Networks banking on World Cup

Soccer tourney begins June 11 in South Africa

Related: ESPN, Univision set World Cup strategy

As the World Cup ads say, one game changes everything.

ESPN is counting on that maxim to justify its biggest marketing blitz to date for a single event, designed to position the sports nicher as a burgeoning soccer powerhouse and in the process prove that the sport has reached critical mass in the U.S. -- a mass worthy of the monthlong global sports extravaganza.

Meanwhile, Univision, with a long track record covering soccer as Spanish-language U.S. rightsholder for the World Cup, already knows it's true. It will use this summer's event to make further inroads with marketers who might not have opened their wallets for the broadcaster in the past and generally still pay lower CPMs than to the network's English-language peers.

Both networks say ad revenue around the World Cup has been brisk.

But rights fees also are up, and both networks are going all out in terms of production, coverage and marketing.

"We embrace this as a mega-event, not just as a sporting event," says Alina Falcon, president of news and sports at Univision. "It is our biggest commitment yet in terms of resources."

ESPN is investing more money on promoting the World Cup than it has for any other sporting event in the channel's 30-year history.

Although the rightsholders don't disclose spending budgets, they might end up making little or no profit. Still, both are betting on continued growth of the U.S. soccer market, which has benefited from more exposure to content than ever before thanks to foreign league coverage on TV and online.

The U.S. fan base is rabid and has helped make the country one of the biggest buyers of tickets, according to the U.S. Soccer Federation.

The quadrennial World Cup kicks off June 11 in Johannesburg, South Africa, leading to the final July 11.

"It's the world's most important sport on its largest stage," says Scott Guglielmino, vp programming at ESPN. "You put into that nationalism, people pulling for their country or the country where they have an interest. You play that over a month, and it's a completely unique story."

Soccer is the world's most popular sport -- only the Summer Olympics rival it in terms of global TV audience -- but it is somewhat less of a spectator sport in the U.S. Soccer lacks the financial and ratings punch of the NFL or Major League Baseball among non-Hispanics.

However, Univision's soccer-crazed young Hispanic demographic has long provided big ratings. The network's World Cup numbers traditionally are much higher than ESPN/ABC's, with a 20 household rating for the 2006 final, a 19 in 2002 and a 26 in 1998, according to Nielsen Media Research.

ABC earned a 5.7 household rating for the 1998 final on English-language TV; it fell to a 2.5 rating in 2002 before rising to a 7 in 2006. The lower ratings in 2002 can be tied to the tournament being held in South Korea and Japan, more than 12 hours ahead of the U.S. This year's event, in South Africa, shares the same time zone as Germany, site of the 2006 World Cup.

Univision is paying about $155 million for this year's tournament, compared with ESPN's $100 million for 2010 and 2014. Univision received about $110 million in incremental World Cup-related revenue in 2006 -- an estimated $170 million during the tournament's time frame -- after paying about $100 million for rights. After prodution and marketing costs, however, that slight profit all but vanished, making it a break-even business. This year, the World Cup likely will bring in about $100 million in incremental revenue, Univision CFO Andrew Hobson said Thursday, which would mean a loss when looking at direct Cup financials.

For its part, Univision is bullish about this year's tournament.

"We are performing above expectations, and the demand for the World Cup is strong," ad-sales president David Lawenda says.

Lawenda adds that general market advertisers are discovering that the World Cup is a major avenue to reaching the growing Hispanic demo. Anheuser-Busch, Coca-Cola, McDonald's and Walmart are among those spending big, many with soccer-themed ads, much as they would for the Super Bowl or Academy Awards.

ESPN senior director of sports marketing Seth Ader says he expects this year's World Cup to surpass 2006's cumulative household rating of 1.9, which was 80% above 2002 levels.

"We'll improve on where we have been in the past," he says. "But the sky is the limit."

The 2006 World Cup drove ratings for ESPN and also ESPN2, which again is showing games this summer. ESPN2 ratings were up in the double-digit range in 2006 and ensured the network's biggest ratings month at the time.

Executives also signaled that they expect to boost ad revenue this year. Like Univision, ESPN is almost done with ad sales.

"We are performing extraordinarily well," says Ed Erhardt, president of ESPN Customer Marketing and Sales.

ESPN wants to bring soccer to a wider audience -- not only soccer aficionados but also casual sports fans who crave big, emotional marquee events. The network's promotions in many cases are targeting the latter group.

It also is targeting foreign-born U.S. residents with posters featuring caricatures of national teams in an effort to reach, for example, ethnic Greeks in Queens, or Italians and Germans in big cities.

More evidence of how much emphasis ESPN is putting on the event: The network has made the World Cup one of the year's top three focus objectives; plus, outside the cafeteria at its Bristol, Conn., headquarters, a big clock is counting down to the event.

The World Cup won't have much in the way of challenges for a sports fan's attention. There are no Olympics, the NFL season is months away, and basketball and hockey nearly will be over by the time the action begins. Only baseball's All-Star Game on July 13 is nearby.

"The World Cup pretty much has the stage to itself this summer," says Sam Sussman, senior vp and director at Chicago-based ad buyer Starcom Worldwide.

Other factors are conspiring to make the event a more attractive sell to English-speaking sports fans: The U.S. team is guaranteed three games and maybe more as it has a chance to move beyond the group stage with England, its opening-match opponent June 12.

Sussman believes that the South African locale -- where it will be winter -- also will help. Cooler conditions could promote scoring, which American fans like.

Data on ad rates are tightly held by Univision and ESPN, and marketers typically don't buy single spots. Instead, they often make commitments to soccer governing body FIFA that include jersey or boot sponsorship for national teams, in-game and in-stadium signage and TV ads.

Adidas had a $200 million deal in 2006 that made it the official supplier of game balls and title sponsor of an MVP trophy. Such arrangements make the World Cup hard to compare with, say, the Super Bowl, for which average spot prices typically are publicized.

Industry folks are keeping a particularly close eye on ESPN to see whether this year's World Cup reaps hoped-for benefits.

Miller Tabak analyst David Joyce says the event still could be a loss business for ESPN and ABC, but "it helps broaden their brand to get customers to identify the World Cup more with ESPN.

"I expect them to be increasingly competitive in their bidding for future World Cups as ESPN has been expanding its programming into European markets, and (showing the Cup and other soccer events in even more countries) would be a key rights win to help grab market share," he says.

Georg Szalai contributed to this report.