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ad $ boon for NBC
CMR: Will pull $700M, up 12% from 1998 games
By Kevin Downey
The Salt Lake City Olympics are coming nowhere near the $1.27 billion in ad revenue generated by the 2000 summer Games in Sydney, but NBC is expected to easily become the biggest moneymaker in the history of the winter Games.
The ad-tracking firm CMR projected yesterday that NBC will pull in about $700 million in advertising expenditures.
“I’m surprised that in a weak ad economy it did quite as well,” says Don Cole, director of media at Fletcher Martin Ewing.
“There might have been some advertisers that wanted to cluster some of their money in the Games after Sept. 11 as a show of patriotism.”
The $700 million represents an 11.6 percent increase over the last winter Games in 1998, when the Nagano Olympics had about $627 million in ad expenditures. Of that, $480 million went to CBS and $147 million went to local television stations.
The top Olympic advertisers typically spend well over $20 million to advertise during the Games.
CMR reports that the biggest spenders include General Motors, which spent an estimated $93 million on the Sydney Games in 2000. Ford and DaimlerChrysler were the biggest spenders in the 1998 winter Olympics, with expenditures exceeding $47 million each.
Their 2002 ad expenditures will be released after the completion of the Games.
“It helps companies in terms of polishing their images,” says Cole. “There’s always been a halo around sports, which is why you pay more for a sports property.”
CMR’s projection for the Salt Lake City Games is in line with NBC’s forecast.
The network has been projecting for months that it would generate about $720 million. Randy Falco, president of the NBC Television Network and chief operating officer of the NBC Olympics, said just before the Games began that NBC was well on its way to achieving that goal.
“It represents the highest sales total for a U.S. Olympic Games, higher even than Atlanta, which had about a third more primetime hours.”
The robust ad sales for the Olympics go counter to the continuing downward trend in the advertising economy.
CMR, for example, reports that ad sales on network TV fell 8 percent in the first three quarters of 2001, compared to the same time period in 2000. Revenue for spot TV, or local stations, dropped by 18 percent.
Still, media inflation in the four years since the last winter Games has gone up considerably.
The reason comes down to a combination of factors. Ratings, in general, have been dropping, meaning there is a diminished supply of commercial inventory. At the same time, demand for TV spots has gone up in the past four years, peaking when the dot.coms fueled a surge in spending in 1999 and 2000.
CMR reports that the average cost for a 30-second spot on network TV went up nearly 63 percent between 1998 and 2000 to just under $272,000. A 30-second commercial on spot TV went up 72 percent to about $4,770.
Even though ads for the 2002 winter Olympics are costly, they are proving to be something of a bargain for advertisers.
NBC has reportedly guaranteed a household rating of 16.9 to advertisers for the 17 days of coverage. The network also forecast a possible average rating as high as 17.8. On both counts, NBC is so far exceeding those projections.
The first four days of coverage have averaged just under a 20 household rating, according to an analysis by Magna Global USA, with the opening ceremonies hitting a 25.5.
“You always benefit when you over-deliver,” says Cole.
“If the games are averaging over a 19, there’s nowhere else left in broadcast, except the Super Bowl and a handful of other evenings, that you can do that.”
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OLYMPIC YEAR
ADVERTISING RATES |
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Olympic Year |
Network TV (000) |
Spot TV (000) |
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2000 |
271.95 |
4.77 |
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1998 |
167.14 |
2.78 |
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% Change |
63% |
72% |
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Source: CMR, a Taylor Nelson Sofres company. |
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2002 SALT LAKE
CITY WINTER OLYMPICS |
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Day |
Households |
Adults 18-49 |
People 12-17 |
Adults 18-24 |
Adults 25-34 |
Adults 35-54 |
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1 |
25.5 |
15.4 |
7.8 |
6.9 |
14.0 |
19.8 |
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2 |
17.1 |
9.8 |
5.1 |
4.5 |
8.3 |
12.7 |
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3 |
17.6 |
11.0 |
6.2 |
5.5 |
9.9 |
13.8 |
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4 |
19.6 |
11.1 |
5.8 |
4.5 |
10.6 |
13.8 |
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Avg. |
20.0 |
11.8 |
6.2 |
5.4 |
10.7 |
15.0 |
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Source: Magna Global USA, based on data from Nielsen Media Research |
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2000 SUMMER
OLYMPICS - SYDNEY |
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Company |
Ad Dollars |
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General Motors |
92.66 |
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Coca-Cola |
52.65 |
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Anheuser-Busch |
38.15 |
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IBM |
35.64 |
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AT&T |
32.83 |
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Visa |
29.40 |
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General Electric |
28.61 |
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Johnson & Johnson |
24.75 |
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GlaxoSmithKline |
23.78 |
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Eastman Kodak |
21.72 |
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Source: CMR, a Taylor Nelson Sofres company. |
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February 14, 2002 © 2002 Media Life
-Kevin Downey is a staff writer for Media Life.
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