Olympics’ Silver Medal Linings

Feb 27, 2006  •  Post A Comment

Though NBC’s Olympics coverage this month was overshadowed for the first time by programming on other networks, particularly Fox’s “American Idol,” NBC executives said the company made money on the games.

In addition, independent research showed that advertisers got a good deal on the games due to higher-than-average recall rates achieved by ads that ran during Olympics coverage.

NBC Universal Television Group President Randy Falco last week projected a profit of $60 to $70 million for the games on revenues of $900 million.

While the ratings have been below guarantees, Mr. Falco said the network did not have to increase its commercial load during the second week of the games to accommodate unplanned make-good ads. The ad load was a consistent 20 units per hour, he said, the same as in Salt Lake City four years ago.

One buyer said that while NBC was underdelivering for some clients by about 15 percent, “it’s not a four-alarm fire.”

Rather than providing traditional make-goods, NBC has been upgrading sponsors from spots in other dayparts to prime time to increase their average ratings and reach their target ratings, an executive familiar with the process said.

Of course, those spots were set aside by NBC in the event of underdelivery, so the distinction might be one of semantics.

Mr. Falco said part of the reason depressed Olympics ratings in prime time don’t necessarily translate to a profitability problem is that there is now much more to the TV business than broadcast network prime time.

In 1996, when NBC aired 176 hours of coverage, revenues from prime time accounted for 75 percent of revenue. This year, with cable and the Internet in the mix, broadcast prime accounts for only about 45 percent of revenue.

Interest in viewing the Olympics has proved to be so strong that at the last minute, NBC decided to stream a simulcast of the men’s gold medal hockey game Sunday on NBCOlympics.com, Mr. Falco said.

“Audiences have been fragmenting for years by the explosion of cable channels and other options. Our Olympic strategy has evolved, so we reach our audience through various means: network, cable, Internet, VOD, wireless to name a few,” Mr. Falco said. “Unlike any other sports rights deal, we own all U.S. media rights to the Olympics. So whatever new technology is developed or wherever the evolution of media consumption takes us, we have rights to be there.”

Mr. Falco noted that this year’s Olympics faced competition from seven of TV’s top 12 shows.

“What made it even more challenging is that all seven of those shows are serialized dramas with very loyal audiences,” he said.

Learning how and where viewers wound up watching Olympics should pay off in the long run in terms of research that can be applied to future revenue streams, he said.

One thing NBC executives as well as others appear certain about is the fact that viewers who did tune into the Olympics were paying attention to the commercials.

Brands that ran ads during Olympics programming achieved higher recall rates for their Olympic ads, according to figures IAG Research released last week.

Commercials aired Feb. 10-15 during the Olympics averaged 17 percent higher brand recall, 36 percent higher message recall and 36 percent higher likability than those same commercials airing in prime-time on non-Olympic shows.

“This is very similar to our research from past Olympics and is one of the benefits advertisers realize from the Olympics,” an NBC spokesperson said. “It’s nice to have independent numbers that back that up.”

High levels of recall, however, are to be expected in a big event like the Super Bowl or the Olympics, one buyer said.

“That’s what we get for $600,000 a spot,” the buyer said. “But we expected it to engage a lot more people than it did,” Adding that the under-delivery was worse in some key demos.