This year’s Super Bowl broke records both within audience levels and ad pricing. On average 111 million viewers watched the 2011 Super Bowl, besting the previous year’s then record audience of 106.5 million. This year’s audience growth of 4.2% is above the average 2.8% growth that event has seen since 1968 but is lower than the price increases on advertising.

For this year’s Super Bowl Fox sold 30-second spots at estimated prices between $2.8 million and $3 million, around 7% more than what CBS charged last year. Given the average reach of 111 million viewers or 53 thousand households, the effective CPM (eCPM) of the broadcast was round around $27 for viewers and $54 for households. This is actually close to the levels seen in 2001 but over double what they were in 1991.

The eCPM growth is even more noticeable when compared to the average paid for broadcast network primetime. Basically the difference between the two can be considered to be a premium paid for spot placements within Super Bowl. Just as one thousand impressions are worth (or priced) more on The New York Times rather than a lesser paper, the opportunity to air a spot on the Super Bowl has a unique value and an extra cost.

Besides simple brand status the essential reason for this “Super Premium” is that television viewing, while increasing overall during the last 20 years, has greatly fragmented so now there is less supply, and inherently greater demand, for any event that can consistently reach a large portion of the marketplace. No other singular live broadcast has the same draw as the Super Bowl. Besides status and reach, a third factor is engagements- the audience during the Super Bowl pays rapt attention during commercials breaks, further increasing the potential value of these message slots. Given these reasons it is easy to understand why the eCPM of the Super Bowl is double the average for broadcast primetime.

Of course it would only make sense to buy one of these placements if you’re certain about the message you’ll be sending, which opens up another debate about the “best” Super Bowl commercials. Ad Age has two interesting top 10 lists for the spots that were enjoyed or recalled the most. It is interesting to note that the three spots with the highest likeability (VW Darth Vader Passat, Bridgestone  Beaver, E-Trade Baby Sneezing Cat) are not on the list for best recall.

Is it more important to be liked rather than remembered? Most sensible marketers would probably prefer the latter, but a likability, or an emotional connection, can be a strong force for larger ticket items or premium brands. I also think that the VW Darth Vader spot received a lot of attention post the Super Bowl, and it has been shared and viewed online a lot more since then so perhaps its recall levels and brand reinforcement to VW are now higher. Another perspective is that the top recalled spots (Doritos Pug, Budweiser Cowboy, Doritos Office Licking) have been criticized for using cheap puns which don’t build lasting connections with audiences, but perhaps this is what you need when you’re selling low-priced items like chips and beer to less mature customers. I think there is a reason that Budweiser has bought the first commercial spot placement in the Super Bowl for years, and repeated a very similar messaging style. Both the Budweiser and VW messaging style have their place, and should simply be subjectively applied depending on the marketing strategy.

Sometimes the big just keep getting bigger. This has traditionally been the case with Univision and their latest online moves are pretty big. The company already ranks as the top U.S. Hispanic property, almost double the users of the closest competitor.

Granted, Univision’s audience was slightly inflated during the month these figures were measured since their site began streaming World Cup videos on June 11. Therefore their current traffic might be closer to 2.5 million, a figure I’ve seen in some industry presentations. Regardless Univision is clearly in the lead and it will likely extend this position given a number of recent announcements:

• September 20: Univision launched 72 new local and mobile sites in top 20 Hispanic markets. Including this one for its owned and operated Miami station.
• September 23: Univision and the NFL announced the launch of a worldwide site (www.NFL.com/espanol) for Hispanic and Mexican NFL fans.
• October 7: Univision launched a new music site, Musica.Unvision.com.
• October 12: Univision and NBA announce a partnership for a new co-branded site with league content on Univision Interactive Media’s online platform.
• October 18: Univision anounces that VEVO’s music video catalog will be added to Musica.Unvision.com.

Most importantly, and probably instrumental in closing these parnterships, a significant deal between Univision and Televisa was realized whereby online content rights from the latter will finally extend to the former. As I explored in early 2009, Univision’s lack of these rights resulted in a large amount of pirated Televisa material on YouTube, something that was eventually policed during the ensuing year, probably as a prelude to this deal.

With the addition of NFL, NBA, Televisa and new music content, it will be interesting to see how much Univision’s traffic grows. Since Univision already reaches over 75% of the online Hispanic audience the effect might be greater in terms of engagement rather than unique users; popular long-form telenovela videos should considerably raise the time on site for their users. Video traffic also sell at higher CPMs and has strong growth potential- online video advertising grew over 31% during the first half of 2010 as compared to 2009.

