TV advertisers and sponsors have spent more on these Olympic Games then ever before, and global TV networks will broadcast more hours, according to Michael Payne, director of marketing for the International Olympic Committee.
But with this year's Olympics moving its start date from summer to fall, the Games will compete against fall season programming rather than less compelling summer fare in the ratings race. In past years, the Summer Olympics have run the last week in July and the first week in August.
"It's in the middle of college football, the NFL and [baseball's] pennant race," said Richard H. Burton, director of the James H. Warsaw Sports Marketing Center at the University of Oregon. "This is a tough window."
In the U.S., advertisers bought $900 million in commercial time on NBC, with Anheuser-Busch, AT&T Corp., Coca-Cola Co., General Motors Corp. and IBM Corp. leading the pack, spending between $40 million and $65 million each. NBC, which has Olympic rights through 2008, will broadcast the Games in prime time, as well as running programming on its CNBC and MSNBC cable TV networks.
BROADCASTERS REDUCE AVAILS
"On the marketing front, on any of the criteria, we are in very good shape," Mr. Payne said. He added NBC and others reduced prime-time commercial inventory to increase value to TV advertisers. "Broadcasters have decided to reduce prime-time advertising [avails] by about 10% to 15%," he said. "In some cases, they have been dropping from 12 minutes to around 10 minutes an hour."
According to the IOC, 70% of the global sponsors bought commercial TV time, the highest percentage ever.
Deals with the 11 top-level global sponsors of the Sydney Games will bring in $605 million, up 51% for the 10 sponsors for the Atlanta Games, according to IEG Sponsorship Report.
But the enormous outlay by advertisers may not buy the same impact as in past years. In addition to competition on the sports turf, the Olympics also will have to vie with other networks' programming, including reruns of CBS' hit "Survivor."
"Some of the sponsors aren't going to get their money's worth," Mr. Burton said.
NBC guaranteed advertisers an 18.1 rating, but last week a spokeswoman said the network is predicting a rating between 17.5 and 18.5. Zenith Media, which bought time for Darden Restaurants and Toyota Motor Sales USA, predicts that the Games will come in at around a 17 rating.
NBC NO. 1 NO LONGER
"The 18 rating might be hard to reach. When NBC made the Olympic deals they were the No. 1 network. They are not No. 1 now," said Paul Schulman, president, Schulman/Advanswers, New York, who cited "Survivor" and other new shows on the WB and UPN as well as ABC's "Who Wants to Be a Millionaire" as competition.
"We're concerned, as an advertiser, about the number of people who will be watching, especially from competition with live sports, a smash hit in reruns and papers reporting results," an AT&T Corp. spokesman said. AT&T is one of 11 global sponsors that paid an estimated $40 million for worldwide rights. Others include Eastman Kodak Co., IBM, McDonald's Corp. and John Hancock Mutual Life Insurance Co. (see chart at right).
"You don't want casual viewership," the AT&T spokesman added. "You want the hard-core sports fan. Our hope is that NBC's packaging of the Games will be compelling enough."
Challenges aside, this year's Olympics seem to have shaken off the stigma of the bidding scandal surrounding the 2001 Salt Lake City Winter Games. Local Olympics officials were accused of offering gifts to IOC members in return for preferential treatment. Major IOC sponsors, such as John Hancock Mutual, threatened to disassociate their marketing efforts from the Games.
"For fans and sponsors, the scandal will have very little effect on the Olympic Games by the time it comes to the opening ceremonies," said Sean Brenner, senior editor at IEG Sponsorship Report.
The IOC, which said it has made far-reaching efforts to reform its bidding process, now boasts corporations are completely won over.
Corporate marketers for the most part are in agreement that the Olympics are still a valuable property. "At the end of the day, the whole Olympic movement is better off," said Dick Hammell, senior VP-marketing and communications for Home Depot, a TV sponsor of the Games. Mr. Hammell said it's now a "cleaner process" for selecting venue cities.
