- American Idol is watched by millions of people – 38Million people watched the 2003’s season 2 finale. But, for comparison, 14M watched last season’s (season 13) finale live. Both numbers are a lot of “eyeballs.” 30M people viewed Idol yesterday (3/19/2014), 20% of them later at night on DVR.
- TV commercials are more expensive to buy with popular shows – so the makers of American Idol make a lot of money when people tune into the show and can be shown to watch the commercial. The advertising rate was selling over $700,000 for a 30-seconds slot, and reaching up to $1.3 million for the finale. Its ad prices reached a peak in season seven at $737,000. Estimated revenue more than doubled from $404 million in season three to $870 million in season six. While that declined from season eight onwards, it still earned significantly more than its nearest competitor, with advertising revenue topping $800 million annually the next few seasons.
- The advertisements during traditional commercial breaks are still very expensive, but that is coming down as DVR watchers skip those commercial breaks (except old people who often DVR something but do not fast forward through commercial breaks).
- Coca-Cola and Ford are 2 companies which advertise *inside* the show, called product placements, so DVR folks still see their advertisement associated with the American Idol stars – Those 2 companies sponsorship deal cost around $10 million in season one, rising to $35 million by season 7, and between $50 to $60 million in season 10.
- Right now on average, more than 20% of all viewings of American Idol are on DVR, and young people tend to watch the show the same night, only later so they can skip the commercial breaks. This is why PRODUCT PLACEMENT within the show is so important to advertisers, and why it is so expensive.
- Young people are the most important to advertisers because they will spend money their whole lives on products, and they usually live a lot longer than old people. So that is a lot more money. The advertisers want young people watching commercials. If the show moves later and later, then the younger people who DVR the show will more often (not always!) tend to watch it live instead of DVR, so they can see it before bedtime. Most younger people get sent to bed around 10pm. Which is a big part of the reason that advertising rates tend to be much cheaper after 10pm, and why most popular shows end before 10pm.
- Here is a very interesting picture of why Coca-Cola spends so much – when people cannot see what they are drinking, then Pepsi is as popular as Coke. But when we see the “brand” then people choose Coke over Pepsi 75% of the time. We are (perhaps very sadly) a completely consumer society. Which is why marketing products is so critical to profit for companies.