At the 2009 Horowitz Media Conference a speaker declared that Hispanic online video was a wide open opportunity. It seems to me that with Univision’s announcements this sector will be catching on fire during the next year, and will likely attract a lot of attention and further investment, both in the form of advertising and new ventures, something that should be beneficial not just to Univision but to all participants in the online Hispanic market.

Summer recently ended and with it finished the biggest season for the U.S. Box Office. This time period is generally considered to run between the first weekend of May and the end of Labor Day weekend. While this spans only a third of the year this summer season contributes close to half of the total annual U.S. box office. Unfortunately the amount of tickets sold this summer was the least since 1997. Based on total gross revenues however, this summer was above 2009 by a scant 0.2%. Comparing the entire year of 2010 so far to 2009 (up through the end of week 36) revenues are up a more decent 4%. The better cumulative performance is thanks mostly to Avatar, Alice in Wonderland and other movies that drew strong crowds during the first 17 weeks of the year.

The fact is that the time between January and May hold the greatest potential for growth given its lower historical performance. Double-digit year-over-year growth occured during the first 9 weeks of 2009 and again during the adjoining 7 week “Spring” period of 2010. Hollywood has been slowly and steadily releasing more bigger budget titles during this period, and over the next five years there may be a smaller difference between the business generated here and during the summer season.

Still, the summer is where the action is and this summer also had some high expectations to live up. Just two years ago The Dark Knight was released (see the large spike during week 29 of 2008) and made the biggest opening weekend of all time. There were also strong titles during the summer 2009 like of X-Men Origins: Wolverine and Star Trek which provided a strong start to the season (note the large spikes around $200 million between weeks 18 and 21 of 2009). In comparison the 2010 summer had a very poor start, puncuated by the worst Memorial Day weekend in 15 years (note week 23 of 2010 on the graph for the complete aftermath of that debacle).

I believe that this pitiful performance over was due to the low-quality of films released that weekend: Sex and the City 2 and Prince of Persia: The Sands of Time have already faded from memory if not from their studios’ balance sheets. I still think that if Fox missed a big opportunity by not releasing The A-Team, a underrated action movie with a recognized brand on Memorial Day weekend- “four soldiers of fortune” is about as appropriate as it gets. I guess research indicated that B.A. Barracus wouldn’t stand up to Carry’s fanclub and videogamers. The real challenge for the studios is to drive a low-quality movie in front of bad reviews which are gaining more steam every day from internet chatter (site reviews, Facebook comments, bad Tweets, etc.). It’s so easy to get word-of-mouth circulating these days that I wonder how a studio can market against it.

For now the safer bet may be just to push releases towards the outer edges of summer and harboring only the strongest titles during Memorial Day and Labor Day weekends. The tougher solution would be to fixing bad titles during production instead of during marketing.

Last week Steve Jobs presented a new version of the Apple TV device and announced that it would stream only rented content and that TV episodes would be available at a lower price point of $0.99. With these changes Apple addressed weak points in its video strategy, which had caused lackluster sales. However, while consumers may be pleased it seems that the lower price ponit is a point of contention with the television networks. So far only ABC and FOX have signed on to Apple TV, and many speculate that ABC did so since since Steve Jobs is on the board of directors for Disney while in FOX got the OK since Rupert Murdoch is interested in working with Apple on iPad projects that support Newscorp’s publishing business.

Ignoring political alliances, I wondered just what the floor price should be for an Apple TV rental. The blog TVByTheNumbers had a provocative post, hyposthesizing that on average broadcast networks make $0.80 in advertising per viewer during a one-hour broadcast show.

CPM of $25 = $0.03 per view x 32 spots = $0.80 per viewer per episode

I considered this $0.80 should be the benchmark by which a substitution view should be judged. I then set out to estimate the revnues other platforms created on a per viewer basis and compare. The revenue models accounted for the following factors:

• Revenue stream (advertising or user payment)
• Advertisements per episode stream (applicable only to Broadcast TV, Hulu and Hulus Plus)
• Viewers per episode stream (dependent upon the delivery screen)
• Viewings (greater than 1 if the episode has been purchased)

I decided to ignore advertising commissions and distribution fees, which could be a major factor for networks to estimate the benefit, or lack thereof, in distributing their shows via iTunes and Apple TV. At the end of this post are all the calculations for each of the platforms. The following graph summarizes the results:

Even with the higher CPM prices (cited in the Appendix) it seems that Hulu offers the lowest revenue per user. However, Hulu Plus’ dual revenue stream (similar to cable TV), which accounts for a $9.99 monthly fee as well as advertising, jumps the gap and manages to post the highest revenue per user, clearly the winning model. The per-episode purchase models of Amazon and iTunes also pose a decent revenue of $0.66 per viewer while Apple TV’s rental model comes in at a lower $0.50 per customer, which might be too low for certain networks.

