Academy Awards show advertising retains a golden aura

Long relationships are rare in Hollywood — except when it comes to Oscar.

During Sunday’s telecast of the 86th Academy Awards, McDonald’s Corp. is set to make its 23rd straight appearance in Hollywood’s biggest night, and American Express Co. will mark its 22nd year.

J.C. Penney Co. has landed the role of leading retail advertiser every year since 2001, and, after a five-year absence, longtime advertiser Cadillac is back.

And the Academy of Motion Picture Arts and Sciences renewed its vows three years ago with ABC, an arrangement that will keep the program on the network at least until 2020. ABC has broadcast the Academy Awards every year since 1976.

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Oscar has long been golden for ABC. Last year’s program attracted more than 40 million viewers in the U.S., the largest TV audience for a non-sporting event. ABC raked in an estimated $88 million in advertising revenue, according to ad tracking firm Kantar Media.

This year, the haul should be closer to $95 million because advertisers are paying an average of $1.8 million for a 30-second commercial spot, a 9% increase from last year.

“It has been a very healthy marketplace for the Academy Awards this year,” said Geri Wang, president of ABC Sales. “There are so few marquee opportunities out there for advertisers, and the Academy Awards are truly special.”

This year’s program, which is scheduled to celebrate movie heroes, could offer more suspense than usual — and higher ratings — because there isn’t much consensus on which film will win for best picture.

Another hook for advertisers: The TV audience traditionally boasts a high concentration of affluent and female viewers. Women made up 62% of the TV audience last year.

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The Academy Awards ratings also have gotten a boost in recent years from social media. Viewers, particularly younger ones prized by advertisers, watch the program so they can view photos and join conversations on Facebook, Twitter and Instagram about the fashion and other moments.

Last year, the Oscars exploded on social media, generating more than 14 million comments, a nearly threefold increase from 2012. Last year, there were 8.9 million Twitter messages on Oscar night, including 2.1 million during the red carpet pre-show coverage. More than 85,000 tweets a minute were registered after “Argo” was honored as best picture.

Sunday’s show will be hosted by Ellen DeGeneres, one of the most popular celebrities on Twitter with 25 million followers.

“Social media has had a pretty large impact,” said Steve Parker, chief executive of digital marketing firm Levelwing. “It’s not surprising that ad rates and TV viewership are going up because more consumers want to engage with one another as well as with the event itself.”

ABC, owned by Walt Disney Co., sells advertisements on Oscars.com website, and a companion application for mobile devices. In eight markets, including Los Angeles, ABC plans to provide a live online stream of the program for subscribers of Verizon FiOS, AT&T U-verse, Charter Communications and Cox Communications.

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“The Academy Awards transcends traditional media,” ABC’s Wang said. “The show lends itself so well to social media, which gives us — and advertisers — a real opportunity to reach people on second screens.”

TV advertising sales are important to the academy. More than 90% of the annual revenue to the Beverly Hills organization comes from activities surrounding the Academy Awards. The program generated nearly $90 million in revenue to the academy in 2011, the most recent year for which the group’s tax filings are available. The lion’s share of that revenue came from the TV rights fees paid by ABC and Disney Media Distribution, which transmits the show to international networks.

This year, Coca-Cola Co., which advertised heavily during the Sochi Winter Olympics, is sitting out. But rival Pepsico Inc. has bought time in the program. Other prominent advertisers include Samsung Electronics Co., Sprint Corp., Johnson & Johnson and Unilever, which returns to the show after a two-year absence. Unilever plans to promote its Lipton tea and Dove beauty products.

Struggling retailer J.C. Penney Co. has spent heavily over the years to be affiliated with the show, shelling out an average of $10 million annually over the last five years, according to Kantar Media. This year, the Texas chain plans to run six commercials, including three featuring women’s products, one concentrating on men’s wear, and another focused on home products.

“It is the biggest night of the year for fashion. The Academy Awards provide the perfect platform to launch our new spring lines,” Penney spokeswoman Kate Coultas said.

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General Motors had long ruled the car category, until the automaker’s financial breakdown. GM pulled out of the Oscars in 2009, clearing the way for the South Korean automaker Hyundai. After Hyundai’s Oscar contract expired, GM last summer jumped back in with a new five-year deal to be the exclusive automobile sponsor.

There will be two Chevrolet spots in the Oscar program and six for Cadillac, which also made a large digital media buy.

“The Academy Awards were definitely a property that we wanted to be involved in,” said Craig Bierley, Cadillac’s advertising director. “It’s appointment television. As advertisers we try to get DVR-proof television programming, and Oscars are a program where people want to sit down with their families and watch it live.”

But the show certainly is no bargain, said Jon Swallen, Kantar Media’s chief researcher.

“The Oscars provide a large audience and a heavy concentration of affluent women,” Swallen said. “But the return on the investment is not commensurate with the price. At $1.8 million for 30 seconds, that is the second-most expensive advertising buy around.”

In contrast, 30-second spots sold for $4 million for this year’s Super Bowl, which delivered 112 million viewers.

“But it looks like demand was sufficiently strong this year, allowing ABC to get a relatively high rate increase,” Swallen said. “It is the value of live event TV and advertisers’ great fascination with programming that can drive social media conversations.”

For an advertiser like Cadillac, that’s in part because the Oscars hit the company’s target consumer.

“Our target audience is hardworking, industrious people who value achievement,” Bierley said. “And the Oscars are all about celebrating the achievements of people who are at the pinnacle of performance.”

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