Feature: Increasing advertising options online - August 2005  

The following article is an extract from the new SportBusiness Group report, Broadband: The Opportunities for Sport. The report analyses the market for broadband video rights and its impact on the existing rights market. Key sections include assessments of the role of archive material and video on demand, the potential for live broadcasts and the use of IP TV as a cost-effective channel for sports which fail to attract mainstream TV coverage. The report explores the experience of different models, including pay-per-view, subscription and advertising supported content. It also examines e-commerce in areas such as e-tailing and e-ticketing, and the prospects for sport in the fast growing sector of broadband gambling.

Broadband advertising

It is not just the quality of the editorial content that improves under broadband – the ads do as well. In an environment with enhanced editorial opportunities, more clients are exploring the use of video advertising – as opposed to basic 2D billboards. In the US, big-spending clients like Target, Procter & Gamble and Kraft have created campaigns aimed specifically at the broadband market. Interactive ad agencies like Avenue A/Razorfish are now consolidating their creative output to the point where they are fusing video from TV with interactive features native to the Web such as Flash animation and text.
One of the most exciting of all online developments is that agencies can also keep track of who views and interacts with ads – providing a level of accountability that allows online media to charge advertisers according to the success of their campaigns. Although this is already possible in the standard dial-up world by monitoring banner click through, broadband will, for the first time give clients the means to directly monitor interest in their video ads – a development that may feed back into TV creative decisions.
eMarketer’s analysis shows just how fast advertisers are jumping on board. In 2004, clients spent $121m on online video advertising. This year the figure is expected to reach $198m with eMarketer predicting that the sector will hit $282m by 2006 – a 133 percent growth in just two years.

Sport’s role in the broadband advertising environment

The headline figures demonstrate that there is a growing online advertising model but there is little evidence to date that sport-specific destinations are benefiting from this upsurge in investment.
While there are very few hard numbers available in the broadband sports sector, a useful indicator of the ad market’s current value is one of the US leading sports sites, CBS Sportsline.
Having started life as an independent destination, Sportsline is now wholly-owned by Viacom and part of the respected CBS Sports division. In addition to its own branded service, it publishes the official websites of the National Football League (NFL), PGA Tour and National Collegiate Athletic Association (NCAA).
In February 2005, CBS Sportsline attracted 1.65m unique users although the level of traffic at any given time varies according to which events are on.
“A Tuesday afternoon during the summer when the only pro sport going is MLB [Major League Baseball] will be quite different from the fall when NFL, college football, college basketball, NBA and post season MLB are all coming together,” explains CBS Sportsline spokesman Alex Riethmiller. “We registered 23m total visits for the first week of the 2005 NCAA Men’s Basketball Championship. Daily unique visitors for the first two days of the tournament, March 17-18, increased 23 percent and 24 percent versus 2004 figures, which establishes an all-time high for our coverage of the NCAA Men’s Basketball Championship.”
The main way that CBS Sportsline seeks to generate revenue from this userbase is advertising, says Riethmiller: “CBS SportsLine.com is and always has been a business based on advertising. Though the percentages can fluctuate a bit, it’s safe to say that roughly 70 percent of our revenue is from advertising.”

The figures uncovered

For the quarter ending September 30, 2004, SportsLine’s revenue grew to $14.8m (5 percent up on the same quarter of 2003). Despite the full weight of support from CBS, however, it still posted a loss of $8.3m.  Advertising accounted for $10.2m in the third quarter of 2004; the only other category was subscription and premium products revenue – which grew 14 percent year-on-year to $4.6m. According to the company this is mainly related to “fantasy sports products” – an area that grew rapidly in 2004.
These figures are the last Sportsline will publish as a stand-alone company and they provide a sense of perspective. During 3Q 2004 when CBS Sportsline generated $10.2m in ad revenue, the overall US online market was worth $2.3bn. For the full year, online ad spend was around $9.6bn – a 32 percent increase over 2003 ($7.3bn). Yet between Q3 2003 and Q3 2004, CBS Sportsline’s revenues only grew from $10m to $10.2m – a rise of 2 percent. This can be compared with Yahoo which made $2bn in advertising and marketing for the first three quarters of 2004, a 220 percent increase year on year.
The quality of CBS Sportline’s coverage is high but the resounding message from these figures is that US advertisers are yet to commit large sums of money to sports-specific destinations – prizing high audience traffic above other considerations.  A similar pattern can be seen in Germany where one of the leading sports online platforms, Sport1, reported sales of just ?8.9m for 2004 – despite traffic of 125.4m visits and more than 862m page impressions.

For a full, free, executive summary, please visit www.sportbusiness.com/reports/broad_rep_req.adp

SportBusiness Conference news

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Unlike the internet, mobile content has multiple proven revenue streams,
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For more information please visit www.sportbusiness.com/resources/broadband_seminar.pdf
 

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