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Wednesday, April 2, 2008

NHL TO TEST VIRTUAL ADS FOR THE PLAYOFFS

SportsBusiness Journal reports that the NHL will test virtual ads for their national postseason telecasts this year. The NHL will also place two "Stanley Cup Playoffs 2008" logos inside the bluelines during the postseason and two NHL shields behind the nets as well. The virtual ads will be placed on the glass above the dasherboards that protect spectators. The ads, being virtual, will not be seen in the arenas and will not affect camera angles or live TV shots. NBC and Versus will not sell the virtual spots separately, but will give them to the companies which buy the most 30 second spots during their telecasts. The idea to sell virtual ads comes from MLB telecasts on FOX, and ironically come from the man who proposed it for FOX, former FOX ad sales chief Jimmy Burnette. He was apparently hired by the NHL as a consultant once he retired from FOX. The idea to place the shield and logos come from the NFL's decision to place their logo on the field during the NFL postseason, as well as the NBA placing their postseason slogans on their courts during their playoffs. The television networks will keep all of the ad revenue, and if everything goes according to plan, Versus, NBC and the regional networks will use the virtual ads next season.

This is a smart initiative by the NHL, designed to keep the national networks interested in broadcasting the sport. You see, TV networks make their money by selling ad spots during their broadcasts. The reason TV ratings are so important is that shows that have higher TV ratings, can charge more money for their spots and there will be more companies interested in buying those spots. The huge investment, will also give these companies an incentive to promote these shows, in order to make sure a lot of people tune in to see their ads. Unfortunately, the NHL is struggling in terms of pulling in decent national TV ratings, so, another way to ensure that the national networks make enough money on their broadcasts, is to offer up more ad spots in prominent places in their telecast. By giving these spots away to companies that buy the most 30 second spots, they are trying to create more demand for those spots. This will ensure more profitability for the networks, and create an incentive for a network like NBC, to renew their deal with the NHL (and maybe even give them a rights fee). Regional sports networks have always been good at this, which is why they have become so lucrative to own. Many owners of NHL teams (such as Colorado Avalanche owner Stan Kroenke, Rangers owner the Dolan Family and Bruins owner Jeremy Jacobs) have created their own regional sports networks (Altitude in Colorado, MSG in New York, and Bruins own 20% of NESN in Boston). This brings up a really good point that TV ratings, are not the only metric which is important when considering what to broadcast. The NBA, for example, was able to secure better TV deals despite all-time low ratings because advertisers loved the power the brand had over the all important 18-49 demographic, as well as the NBA's reach on other platforms, such as the internet and cell phones.

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