As I mentioned before this price doesn’t reflect any distribution fees that Apple might take so the comparison for iTunes and Apple TV might not be accurate. I might also be ignoring other factors. For example, episode purchases through Amazon might have more viewers per episode than Apple iTunes since the Amazon service has more streaming options to televisions.

Another thing to consider is that although broadcast television may take in around an average of $0.80 per viewer during every hour of primetime, these viewers are also likely to continue watching the same channel, contributing to further revenue on the channel during the next show. They are also going to be exposed to TV spots promoting the network’s other content. These are benefits that would might be incurred towards a limited extent with Hulu (which does promote a network and its other content), but would be completely absent with Amazon and Apple. Therefore, there is a much larger set of intangible benefits to a viewer watching a show on a network, that can’t be simply accounted for in the subscriber, rental or advertising revenue of alternate platforms.

I want to also highlight that DVDs are sold after a television show ends, so this aggregate revenue stream doesn’t directly compete with a broadcast audience like Hulu, Amazon or Apple’s services, so it has a different set objectives of to fulfill; not so much to compensate for an audience which is not watching the show on television as helping pay for the production costs- typically a broadcast production only covers 50% to 75% of its costs through broadcast distribution; the rest has to be recouped through syndication and other sources like DVD sales.

Even though I do think these models are inherently limited in their ability to compare the platforms, I still believe the comparison illustrates well some of the factors that are involved in the pricing and negotiation of these deals, and indicate why the new Apple TV rental model is not currently accepted by CBS, NBC and other networks.

Appendix

For Hulu, I calculated the advertising based on a CPM of $63 since according to Wired their rates run about two to three times that of broadcast television. This sounds a bit high to me but it’s possible since the Hulu has better targeting, higher valued demos, and lower commercial skipping/avoidance than broadcast TV.

Hulu: CPM of $63 x 6 spots = $0.38 per viewer per episode

In the case of Hulu Plus I added the $9.99 monthly fee, divided by 18.8 episodes per month (this was estimated by taking the average monthly minutes per Hulu viewer by 47, 44 minutes of content plus six 15-second spots).

Hulu Plus: $9.99 monthly fee / 18.8 episodes = $0.53 in fees per episode + $0.38 in ad revenues = $0.91 per viewer per episode

Since Amazon, iTunes and Apple TV are strictly purchased or rented models, advertising was not part of equation. For Apple TV I assumed that an average of two viewers would watch each rented episode since it streamed to a television. In the case of Amazon and iTunes I assumed an average of only 1.5 viewers since their models could stream to computers that inhibited group viewing. I also assumed that content purchased via Amazon and iTuens would be viewed more than once.

Amazon: $1.99 purchase fee / 1.5 viewers / 2 viewings = $0.66 per viewer per episode
iTunes: $1.99 purchase fee / 1.5 viewers / 2 viewings = $0.66 per viewer per episode
Apple TV: $1.99 purchase fee / 2 viewers / 1 viewing = $0.50 per viewer per episode

The model for DVDs was similar to iTunes and Amazon, only substituting a $2.50 price per episode based on the retail price of $60 for a DVD set with 24 episodes.

DVD: $2.50 purchase fee / 2.0 viewers / 2 viewings = $0.63 per viewer per episode

The Emmys broadcast last Sunday on NBC attracted 13.5 million viewers, making it the largest non-sports audience so far in 2010, at least since the airing of FOX’s American Idol finale on May 26. This is also the largest audience the Emmys has had in four years but it’s still over a quarter less than what the awards attracted 10 years ago.

The Oscars also had a similar ratings rebound this year, garnering the highest ratings since 2005. The Oscars are also off their ratings highs of 50+ million viewers (achieved in 1983 and 1998), but althought they’re down the Oscars haven’t lost as much audience percentagewise as the Emmys.

In any case as far as viewership these television events pale in comparison to major sporting events. This year the Superbowl attracted a record audience of 106.5 million, well over double the audience of the Oscars and close to ten times that of the Emmys. Incidentally the World Cup Final had only 24.3 million viewers, which places it in third place behind the Oscars.

Two telenovelas have made waves recently in the U.S., for each of the major Hispanic broadcasters. ¿Dónde está Elisa?, based on a Chilean soap of the same name, aired on Telemundo at 10 p.m. between March and August and improved the ratings for the time period 30% over the previous telenovela, Los Victorinos. Elisa even managed to tie or beat Univision programming during two evenings during its run, a pretty fair feat in primetime for Telemundo.

