
So I think if you went to Oscars.com you're going to see Hyundai as dominating the advertising. Well, they're also a dominating sponsor of the TV broadcast. So it's clear there's some packaging going on.
We already saw NBC air the Super Bowl online for the first time earlier this month. What is the promise of digital advertising over the next few years for such events? Will it ever become a major contributor?
Awards shows have been following a similar path in recent years in terms of migrating content during the broadcast to the web and mobile devices to give people another way of accessing or engaging them with the show.
The paradox for the Oscars is, for those second- and third-screen applications, such as apps that support social media discussion, those tend to appeal to younger viewers, but the natural audience for the Oscars is older. And it's kind of a paradox because the audience that watches the Oscars isn’t the audience that buys tickets at the movie theater.
The audience that buys tickets at the movie theater would presumably be most inclined to participate via a second or third screen. But on the other hand, it's all about who's going to win the award.
What's the biggest misconception about Oscar advertising and why?
I don’t know if there is one. The show is a well-known franchise. Although it's a difficult decision for advertisers, they know what the pros and cons are. It is a calculated risk.
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