—Canadian TV advertising fell 45% in Q2, but the restart of NHL, MLB and NBA will a mean much better Q3, says SMI’s James Fennessy—
After more than four months, live sports have returned, much to the delight of not only fans, but also publishers and advertisers. After a dismal second quarter caused by the lack of sports, this could not happen fast enough for the advertising marketplace.
To fully understand the impact sports programming had on the market, we leveraged our detailed ad intelligence data—sourced from actual invoices from Canada’s top media agencies. The data shows that from April through June, the television advertising market declined by an astonishing 45%.
To put this in perspective, this decline was greater than during the financial meltdown that triggered the 2008-09 recession. The loss can be attributed largely to the absence of live sporting events, which accounted for nearly one-third of the quarter’s decline in TV ad spend.
The remainder came from entertainment and news programming.
The second quarter has historically been one of the most popular times for sports fans, with both the Stanley Cup playoffs and NBA postseason occurring simultaneously and the Major League Baseball season in full swing.
The Canadian ad market had been strong prior to the second quarter, with ad spend in first quarter down by only 3% despite the pandemic shutting down sports during the quarter’s final weeks.
In the second quarter of 2019, live sports accounted for 17% of all TV ad spend in Canada; most of that revenue was lost in the second quarter of this year because of the pandemic. The good news for broadcasters is that the leagues are all scheduled to play into October.
As a result, the TV ad spend that was lost in second quarter 2020 can now be re-allocated during the August-October period. October will be especially beneficial for publishers, advertisers and viewers, with three leagues playing playoff games simultaneously. We are forecasting a strong three-month period in ad spend, amplified by the postseason.
The NBA and NHL postseason running into October will lead to a shortened offseason, with the 2020-21 NBA season now scheduled to start on Dec. 1. The start of the 2020-21 NHL season could also be delayed until early December.
Prior to the pandemic, both the NHL and NBA had reported strong ad revenue figures for 2019. The NHL had year-over-year revenue growth of 6.3%. The NBA, aided by the Toronto Raptors’ first-ever championship, recorded a significant 33% year-over-year increase in ad revenue.
Despite the Raptors championship run, however, ad revenue for NHL games was four times greater than NBA games. The Stanley Cup playoffs consistently outperform the NBA playoffs, even though the last Canadian NHL team to win a championship was the Montreal Canadiens in 1993.
Our data shows that the average cost for a :30 ad on major networks for NHL games in 2019 was nearly $7,000 for an in-game broadcast, compared to just over $2,500 for an in-game NBA ad.
The market will gain a better understanding of how the cost of ad placements has been impacted based on COVID-19 in coming months. When looking at ad revenue for sports broadcasters in 2019-20, CBC and Rogers held the majority, accounting for 83% of all ad revenue for NHL games (with all revenue going to Rogers, who bought the media rights to the NHL in November 2013), with Bell Media garnering 10% and Quebecor Media the remaining 7%. NBA advertising is more evenly distributed between Bell Media (51%) and Rogers.
Sports programming continues to be a major driver of brand ad spend and subsequently broadcast revenue. We will continue to watch how both brands and publishers respond, as the leagues navigate this unique 2019-20 season.
James Fennessy is the global CEO of Standard Media Index.