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Olympic Ads Down to Wire

Aug 2, 2004  •  Post A Comment

Two weeks before the Athens Olympics, NBC still has about $50 million, or about 5 percent, worth of Olympics advertising inventory to sell. But the network is holding firm on pricing.

Buyers say buzz-killing reports about incomplete facilities in Greece, unsold tickets, terrorism and doping have softened demand for last-minute Olympics commercials.

“The people that wanted it bought it,” said Donna Speciale, president of U.S. broadcast at MediaVest. “If you have to be on-air during those two weeks, then you want to be on the Olympics, because the viewing will be for the Olympics versus the other programming. But if you don’t have to be on-air, people aren’t going to buy it just for the sake of being there.”

Buyers say NBC reps are calling around seeking Olympics dollars. “They’ve definitely been doing a lot of inquiring. But they don’t want to look like they’re panicking. They don’t want to break their pricing structure,” one media buyer said.

“They can’t afford to cut prices, because then they’d have to go back to their other advertisers and renegotiate those deals,” said another ad buyer. Failure to renegotiate could leave a bitter taste in the mouths of sponsors who committed to the games early, the buyer said.

Still, even if NBC doesn’t sell out, it is expected to make money on Athens. The network came out of the Sydney Games more than $50 million in the black.

In all, NBC has said, it expects to sell $1 billion in Olympics advertising. It is airing Olympics coverage on six of the networks it owns: NBC, CNBC, MSNBC, Telemundo, Bravo and (the most recent addition) USA Network. It is also making a high-definition feed of Olympics events available over its affiliates’ digital channels. That’s created a huge amount of Olympics advertising to sell.

Spots aren’t cheap. Prime-time spots on NBC cost $650,000 to $700,000, Weekend daytime spots are $250,000 and late-night and weekday spots are $75,000. Spots on cable, by comparison, are “relatively cheap because there’s so much tonnage there,” a buyer said, with spots selling for about $10,000 a unit. NBC is bullish on the selling power of the Olympics. The network’s promotional arm is creating new commercials for its fall series, some of which will begin to air in the days after the closing ceremonies. NBC’s prime-time shows will get about four minutes of commercial time per night for promos on the broadcast network and will get about 25 percent of the promotional time on the Olympics telecasts on cable.

NBC is broadcasting the games over seven television platforms, having recently added USA Network to the mix. During the past upfront NBC offered buyers lower rates on the network’s prime-time schedule in return for Olympics dollars, and that tactic generated as much $50 million. But at this point, another buyer said, few advertisers have $3 million to $5 million in their ad budgets to spend on Olympics packages. Even NBC’s Olympics cable-only packages carry price tags of about $1 million, and NBC may be reluctant to sell the Olympics a spot at a time.

An NBC Sports spokesman said the Olympics are now about 95 percent sold-out. “As is typical, we will sell right up into the opening ceremonies,” the spokesman said.

NBC had added a number of last-minute Olympics sponsors, including Choice Hotels, TIAA/ CREF, Emerald Nuts and Expedia.

It is in NBC’s interest to keep the value of the Olympics high. NBC has spent $3.5 billion to lock up the rights to the Olympics in 2006, 2008 and 2010.

Some ad industry executives noted that after Athens, NBC is likely to have to replace two Olympics stalwarts, Xerox and Kodak, because their long-term deals as global Olympics sponsors are expiring.

But NBC sees more upside than downside should those cash-strapped companies decide not to renew. “Their departure could actually open the door to other opportunities across multiple categories,” the network spokesman said. The spokesman noted that the United States Olympics Committee recently added a number of sponsors, including DHL, Nike, and Oroweat/Bimbo Bakeries. “They’re still doing deals, so that’s a good indicator. And those are more companies that will be interested in doing business with us,” the NBC spokesman said.

A Drop Since Sydney

The Olympics is one of a few sporting events that offer ratings guarantees to sponsors. One ad buyer said its clients were guaranteed a prime-time household rating of 14.5. That rating is up from the average prime-time rating of 13.8 and a 24 share that NBC generated four years ago in Sydney, Australia. But the buyer said the number NBC offered was in line with the media buying agency’s own internal estimates.

Steve Sternberg, executive VP, director of audience analysis, said he expects the Olympics’ share to be down 10 percent from Sydney because of growth in the number of cable channels and in the number of original reality shows running on other networks, which may draw some younger viewers.

That’s not a major drop over a four-year period,” he said, noting the decrease was smaller than for network prime time overall. “It’s going to be just as much of a big event as it has been in the past.”

NBC has told buyers it will leave a sufficient amount of inventory aside for make-goods in case ratings are lower than projected. “They want to make up any deficiencies during the Olympics,” one buyer said.

And if, on top of that, NBC doesn’t sell out its Olympic inventory, it has told some advertisers it will use the remaining time for make-goods for its best prime-time sponsors. NBC’s prime-time ratings were down 10 percent in July among the 18 to 49 demo.

NBC has already begun pushing its fall shows, and that effort will intensify during the Olympics, especially for the five shows the network will premiere the week following the games, said John Miller, chief marketing officer at NBC Universal. With the Games’ huge viewership, “It’s a huge opportunity,” he said.

Mr. Miller said Olympics- or sports-themed spots have been shot or edited for “Father of the Pride,” “Joey,” “Medical Investigation,” “Hawaii” and “LAX.” In a spot for “Joey” the show’s characters are shown watching the Olympics. Those spots will debut during the Games.

Mr. Miller said that rather than overplaying an Olympics connection, simply “having new creative freshens what’s already on the air.” He said that by the time the Olympics start, about 50 percent of all viewers will have seen spots for the new shows five to seven times.

Also getting special pushes during the Olympics will be new seasons of “Last Comic Standing,” “The Apprentice,” “Scrubs” and “American Dreams.”

During the Games, the network will start promoting what it’s calling its “premiere month,” Mr. Miller said. Shows with more female appeal will be promoted during female-skewing events, while male shows will be pushed during appropriate contents.

With spots going for $700,000 in prime time, Mr. Miller said, the Olympics are giving NBC’s new season tens of millions of dollars’ worth of promotion. And if the ratings are stronger than expected and the network does not have to give advertisers make-goods, there will be even more time for promotions, including some 60-second spots, he said.