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How CBS Sports Can Use March Madness Success to Grow Online

Broadcaster Owns One Month of Year, Looks to Spread Success Over a Year

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NEW YORK (AdAge.com) -- CBS's March Madness on Demand, which allows users to watch every game of the NCAA men's basketball tournament on their computers at cbssports.com, has become a huge hit in just six short years and added a digital layer to the cultural phenomenon known as March Madness.

CBS Sports increased distribution sites to 300 this year, including YouTube, Facebook, MySpace, ESPN and NCAA.
CBS Sports increased distribution sites to 300 this year, including YouTube, Facebook, MySpace, ESPN and NCAA.
Now the network has to figure out how to further leverage the success of what is arguably the biggest online sporting event around in order to make its web presence more formidable during the other 11 months of the year.

Increase in distribution
During last year's three-week NCAA tournament, 4.8 million unique viewers clicked on using the on-demand channel, a 164% growth from 2007. The site's senior VP-general manager, Jason Kint, expects that total to rise to 7.2 million when this year's tournament begins March 19, thanks in large part to an increase in distribution sites from 200 last year to 300 this year, including YouTube, Facebook, MySpace, ESPN and NCAA.

Still, CBS Sports -- while consistently ranking in the top five of the most-visited online sports sites -- has never really challenged ESPN or Yahoo Sports, which flip-flop as the Nos. 1 and 2 sports sites. Both draw more than 20 million unique visitors a month, according to Nielsen Media, while CBS Sports fights it out with Fox Sports for Nos. 3 and 4, each drawing about 13 million visitors. (According to the latest numbers from ComScore for February, CBS Sports was sixth among most-visited sports websites behind Yahoo, ESPN, AOL Sports, Fox Sports and NFL.com.)

"This is certainly an opportunity to talk to a lot of new users," Mr. Kint said of CBS Sports' March Madness on Demand. "We'll use the opportunity to innovate the site and remind them why they should be coming to CBS Sports."

That might be easier said than done.

Challenging the giants
"Online consumers are creatures of habit, and ESPN.com and Yahoo [Sports] benefit from being more interwoven into people's daily lives," said Michael Neuman, president of Amplify Sports & Entertainment, New York. "ESPN's integrated platform makes them the 800-pound gorilla, and Yahoo Sports benefits because consumers are addicted to their search engine and mail offerings. On a year-round basis, these brands are more relevant."

Mr. Neuman suggested targeted promotions to help drive incremental visitors, and CBS has done a solid job with social media. Last year, the ever-popular office bracket for the tournament was put on Facebook, where 3.8 million people played the online version of predicting each of the 64 games.

But while CBS Sports still has a long way to go to turn itself into a year-round web destination, it is adding value during the tournament to CBS's coffers.

Complementary services
Mr. Kint said the site, as well as the on-demand service, are complementary to the TV broadcasts of CBS's properties. "Online clearly is additive and not cannibalistic," he said. "Our big days are the network's small days, Thursday and Friday."

Indeed, viewership of March Madness on Demand on the web is bigger on the first two days of the tournament, the opening Thursday and Friday, when all 64 teams play (32 games, 16 each day) starting at noon and ending sometimes after midnight. As teams are eliminated from the one-loss-and-out tournament, and as start times are moved closer to prime time the following week, there's less of a need to watch online at work.

"We start out big and we get smaller," Mr. Kint said. "We're not cannibalizing eyeballs."

$30 million in ad revenue expected
Advertising revenue from NCAA March Madness on Demand also has surged, from $4 million in 2006 to $10 million in 2007 and $23 million in 2008 -- and it's expected to jump to nearly $30 million this year. That's partly due to a hike in online ad prices from last year, and the addition of Comcast as the first sponsor of the service's "Boss Button," a unique and popular application on the site that allows viewers to click a button that kills the sound and jumps to an onscreen Excel spreadsheet if a supervisor is nearby.

Overall, TNS Media Intelligence reports that CBS earned $643 million in ad revenue for the 2008 NCAA tournament, including pre-game, game and post-game. That's second only to the $748 million advertisers spent on the National Football League playoffs and Super Bowl in January and February last year, and not a bad return on the $545 million CBS pays as part of its 11-year, $6 billion deal with the NCAA to broadcast the tournament across all platforms.

Mr. Kint said CBS Sports online and the network have a symbiotic relationship when it comes to selling ads. CBS was able to keep General Motors -- which pulled its Super Bowl and Academy Awards advertising last month in the wake of its dismal earnings -- and even added Audi in the car category. Other key advertisers include AT&T and Coca-Cola -- which like GM are NCAA Corporate Champion partners -- as well as Lowe's, Charles Schwab, Hershey, State Farm Insurance, Starwood Hotels, MillerCoors and Anheuser-Busch.

Returning sponsors bring bucks
According to TNS, 80% of CBS's ad revenue for the NCAA tournament comes from returning sponsors, including GM, which spent a whopping $79 million around the tournament last year.

"I still don't see the online component as counterproductive," Mr. Neuman said. "Although MMOD will bring in an amount slightly more than 5% of the total TV ad revenue, I do see this as incremental and don't believe if the MMOD was not offered, that this revenue would be recaptured by selling additional commercial units. I do see these as complementary, and if an advertiser can effectively integrate across both platforms with a compelling message or call to action, I anticipate stronger results for them."

John Bogusz, CBS's exec VP-sports sales and marketing, said earlier this week only a "handful" of units are left for the two Final Four games April 4 and the national championship game April 6. Mr. Bogusz will likely couple those spots -- estimated at about $1.4 million for a 30-second spot for the title game and about $900,000 for a 30-second spot for the two Final Four semifinal games -- with the remaining scatter in the earlier rounds of the tournament. TNS noted that only the Super Bowl commands a higher rate for a 30-second spot among sports broadcasts.

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