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.

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.

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.

Although I really love my new job in online advertising sales, as I previously worked for 12 years in TV, I am still irked when I hear media pundits declare the inevitability of television’s demise. It was thus with some sense of reassurance and satisfaction that I recently read the positive report by The Economist of the TV industry “Changing The Channel,” but perhaps it would be more aptly titled “TV Ain’t Dead Yet.” Among the report’s key points:

• Increased and better programming options: Clearly television is no longer the domain of the “big three” networks. A myriad of networks now proliferate resulting in greater programming options which satisfies more diverse interests, but also creates increased competition which improves overall quality.
• Increased viewing options: Besides having more things to watch consumers now have more options on how or when to view it. First of all there are more sets now in households. Secondly there are other platforms for viewing (iPods, Hulu, etc.). And finally there are also adjunct devices which allow consumers to record programming or view it on demand.
• Increased consumption: Programming and viewing improvemetns have yielded greater total consumption. On average a U.S. viewer watches over five hours of television per day, about a third more than what a person normally estimates.

The report also busts five myths surrounding the television industry:

• Myth #1, Death by DVR: Although DVRs have penetrated 34% of the market, time-shifted viewing is not threatening television’s advertising business model. Viewers will almost always watch live programming before considering recorded programs. This is backed up in a recent study by Duke University’s Fuqua School of Business which finds that 95% of people watch television live.
• Myth #2, Commercial Aversion: Even without DVRs it is believed that people ignore or evade commercial breaks, but a recent study by the Council on Research Excellence indicates that “TV advertising and programming promotions reach 85% of adults daily.”
• Myth #3, Online Viewing Cannibalization: It is also believed that online viewing is hurting television ratings but the average YouTube viewer watches only 15 minutes of video per day on the site, compared with five hours in front of an actual television set. Online video certainly is an interesting, high-growth market, but it’s not substituting television.
• Myth #4, Shift to Mobile TV: A great deal of hype has also been given to to mobile TV, although it has yet to take hold in any country other than Japan or South Korea. And even in those markets it has yet to find a viable business model since mobile TV is free and advertising CPMs run only 10% of the TV market rate.

As much as I enjoyed the report I was disappointed that it barely touched on the potential of targeted television advertising, perhaps since it’s a technology which has taken so long to be applied in the industry. Combing the mass audience of television with the audience targeting capabilities of the internet would immortalize television, not that it’s going away anytime soon.

I wanted to follow my last post on U.S. Spanish language TV ratings by focusing just on telenovelas, and how their similar storylines draw similar audience flows.

This analysis is based on the same data as the previous post, a consolidation of household (HH) ratings data from archived newsletters, dating back to April 3, 2009. Ratings were not available for certain dates when the newsletter was on hiatus, most importantly between December 18th and the 28th.

The following graph charts the ratings from beginning to end for various 8 p.m and 9 p.m. telenovelas on Univision. Initial episode ratings for certain titles are not shown since they began before April. The biggest performer within this group is Mañana Es Para Siempre, who began to rise in viewership during its last 46 episodes.  Similar audience increases are also seen for Sortilegio and slightly for En Nombre del Amor. These rises demonstrate how viewers tune in more often once a telenovela becomes “caliente,” once the viewers have become engaged with its characters and the plotline begins to reach climactic points before reaching a big finish. It’s the natural cycle of telenovelas. Not all titles follow this rule however, as in the case of this group’s underperfomer, Ciudado con el Angel. This title market the lowest rating (1.5 on April 10) and also experienced a gradual ratings decline during its final episodes, an unusual reversal of the norm.

For Telemundo I also got together various titles, albeit from a broader time periods since Telemundo programs telenovelas during their entire primetime at 8, 9 and 10 p.m. The highest overall performer seems to have been Mas Sabe el Diablo, but it might be usurped by the recently started ¿Dónde ésta Elisa? which opened up at 10 p.m with a respectable audience of 826,000 viewers and a 0.7 HH rating.

¿Dónde ésta Elisa? has maintained or increased its HH rating since then, which is quite extraordinary, as audience normally decreases for a a telenovela after the premiere episode before bouncing back. This enduring viewership could be due to the title’s mystery plot, which focuses on a young girl who is kidnapped in the first episode. This effective plotline will likely be replicated in future telenovelas.

I love reading about television ratings but not much coverage is given to Hispanic channels, an unusual discrepancy considering that 16% of the U.S. population and 11% of TV households are Hispanic. The lack of coverage may be due to the fact that Hispanic programming is so diferente. During weekday primetime Univision and Telemundo program mostly telenovelas, which run around 120 episodes or five months long. This stripped programming results in a more stable audience flow, which occasionally changes in the event of substituted programming or as a telenovela becomes frio or caliente.

