Why Football Still Owns Television and How Shoulder Content Is Shifting CPMs | Ross Benes, Senior Analyst at EMARKETER

Football Still Owns TV

Tim Rowe, State of Streaming 0:45

Did you know that 92 of the top 100 most watched television events last year were football games? With the NFL and college football dominating the ratings, why are connected TV ad prices for live American football actually dropping? Today I'm joined by Ross Benes from eMarketer to discuss his latest report on US football advertising. We break down why five linear companies still control 88% of all ad revenue and we talk about the two streaming pure play companies that have the other 12%. We talk about how the explosion of shoulder content is actually lowering live football CTV CPMs and why Disney is asking for a record $10 million for a Super Bowl spot and how they sold it out before August. Be sure to subscribe to the podcast for more weekly insights just like this. Now let's get into the conversation.

Why Linear Networks Still Dominate

Tim Rowe, State of Streaming 1:43

Ross Benes, welcome back to the State of Streaming podcast.

Ross Benes 1:47

Hey, thanks for having me on here, Tim.

Tim Rowe, State of Streaming 1:48

You've got a new report out, U.S. football advertising. We are in peak football season. What did you set to uncover through this report?

Ross Benes 1:58

You know, I was just trying to get a sense of how advertising in football games is changing as more of it becomes streaming, and if those old ways of buying are still really intact. And one of the things that was surprising to me was just how much revenue still goes to those main linear broadcast networks. They are still the lion's share, and I think they're gonna be for a while.

Tim Rowe, State of Streaming 2:19

Yeah, that stood out to me. Five companies accounting for 88% of all NFL ad revenue. Fox comes in with 30%, Paramount, I guess now Skydance uh 23%, Comcast 21%, Disney 12%, and NFL network owned by ESPN, and I guess that's there for Disney at 2%. Did that surprise you?

Ross Benes 2:43

Well, a little bit because you hear about all the digital options that are coming and how like you know you don't want to get behind on streaming if you are a sports league. But the rights are, especially in the NFL, the rights are very much held by those linear networks. And I think a big reason why is there's very little local broadcasting. You have some regional, but you know, there there isn't a lot of flexibility in the NFL like there is with the NBA and MLB, where you can have a whole assortment of different people broadcasting one team's games. You're a little more restricted in the NFL just due to the number of games.

Tim Rowe, State of Streaming 3:18

Interesting. And if we look back at last year, 96 of the top 100 most watched television events were sports. The four that weren't were the Macy's Thanksgiving Day Parade, the Oscars, Presidential Inauguration, and the State of the Union. 92 of the top 100 most watched television events were football, 84 were the NFL, and eight were college football playoffs. So college football certainly has uh has some skin in the game, and you're wearing a Nebraska shirt there. What's the story about college football in this bigger NFL or bigger football advertising picture?

College Football Becomes A Mini NFL

Ross Benes 3:56

Well, the leagues themselves are becoming much more active on securing giant media rights deals, and that's led to all this conference realignment where you got like Rutgers and UCLA in the same conference, or Cal and Miami in the same conference. You just saw this unfold again in the last few weeks where ESPN just paid another huge bonanza to expand the college football playoff. So that there's a huge demand for more college football games, especially at a top level. And now that they're paying players and the playoff has expanded, the uniqueness and some of the regionality that made college football charming and you know really much its own thing is going away a little bit. It's it's a mini NFL with the younger players at this point.

Tim Rowe, State of Streaming 4:38

Yeah, that's interesting. We see all the money coming into college sports is definitely changing the landscape of the game, but advertisers are hungry for live sports. So yeah, people are still watching.

Ross Benes 4:48

They're not they're not tuning out, even though that's all turning it off. No, not I probably the opposite is happening. I think, especially during the playoffs, you know, they're really, really glued in. I think ESPN actually probably got a good deal on that playoff expansion for a few hundred million dollars. They expanded it all the way to 24 teams, just given how much rights have increased. I think if we look back in five years, we're gonna say that was actually fairly cheap inventory to secure.

Amazon And Netflix Take The Rest

Tim Rowe, State of Streaming 5:12

Yeah, that's interesting. On the streaming side, Amazon obviously accounts for the lion's share, that 12 remaining percent. So five companies accounting for 88% of the NFL ad revenue, the other 12% going to Amazon with Thursday Night Football and Netflix with kind of their curated menu of games. Anything stand out to you there?

Ross Benes 5:34

Just that Amazon's been the most proactive with NFL, and I would say with NBA, you know, with with the season launching now, they have the consistency that a lot of streaming services lack to turn Thursday night football into a stronger brand than it was before and just own that. It's it's a little different than when you know YouTube gets like a game here, not counting Sunday ticket, like they get like the international game, you know, Netflix will get like the Christmas games or whatever, but it's very one-off. You know, Amazon's strategy, both NBA and NFL, and in various other sports they have is to like consistently appear at least once a week. And I think that helps uh viewers get accustomed.

