March Madness is here, and some say it rivals the Super Bowl for advertisers.
The NCAA basketball tournament doesn't get nearly the hoopla that the Super Bowl garners, but it's a bonanza for advertisers.
It's all about demographics. While the Super Bowl attracts a much bigger audience, March Madness draws a much more specific audience.
It's very heavily tilted towards the college-educated sports fans that advertisers crave. These are generally people with money to spend on cars and other consumer products.
And of course, it's not just a one-day event: March Madness includes 67 games over three weeks. With 68 schools in the tournament, there are a lot of alumni with a rooting interest. And just about all of us are in at least one March Madness pool, so we have a rooting interest too.
The guaranteed corporate winners are broadcasters CBS (CBS) and Time Warner (TWX), which has three of its Turner networks carrying the games. By some estimates they brought in more than $1 billion in ad sales from last year's tourney.
The early round games this year cost advertisers about $250,000 for a 30-second spot. By the time you get around to the championship game on April 8, the cost goes up to about $1.6 million. That's about 10 percent higher than last year.
Car companies are among the biggest advertisers. General Motors' (GM) Buick division and Nissan's (NSANY) Infiniti are considered official sponsors.
Buick officials say its sponsorship of the NCAA tourney helped the company lower the average age of Buick buyers.
If you're watching the games, you'll also see plenty of ads for rental car company Enterprise, as well as Capital One (COF), AT&T (T), and Coca-Cola (KO).
And Buffalo Wild Wings (BWLD) is not only an advertiser. The sports-themed restaurant chain has an agreement with the NCAA designating the company as the "Official Hangout of March Madness." The tournament is the company's biggest sales event of the year. An executive says that sales reflect how close and exciting the games are, so the company is rooting for lots of overtimes.
And March Madness comes at great time for fans: We haven't seen football in months, and the baseball season has yet to start.
The 40 Most Unusual Economic Indicators
Midday Report: March Madness a Bonanza for Broadcasters, Advertisers
The Concept: People seek out others for first dates when the economy turns down and sentiment falls (they're lonely!).
The Proof:Match.com notices strong patterns on its site that correspond to economic downturns. The company said the fourth quarter of 2008 was its busiest period in seven years (its second busiest weekend ever came when the Dow dropped to five-year lows in November 2008). Match said traffic also spiked after the Sept. 11 attacks.
The Concept: The more the Drudge Report focuses on business stories, the more likely the stock market is to have hit a bottom.
The Proof: Bespoke Investment Group recently tracked the number of financial headlines on the Drudge Report front page and compared them to the S&P 500. Turns out bottoms in the S&P 500 correlated to the number of business headlines on Drudge.
The Concept: Markets should rally during the Summer Games as the games distract investors from gloomy headlines.
The Proof: Bespoke Investment Group tracked the Dow Jones back to 1900 and found positive returns in 18 of the last 26 games. Bespoke based each year's time frame as that between the opening and closing ceremonies.
The Concept: Countries where the average male organ is, well, average, have stronger economies than those with the largest and smallest.
The Proof:Tatu Westling of the University of Helsinki conducted the study and found the correlation. How does he explain it? Salivary testosterone levels have been shown to be positively associated with risk-taking behavior. Assuming these links hold it would suggest that male organ acts as a proxy for risk-taking. Therefore, countries that engage in too much or too little risk taking underperform countries that take moderate risk.
The Concept: The Guns-to-Caviar index measures the ratio of money spent on military jets to that on private jets, or the relative amount of anxiety and elation among the global elite.
The Proof: Richard Aboulafia, the creator of the index, says, "Defense budgets rise with threats and perception of threats, and cash filters down, with planes typically delivered two years after they are ordered."
The Concept: The intensity of Marine Corps advertisements evolve with hiring trends. During tough times, civilians who can't get work are more likely to enlist. But if too many people sign up, the Marines toughen up their videos to scare off potential recruits.
The Concept: People stop getting cosmetic surgery as the economy begins to falter. The reasons: 1. If job cuts are coming, people want to save for futures needs; 2. Even if job cuts are not coming, employees don't want to take off from work for elective surgery, preferring to stay in the their bosses' good graces.
The Proof: Plastic surgery revenue in the U.S. declined 9 percent in 2008 as the economy headed into contraction, with the American Society of Plastic Surgeons expressly citing the bad economy.
The Concept: Won't be able to make it out to that bar after work? Apparently you aren't alone. Cash-strapped consumers often try to save money by drinking at home, sending pub sales and jobs downward.