At 10 p.m. Univision presents a variety of programming, mainly talk shows and series. In Hispanic proramming it is inherently risky to step away from telenovela genre, which Univision presents during the first part of its primetime, but it is also necessary in order to present a varied menu to an audience. Telemundo actually has an inverse strategy, programming a game show at 7 p.m. and then shifting into novelas for the remainder of primetime. However, Telemundo strips at 7 while Univision varies at 10, leading to a volatile ratings performance illustrated by sharp peaks and valleys in the graph above. Moreover, most of the high ratings were created by special programming. On average the regular shows at 10 p.m. only averaged a 1.47 household rating.

Still, the average rating for Univision at 10 p.m. began to rise after June, once the hot new telenovela Soy Tu Dueña aired at 9 p.m., creating a much stronger lead-in for the 10 p.m. time slot. Dueña has gone on to dominate the 9 p.m. slot and is currently averaging above a 2.5 household rating. It looks like Dueña is going to be the telenovela of 2010, just as Mañana es para Siempre was the big hit for Univision in 2009.

Unfortunately for Telemundo at 9 p.m., the recently premiered El Fantasma de Elena has been slightly underperforming, as compared to its predecessor Perro Amor. However Telemundo has recently announced a couple of new telenovela productions including Alguien Te Mira starring Danna Garcia and Christian Meier, which is likely to be a hit considering the track record of both actors.

Last week the fourth season of Mad Men premiered and while the episode was entertaining as always (I am a fan) the ratings were a mere 5% above last season’s premiere. This growth was also significantly lower than previous season premieres: 167% from Season 1 to 2, and 44% from Season 2 to 3. Also of concern is that the 18-49 demo rating remained flat at 0.9 ratings points or approximately 1.2 million viewers.

A great article posted yesterday in AdAge highlights while Mad Men has a relatively small audience, which has equally translated into not so many advertising dollars, it has still been a success since its premium status allows AMC to command higher carriage fees. According to SNL Kagan these are up on average up from 21 cents per subscriber in 2001 to 24  cents today. Similarly, Mad Men’s presence on AMC was obviously an important factor for the recent carriage dispute between AT&T U-Verse and Rainbow Media (subsidiary of Cablevision and owner of AMC); uncoicidentally a settlement was reached less than 10 days before the premiere of Mad Men season 4.

Still, if Mad Men’s ratings have apexed, as the recent premiere indicated, it is critical that AMC look towards other series to sustain the channel’s position in the long run. Breaking Bad, last year’s mini-series The Prisoner and the new series Rubicon, are all indications that AMC is doing precisely that. Rubicon’s premiere last night was actually the strongest ever for an AMC original production so perhaps they’ve finally found a show worthy of filling Mad Men’s shoes, whenever it’s gone. In the meantime I’ll just enjoy the episodes.

Facebook has been in the news a lot lately, sometimes making good headlines, other times bad, and still other times it’s gotten ugly. The good news was actually great- Facebook announced that it had reached 500 million registered users. This is especially impressive since two years ago they had only 100 million users. The 300% growth has mostly resulted from expansion into older demos and within foreign markets. At the same time MySpace has actually been losing users.

Although Facebook membership has grown as a whole, the bad news is that certain key segments are shrinking. Inside Facebook reported a decline for active 18- to 44-year-old U.S. users for the month of June. This could be a sign of “Facebook fatigue” by early adopters that have outgrown the site. Perhaps un-coincidentally, the American Customer Satisfaction Index also reported that Facebook is perceived to to offer poor service due to issues related with privacy, spam and functionality.

Another bit of bad news hit Facebook when a businessman said that he had an old contract signed by Mark Zuckerberg granting him a majority stake in the company. While one Facebook lawyer said that they were “unsure” if a contract had been signed, Zuckerberg later clarified in an ABC interview that “…we are quite sure that we did not sign a contract that says that they have any right or ownership over Facebook.”

All of these news stories coincided with the release of a new trailer for “The Social Network,” an “unauthorized” movie about Facebook that comes out in October. The movie is directed by David Fincher whose previous work (Seven, The Game, Fight Club, etc.) is dark and largely of society. Unsurprisingly the trailer paints an ugly portrait, not just of Zuckerberg but also of social networks.