Utilizin email newsletters archives between April 2009 and February 2010 I compiled the weekday ratings for these Univision and Telemundo during the 8 p.m. and 9 p.m. time periods. Certain dates were not available but I believe that an overall performance picture emerged. The numbered points in the graph indicate notable highs and lows.

Highs and Lows for Univision at 8 PM

1) April 10, 2009 (Good Friday): 1.5 rating for Cuidado Con el Angel. I am not completely why this telenovela dropped this much that day (37% on a week to week basis). It may have something to do with the fact that it was Good Friday, and that many Hispanic Catholic families were at church. This might not be the case since Telemundo dropped only 16% from the previous day and 28% from the previous Friday. Angel’s bigger decline might really indicate a poor performance. The telenovela does continue to have lower audience levels until on July 3, upon which the time period improves with the new novela En Nombre del Amor.

2) October 5, 2009: 3.0 rating for the finale of Mañana Es Para Siempre (average for the night). This night a special three hour finale for wildly popular 9 p.m. telenovela Mañana Es Para Siempre was programmed. More about this later.

3) November 5, 2009: 3.0 rating for Latin Grammys (average for the night). This demonstrates how Hispanic-themed awards specials can greatly improve a time period, by about 50% in this case.

4-5) November 26 and December 31, 2009 (Thanksgiving and New Year’s): 0.8 and 0.9 ratings for special holiday programming. These drops of roughly 50% are parallel to what Telemundo experiences during the same nights (see points 10 and 11 below). The low audience levels may be due to either the holidays lowering television viewing or lack of interest in the special programming. I don’t have information for Christmas for comparison.

6) February 18, 2010: 2.9 rating for Premio Lo Nuestro (average for the night). Just like the Latin Grammys, this award special greatly improved the time period’s ratings.

Highs and Lows for Telemundo at 8 PM

7) April 23, 2009: 1.0 rating for Premios Billboard. This 50% bump is the same that the Latin Grammys and Premio Lo Nuestro gave Univision.

8 ) June 24, 2009: 1.0 rating for soccer match between Mexico and Venezuela. Games or specials, often programmed by Telemundo, boosted their ratings between 20% and 100%.

9) October 14, 2009: 1.2 rating for soccer match between Mexico and Trinidad & Tobago; another big winner.

10-11) November 26 and December 31, 2009 (Thanksgiving and New Year’s):  0.4 and o.3 rating for special holiday programming.

Highs and Lows for Univision at 9 PM

1) April 10, 2009: 2.1 rating for Mañana Es Para Siempre, lower than the usual  This is mostly due to the poor lead-in that night from Cuidado Con El Angel. Mañana Es Para Siempre would later attract much greater audience levels, finishing out with the highest rating for any program within the data I obtained.

2) October 5, 2009: 3.0 rating for the three hour finale of Mañana Es Para Siempre (average for the night). The finale had an average of 7.3 million viewers, and was the #2 broadcast of that night among Adults 18-34. This ratings peak was followed by a lower start for Sortilegio, which eventually also found rose in ratings, until its conclusion on February 17, the day before Premio Lo Nuestro (see point 6), upon which the ratings dropped again for the start of Corazon Salvaje.

3) November 5, 2009: 3.0 rating for the Latin Grammys (average for the night).

4) November 26, 2009: 0.8 rating for movie special.

5) December 31, 2009: 0.9 rating for special programming.

6) February 17 and 18, 2010: On February 17 Univision had the finale for Sortilegio, which drew a 3.1 household rating, with an average of 6.6 million viewers and beating ABC, CBS and the CW. On the following night Premio Lo Nuestro had a 2.9 rating. The drop that follows reflects the start of a new telenovela, Corazon Salvaje.

Highs and Lows for Telemundo at 9 PM

7) April 23, 2009: 1.0 rating for Premios Billboard. See point 7 in the 8 PM analysis.

8 ) October 14, 2009: 1.2 rating for soccer match between Mexico and Trinidad & Tobago.

One of the big takeaways from this analysis was that both Telemundo and Univision have relatively stable ratings resulting from the telenovelas, which requires loyalty required to follow plotlines, the absence of repeat episodes, and the fact that telenovelas are stripped programming. On the major broadcast networks like ABC, CBS, Fox or NBC, audience levels are often more volatile, as popular shows are much more widely scattered across the grid. It would be interesting to study this historical volatility and see if it’s attributable to the far more fragmented audiences of today. Given their ratings stability, and a younger skewing audience (a benefit of the Hispanic Market Univision often beats major broadcast networks in the 18-49 demographic, especially on Fridays nights when the ratings for other broadcast networks dip significantly allowing Univision to sometime lead that night.