The Proof: In Europe, 73 percent of jobs tied to the beer industry are outside breweries. These include jobs at bars and restaurants. From 2008 through 2010, employment in the beer industry fell 12 percent, versus 2 percent for Europe as a whole. Surely austerity measures feel much harder without that drink.
The Concept: If a team from the old National Football League (now the NFC) wins the Super Bowl, the S&P 500 will gain for that year. However, if a team that can trace its roots to the old American Football League (now the AFC) wins, the market will decline.
The Proof: Believe it or not, analysts tell us it is widely accepted that this rule has been accurate around 80 percent of the time since 1970.
The Concept: "Usually, in an economic downturn, heels go up and stay up -- as consumers turn to more flamboyant fashions as a means of fantasy and escape," IBM's Dr. Trevor Davis said.
The Proof: The low flapper shoes of the 1920s gave way to high pumps during the Depression, while stilettos surged over the dot-com bust. The most recent case shows some deviation. While dizzying heel heights walked the walk during the 2008-2009 crisis, they came down even as the U.S. economy sputtered at the end of 2010 into 2011.
The Concept: Two indicators here. The first: Men will buy ties to appear that they're working harder during difficult economic times. The second: Ties get slimmer during bad times and brighter when the economy starts to recover.
The Proof: In the U.K., with news that layoffs could be coming in 2007, sales of ties spiked as men tried to show employers that they came to do work. Width of the ties narrowed due to austerity measures during past wars, but current production abilities have seemingly put that indicator on hold. But anyone who has spent time in lower Manhattan will tell you that skinny ties are back.
The Concept: During flush times women are more likely to get their hair cut, dyed and otherwise groomed more frequently. During recessions, they're more likely to take off extra inches to save on trips to the salon.
The Proof: Few analysts have latched on to the idea, but Japan's Nikkei magazine drew on data that revealed women cut their hair shorter as the economy fell in 1997.
The Concept: When the economy slips, consumers turn to the coupons in their Sunday circulars to try to cut costs on things like toothpaste, laundry detergent and groceries.
The Proof: In 2009, coupon redemption soared to 3.3 billion uses as consumers made an effort to save more at the market. During the second quarter of 2011, coupon use increased 4%, coupon processing firm Inmar says.
The Concept: They're always busy with other clients, so getting a contractor to return a call can be a big hassle during a home renovation project. Thus, the quicker a contractor returns your calls, the worse the economy is doing.
The Proof: There isn't much hard data on this one. But it seems to make sense. Then again, if the economy is bad enough, you might not be able to afford that home makeover you want to commission.
The Concept: Discovered by economist George Taylor in the 1920s, the Hemline Index predicts the market based on the length of women's skirts and dresses. The shorter hemline, the better the economy is looking.
The Proof: Just a myth, according to retail buyers. But some economists still point to the dreary lengths that came out following the financial crisis in 2008. And others worry that the maxi skirts out this summer are forecasting another downturn.
The Concept: A sharp decline in the usage of cardboard means a recession is on the horizon, while increases indicate expansion.
The Proof: A large fraction of the world's non-durable goods gets shipped in cardboard containers, making this indicator rather straightforward. When cardboard box sales increase, it means companies are shipping a more goods to sell, and therefore employing more people. The largest producer of cardboard boxes in Europe, Smurfit Kappa, saw top line results fall by $269.9 million in 2008 from a year earlier, as operating profits declined 50 percent.
The Concept: This one's pretty simple: GDP should correlate to the amount of garbage produced. The reason: if you create things you also have to throw other goods out.
The Proof: Of all categories that ship by rail, none correlate more tightly to GDP than waste. A 2010 Bloomberg piece by economists Michael McDonough and Carl Riccadonna put the correlation as high as 82 percent.
The Concept:Simple supply and demand: During boom times when women can find better jobs, there are fewer hookers and hourly prices for those remaining rise.
The Proof: Latvian sex workers have unfortunately been stuck in a rut. As the economy soured, rates fell as low as $60 for a night's work in 2009. This Baltic index is way more intuitive than that other Baltic index.
The Concept: The hotter your waitress, the closer the economy is to the brink. During boom times, physically attractive people can leverage their looks to get better paying jobs -- perhaps modeling or hosting corporate events.
The Concept: This index compares currency exchange rates in different countries relative to the local cost of a Big Mac. The index uses purchasing power parity to explain whether a currency is overvalued or undervalued.
The Proof:The Economist publishes this index annually and it shows a strong correlation between the dollar price of a Big Mac and GDP per person. The Economist notes that simply comparing prices is irrelevant, as labor costs vary greatly by country.