* Local ads yield higher profit margin than national
* CBS says local ads sales exceed analyst estimate of $22
* Analyst pegs total Super Bowl ad sales at $250 mln to $300
* CBS owns and operates stations in cities of Super Bowl
By Sue Zeidler and Lisa Richwine
LOS ANGELES, Jan 25 Splashy Super Bowl ads for
national advertisers like Coca-Cola Co and Budweiser
always seem to set records, but sales of lucrative local
commercials on stations owned by broadcaster CBS Corp
will also hit an all-time high this year.
"It's huge compared with what CBS did three years ago," said
Peter Dunn, president of CBS Television Stations. "Money is
still coming in, so it's still not finished. We do think it's a
record for total revenue."
Dunn said with eight days to go before kick-off, local ad
sales are well above one analyst's estimate of $22 million for
CBS's 16 owned and operated TV stations that will air the
industry's biggest annual advertising spectacle on Feb. 3.
Ad sales are strong at all of the stations, particularly
those for CBS' stations in San Francisco and Baltimore, the two
competing teams' local markets. In New York, CBS' biggest
owned-and-operated market, at least two local ads have been sold
for about $1 million each, Dunn said.
He also said local ad rates were sharply higher, nearly
double from where they were three years ago when CBS last aired
Evercore analyst Alan Gould estimates the network will
generate $225 million to $255 million in ad sales, and $30
million at its stations, up from $188 million for the network
and $25 million at the stations the last time CBS had the Super
Bowl in 2010.
Super Bowl ad time is expensive because the game delivers
the year's biggest TV audience. More than 100 million people are
expected to tune in when the National Football League's
Baltimore Ravens battle the San Francisco 49ers.
While big multi-million dollar ad campaigns garner most of
the attention, it is the local ads that actually yield higher
profit margins, said RBC Capital Markets analyst David Bank, who
pegged CBS stations' Super Bowl local ad sales at $22 million.
"It's massively profitable at the station level, much more
so than at the network " he said.
Prices for the national commercial space have also jumped.
CBS has said it is getting as much as a record $4 million for
some of its 30-second national ad spots for the game.
Based on estimates by RBC Capital's Bank, CBS just nearly
breaks even on the big national ad sales for the Super Bowl
after accounting for NFL fees to air the game and other costs.
By contrast, local ad sales generate about an 85 percent profit
margin for the company, he said.
Dunn said there has been a flurry of interest for ad
inventory at the stations level since last Sunday, when
advertisers knew which teams would be playing.
The interest in Super Bowl Sunday has carried over to other
shows placed before and after the big game, and the stations are
getting higher rates as well, said CBS' Dunn. Many of the ads
were placed in the last few days as sponsors rushed to the
"The good news about having these two stations (in the
teams' home towns) is that we have a lot of 'shoulder'
programming that's local." said Dunn. "That's huge incremental
revenue for having two stations in the Super Bowl."
For some sponsors, local ads are more desirable because they
have a regional bent, while others buy local ads or clusters of
local spots after failing to get a national spot.
Beer maker MillerCoors was forced to go local to get around
the exclusivity for national Super Bowl ads purchased by rival
Anheuser-Busch InBev for Budweiser and its other beers brands.
MillerCoors, a joint venture between Molson Coors
and SABMiller, bought 15-second spots on local stations
in the Great Lakes and Southeast regions to promote Redd's Apple
Ale, a new apple-flavored malt beverage.
Characters from AMC's hit zombie series "The Walking Dead"
also will appear on screen during the Super Bowl in 44 markets
as Time Warner Cable pitches its TV and Web service.
The ads will promote its entertainment offerings on cable
television, video on demand and mobile devices.
"It's much more efficient for us," Time Warner Cable Chief
Marketing Officer Jeffrey Hirsch said. "We think there is a lot
of value in having that kind of focused audience."
Other local Super Bowl buyers typically include regional
restaurants, grocery chains or groups of auto dealers that band
together so they can afford air time during the big game.
Companies can go hyper-local, too. Super Bowl viewers in
Scranton, Pennsylvania, will see a promotion for Dunder Mifflin
paper, a brand hatched on NBC's Scranton-located comedy "The
Office." Quill, a unit of Staples Inc, sells paper to
real-life customers under the Dunder Mifflin brand.