Home Depot will continue to be an active and major sponsor of the Olympics because "in our opinion, what the Olympics are about are the athletes -- their story, their dreams and their dedication," Mr. Hammell said.
EIGHT SPONSORS RE-UP
According to Mr. Payne, eight sponsors already have signed up for new global contracts: Coca-Cola, John Hancock Mutual, Kodak, Time Inc., McDonald's, Xerox Corp., Visa International and Sema Group. (Sema succeeds IBM, which after this year is opting out of the Olympics following 40 years as a sponsor.) Some of those are paying an estimated $65 million each for four-year marketing rights up to the 2004 Athens Games. Others have inked eight-year deals.
"We are further ahead in the renewal process that in any previous quadrennium," Mr. Payne said. The IOC also expects United Parcel Service of America, Samsung Electronics Co. and Matsushita Electric Industrial Co.'s Panasonic to return.
Although it's a costly proposition to get involved with the Games, marketers and industry observers cite the diverse global audience as a worthy reward.
"The price tag is high, but the risk is low," said Fred Fried, president of SFX's Sports Group Marketing Division.
NBC executives are confident advertisers will sign up for the next four Olympic Games for which the network has broadcast rights: Salt Lake City in 2002; Athens in 2004; Turin, Italy, in 2006; and another, still-to-be-determined location in 2008.
For the 2000 Olympics, NBC contributes the most to IOC's pool of TV rights fees. The network paid some $705 million for the U.S. rights, a sizable chunk of the $1.3 billion rendered globally by the IOC.
Media observers said NBC lagged its Olympic sales goals at the beginning of this year. But Keith Turner, president of advertising for NBC, has said Internet companies will help the network reach its sales goals.
Flipside.com, a game site, is one of those companies. Flipside, launched earlier this month by Havas Interactive and Vivendi Net, will make a high-profile ad debut Sept. 15 on the Games' opening ceremonies.
"Advertising on the Olympics gives you a certain cachet," said Flipside VP-Marketing Virginia Gray. "It's the big `games' event of 2000. We also know our target audience was both men and women. We know the Olympics truly appeal to everybody."
The universal appeal of the Games has led to some IOC Internet headaches.
When NBC Internet partner Quokka Sports proposed posting real-time streaming video on its site, broadcast partners, which paid millions for their rights, got nervous about a site that could be accessed by anyone in the world at any time.
The IOC, understandably eager not to jeopardize relationships with its territorial TV broadcasters, nixed the proposal.
"At four months before the start of the Games, you are not going to tear up your contracts, and say, `Terribly sorry, guys, we are going to start afresh,' " Mr. Payne said in describing the potential conflict. "It's just not possible; you have $1.3 billion at stake here."
Instead, Quokka will post results on nbcolympics.com of 10,000 athletes in real time, along with still photos.
"The Sydney Games will be a major presence on the Internet," Mr. Payne said.
The Games also had some technology duels with IBM.
In 1992, the technology giant signed an eight-year deal making it the exclusive information technology supplier to the Games. But by 1998, as it was time to begin negotiating another pact with the IOC, discussions broke down over Internet sponsorship rights. IBM wanted its official IT sponsorship to continue to include Internet activities for the Games. The IOC, eyeing a potential windfall from sales of Internet sponsorship rights, wanted to levy additional charges on the sponsor.
`HARD TO REPLACE IBM'
"It's been a tremendous association. . . . It's not just about [olympics.com], scores and stats, it's about linking all of these systems together," said Marilyn Mersereau, VP-marketing communications, IBM Americas. "It's going to be hard to replace IBM with a variety of vendors."
While that may be true, the Olympic Games seem to have no trouble attracting replacement sponsors.
Contributing: Cara Beardi, Hillary Chura, Alice Z. Cuneo, Tobi Elkin, Jon Fine, Brad Johnson, Kate MacArthur, Bonnie Tsui.