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CBS has turned one of the premier multi-day sports events into a destination purchase for Internet advertisers.

The NCAA men’s basketball tournament, which tips off later this week, has brought in millions in online ad sales. Ad Age reports that CBS has sold out its online inventory for $37 million, a number 20 percent higher than last year.

The appeal for advertisers is March Madness On Demand, the web service which allows users to watch the NCAA Tournament games of their choice livestreamed on CBSSports.com. Last year, 7.5 million viewers watched online up 7 percent year over year and CBS expects that number to continue to grow. Key to increasing views is the decision to allow the content to be distributed via multiple channels including Yahoo Sports and Facebook.

All 64 games of the tournament can be watched free online, a gamble which has paid off for CBS. Removing the paywalls and other restrictions to online viewing while maximizing distribution has paid off big. CBS has seen online ad revenues grow from $4 million in 2006 to this year’s $37 million total.

CBS is almost synonymous with the Tourney having held exclusive rights since 1982 and is currently in the middle of a 11-year rights deal with the NCAA for the Tourney, with 3 years remaining. According to WPP-owned Kantar Media, CBS’s online March Madness revenue totaled 5 percent of the overall $600 million plus ad revenue pie last year, up from 3.5 percent the year before and expected to edge even higher this year.

“This is extraordinarily similar to selling TV and that’s a good thing,” Rich Calacci, Senior VP-Advertising Sales CBSSports.com told Ad Age.

In collaboration with AT&T, CBS has another revenue stream coming from mobile this year, charging $9.99 for its March Madness iPhone app which will allow viewing on phones. But, according the Apple’s rankings, that isn’t turning off buyers. March Madness is the No. 2 paid iPhone sports app.

The sponsors CBS is picking up are quality sponsorships too, including Coke, Kraft Foods, AT&T and newcomer Capitol One.

According to Ad Age, CBS CEO Leslie Moonves called March Madness On Demand “a great new source of revenue” for his network.