Advertising / Entertainment / marketing

NBA Expanding Further into Advertisements on Players’ Jerseys

Brooklyn Nets home and away jerseys with advertisements stitched on

On February 8, the Brooklyn Nets became the fourth NBA team to agree to display advertisements on their jerseys during games. Infor, the software company purchasing the advertisement, agreed to an $8 million dollar annual deal in exchange for a 2.5 inch by 2.5 inch Infor patch to be displayed on the left shoulder of jerseys. The deal is the fourth to be completed with the Celtics, 76ers, and Kings all preceding this offer. The NBA became the first major US sports league to allow advertisements in April of 2016 when the Board of Governors approved the rule change. Commissioner Adam Silver stated that the advertisements were expected to bring in $100 million dollars, with half going to the owners and half going to the league’s revenue sharing pool. Although fans may be hesitant to see these sponsorships on their team’s jerseys, owners still have the option to include the patches on replica jerseys; other outlets are not authorized to include the advertisements.

Despite this, companies that choose to advertise with NBA teams should enjoy ample opportunity for their expense to pay off. Millions would see these advertisements while watching the game live, at home, in magazines and newspapers, or even from highlights days after. The potential audience could be enormous. TNT held the largest average views per broadcasted game in 2015 with just about 1.9 million viewers per game. In 2011, TNT had an average cost of $16,474 per 30 seconds of airtime; it may be a more economical decision to advertise on jerseys due to this cost. For example, the $8 million dollars spent by Infor for a jersey sponsorship would be able to purchase just about 485 half minute long commercials, a total of just over 4 hours of airtime. These $8 million dollars would buy even fewer commercials on an ESPN broadcast that prices 30 second ads at $31,551, which would grant just over 2 hours of ad time. Although the average NBA game during the past season lasted 2 hours and 15 minutes, the average time spent watching the players and not the commercials is about 1 hour and 30 minutes. Infor would receive about 123 hours of air time a season from games alone, a large step above the 2-4 a firm could purchase in 30 second ads from TNT or ESPN. Consider pictures, videos, and other forms of media and this small advertising patch has the potential to be seen by an extremely large audience. With the chance that a sponsored team could make the NBA Finals, where advertising costs can average around $500,000 for a 30 second ad and viewership is increased greatly, firms may see huge returns on its investments.

Despite the sheer amount of people that may be able to see an advertisement on a jersey, it is still unknown whether this will produce increased revenue for a firm. Although its name will be seen by tens of millions, a name does not always help to bring in customers. 30 second advertisements allow a firm to present their product or service and explain why a consumer should purchase it; however, a name on a jersey does not get this information across. Advertising on jerseys may be more beneficial for companies that have strong brand recognition. For example, a fan watching a game that sees a Pepsi patch on a player’s jersey may be more inclined to purchase the beverage. Firms in the food and beverage industries could see sales increases due to jersey advertisements. Companies also could benefit from allowing fans to purchase their products at the game. Seeing a patch for Wendy’s on a jersey may cause numerous fans to crave the fast food chain, and having an operating restaurant in the arena could lead to a boost in sales. A similar strategy was utilized by the Nets in their deal with Infor; the team agreed to use the software provided by the company in its daily business. This may become the norm for teams in choosing which firm they should grant the advertisement rights. Companies will have to decide which medium to use for their advertisements depending on what they want to convey to their audience.

Although NBA teams may want to look at which partner could benefit them the most, firms should also be considerate of which team to advertise with. Teams that play poorly usually don’t receive national attention from broadcasting companies and therefore are limited in the audience that the game will reach. For this reason, teams in smaller markets might also receive less money for the space on their jerseys. As for NBA powerhouses like the Cavaliers and the Warriors, expect advertisements to cost over $10 million a year due to their high viewership and national media exposure, a result of their success in recent years. Although advertisements on jerseys are currently only occurring in the NBA, it would not be surprising to see this trend spread to other sports. NFL teams would benefit the most; the cost for a 30 second ad during Sunday Night Football on NBC in 2016 ran for $700,000 dollars while Super Bowl ads peaked at roughly $4.5 million dollars. Advertisements on jerseys may seem to only be a rumor of the future, but they might be coming faster than you think.

Sources:

http://www.cbssports.com/nba/news/look-brooklyn-nets-unveil-clashing-jersey-ad-for-softwre-company/

http://www.nba.com/2016/news/04/15/nba-board-of-governors-approves-jersey-ads-for-2017-18-season/

https://www.bloomberg.com/news/articles/2017-02-08/nets-sell-jersey-sponsorship-to-koch-backed-company-infor

http://money.cnn.com/2016/04/15/news/nba-jerseys-corporate-sponsors/?iid=EL

http://www.inpredictable.com/2016/02/nba-games-are-not-getting-slower.html

http://www.therichest.com/sports/the-most-expensive-tv-advertising-for-sporting-events/ http://www.brooklynse.com/news/brooklyn-sports-entertainment-and-brooklyn-nets-form-wide-ranging-partnership-with-global-software-leader-infor/

http://www.businessinsider.com/nfl-regular-season-ad-cost-2016-9

http://www.si.com/nfl/2017/01/26/super-bowl-commercial-cost-2017

http://sports.yahoo.com/news/the-nets-will-wear-big-red-ad-boxes-on-their-jerseys-next-year-210543458.html

http://yourbusiness.azcentral.com/average-cost-national-advertising-campaigns-26091.html

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