I also recently heard a journalist’s take on Facebook. David Kirpatrick, author of  ”The Facebook Effect: The Inside Story of the Company That Is Connecting the World” came to speak at Books & Books about his new book. He has an overall positive opinion of Facebook and attributes the site’s success to three factors:

1. “Real” Identity: Unlike other social networks like MySpace Facebook requires all users to base their profiles on their individual real-life identities and use real names. This validates user profiles, provides a greater sense of security and leads to more valuable communication between network members.
2. Viral Nature: Ideas and relationships grow in a viral manner within Facebook, strengthening the site as a communication channel.
3. Communication: Facebook began as a basic platform but with its current features and its large user base it now provides users with the infrastructure to communicate on a level comparable with mass media. According to Mr. Kirkpatrick, Facebook empowers any of its users to become “Walter Kronkite.”

David Kirkpatrick giving his talk at Books & Books for "The Facebook Effect."

Mr. Kirkpatrick also said that Mark Zuckerberg was “an amazing visionary” and a “combination of Lenin and Kerouac.” He also didn’t agree with new Facebook movie which seems to paint Mr. Zuckerberg as “evil.”

Mr. Kirkpatrick did admit that Facebook needs to improve how it handles privacy issues. He read an excerpt from the book, which mentions how Mark Zuckerberg espouses openness, saying that “dual identities are impossible” in today’s society where transparency is the norm. This is where Facebook has gotten it wrong in the past. If Facebook doesn’t address these issues with greater clarity and transparency, “The Social Network” might actually galvanize a great deal of negative sentiment against the site, leading into a larger exodus of users from Facebook, perhaps to Diaspora, an open-source alternative, or “Google Me,” a social network that Google is rumored to be working on. While it’s not likely that sufficient users would leave to dent Facebook’s overall user numbers, an exodus by young and tech-savy users would be a very ugly headline for Facebook, denting the service’s image and impeding its value offering to advertisers. Of course Facebook is aware of this threat and of the need to adjust itself. As Zuckerberg said in his ABC interview, “I think what people really want is control. And building tools to make it so that people have the control that they want, that’s our job, right. We work really hard to make it is as simple as possible.” It will be interesting to see how Facebook evolves during the next six months to address these issues.

The World Cup is almost into the second round but the real competition might be taking place behind the cameras, between the broadcasters. In the U.S., two companies have television broadcast rights: Disney (ABC and ESPN) has the English-language rights and Univision (Univision, Telefutura and Galavision) has the Spanish-language rights.

It was expected that Unvision would do well in the ratings since their Latino audience is generally regarded as being more fanatical about soccer than the “gringo” viewers of ABC or even ESPN audience. This proved to be the case during the inaugural match when Univision drew 5.6 million viewers, almost double the audience of ESPN. However, Univision did not beat ESPN during any of the following seven matches, and got especially trounced during the England versus USA match which was attracted 10.8 million viewers on ABC; the largest audience for any U.S. World Cup match since 1994 .

The strong ratings for Univision and ESPN demonstrate both the strength of Univision (to compete effectively in sports against ESPN) and the growing attraction for soccer in the U.S. (since the ABC ratings have surprised most media pundits). It’s been difficult to get information for later telecasts but Univision did issue a press release for the Mexico versus France match noting that their audience of 5.8 million was double ESPN2′s and the most watched game to date for Univision during the 2010 World Cup. Odds are strong that this record will be broken by this Sunday when Argentina plays Mexico in a second-round match at 2:30 p.m. This is also likely to be another “victoria” for Univision against ESPN.

Two weeks ago ABC broadcast the final episode of Lost, a popular show that whose ratings I’ve been posting about every now and then. The last episode tallied 13.5 million viewers, which was more viewers than the season’s premiere (something that hasn’t happened since the first season) and the most viewers for any episode within two years.

As I’ve noted before, Lost consolidated a strong fan base during the first season, which led to a strong second season premiere. Over the course of that and later seasons however, the show steadily “lost” ratings. This could be attributed to a number of factors including its convoluted plot line, the 12 week hiatus the show took in the middle of the third season, the writers’ strike in 2007 which led to short fourth season, etc.

The show hit a ratings bottom in the twelth episode of the fifth season which had only 8.29 million viewers. The final sixth season saw a significant ratings bounce back, probably since a lot of viewers were interested in how the series was going to conclude.

Another factor that may have affected Lost’s downward ratings was overall viewership at ABC. The network was strong during the 2004-2005 season when Lost, Desperate Housewives and Grey’s Anatomy all premiered. Since then the network has had a few more hits, notably Dancing with the Stars, but has yet to produce another critically acclaimed drama. This season ABC did break out Modern Family this season, which I believe will run at least three seasons, but the “alphabet network” also lost the most viewers, both in general and in key advertising demos. It seems critical that ABC find some new strong shows during the 2010-2011 season.