The Real Cost Of NFL Rights

Tim Rowe, State of Streaming 6:12

I want to bring uh a recent analysis up here from one of our syndicated contributors, Michael Beach. He writes a column called The State of the Screens. He's got some great data here about the cost per unique viewer per game, and he's got a breakdown here that shows you what it's actually costing the networks to put eyeballs on a game. We've got CBS leading the pack here, so Paramount $2.91, Netflix at $3.10, Fox $3.20, Amazon $3.89, NBC $3.91, the average $4.12, ESPN and ABC overpaying a little bit there to put uh to put eyeballs on an NFL game. Is there a breaking point to this? It feels like you know the NFL rights are are potentially up for renegotiation next year or in the next two years, rather. Is is there a point in diminishing returns? Can the market just continue to take increases?

Ross Benes 7:07

I think it can take a little bit of increases for now. Maybe not the monumental they're seeking. You know, I I know the league would like to double its fees. Maybe that's a little aggressive, but they're definitely going to rise faster than inflation. It's one of the few places where you can get that, you know, really tuned-in, reliable audience and and build your network around it. ESPN overpaying, I think they're they're fine doing that. That that goes back to their Monday night football deal several years ago. Now they're in cahoots with the league. You know, they have the NFL network. Like doing that allowed them to form that partnership that I think is beneficial for all the shoulder content ESPN produces, all the access they get to players and teams. So I think there's indirect benefits for getting that package that go beyond just like I got this number of games for this price.

Shoulder Content Pushes CPMs Down

Tim Rowe, State of Streaming 7:58

And that shoulder content, there was a trend that stood out to me, especially for this audience. Connected TV e CPMs fell 13% against live football. Why was that?

Ross Benes 8:11

Well, CPMs and and streaming in general have been flat to declining, whether you're talking about like sports or or non-sports, just like a general trend. But I I I think there's just a big uptick in the amount of shoulder content, especially on streaming services. There are so many like little docuseries or almost like reality TV, you know, spin-offs that come out of the league that are tangentially related. And you didn't have as much of that before. So, you know, if you were gonna compare like 10 years ago, you had hard knocks and not much else. And now most of the networks who have a deal with the NFL produce some sort of show about the league that isn't live games, and I think there's just a a little bit of a you know, in the increased ad supply just drives down the prices a little bit.

Tim Rowe, State of Streaming 9:01

We caught up with Shawne Merriman, three-time NFL All Pro and founder of Lights Out Sports TV. He was just launching some specific NFL shoulder content that was focused on the fan and tailgating, and and we'll catch up with him on how that's going. But it is interesting to see how streaming has has unlocked kind of this long tail of shoulder content, which now allows you as an advertiser to reach those audiences, perhaps at a discount, with with the same at least relative context to the big game itself.

Ross Benes 9:34

But on the I mean Peyton Manning has a whole company built around doing this.

Super Bowl Pricing Hits New Highs

Ross Benes 9:38

Tim Rowe, State of Streaming 9:38

That's a great point. The the on the other side of it, not CPM s falling, but this Super Bowl on pace to be the first billion dollar ad spend Super Bowl. Roku data, I think you had in there that playoff spots were going for between a million and a half and three million last year. The regular season was between 800k and a million. But Disney did something different this year. What did Disney do?

Ross Benes 10:04

Well, Variety reported that Disney sold out their inventory, you know, asking a high price, asking about $10 million per spot. They didn't always get that. But now that they're sold out, they're still going out to market asking for increases in case someone backs out. So they're already upselling on the event that there'd be a new advertiser to slot in. And that's a little bit unusual. I think it shows how confident they are. They keep adding those alt casts, they just added a Star Wars one. There's more ways to segment the Disney audience for this Super Bowl than there is for most Super Bowls, which tend to rely on one or maybe two feeds.

Tim Rowe, State of Streaming 10:41

It's really interesting. It's certainly a trend to watch.

Where To Get The Report

Tim Rowe, State of Streaming 10:44

Ross, if folks want to get the full report, where should they go?

Ross Benes 10:48

They can just go to eMarketer Pro and click on the sports section and they'll find it. Or we'll put a link on your website.

Tim Rowe, State of Streaming 10:55

We will make it easy to find. It'll be linked nearby. There's a lot in here. We talked about some of it today, But get the whole report, go deep on this. Ross, what are you working on next? What are you most excited about?

Ross Benes 11:07

Well, I got a lot of year-end trends reports to do. So when we get close to the new year, we got to figure out like what's the the next big thing and kind of be a futurist a little bit. And I don't have that entirely nailed down yet, but it is a thing I'm excited to work on.

Tim Rowe, State of Streaming 11:22

All right. We're excited to catch up with you about it. Ross Benes, thank you so much for joining the State of Streaming podcast.

Ross Benes 11:28

Hey, good to be here.

Tim Rowe, State of Streaming 11:29

Absolutely. And if you found this conversation to be helpful, please share it with a colleague or a client and start a conversation yourself today. We'll see y'all next time.