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NBC Universal Finishes Out of Medals on Olympics Video Ads

Projected Take of $5.75 Mln a Tiny Sliver of TV Revenue

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NBC Universal may have shattered records in Olympics' TV ratings, Web site traffic and online video streaming, but it looks like it dropped the baton when it came time to sell ads into its online videos.

Online marketing research firm eMarketer estimates video ad spending on NBCOlympics.com will reach $5.75 million, 1.1% of the total $505 million the firm projects marketers will spend on online video ads in 2008.

So why is online still a small piece of NBC's Olympics pie, which is on pace to add as much as an additional $50 million in ads from the last two weeks alone? David Hallerman, a senior analyst at eMarketer, pointed to limited streams of the Olympics' most popular events (no swimming, gymnastics, volleyball or boxing) and the cumbersome download of Microsoft's new Silverlight video player as chief suspects.

"Any time you force an audience to download something, you're going to eliminate some of the audience, partially because of the extra step and partially because the software didn't support some operating systems on Windows or Mac behind certain firewalls," Mr. Hallerman said.

But perhaps the overhyping of Olympics inventory is just another sign of the inflated online ad market, for which Mr. Hallerman has twice reduced his 2008 estimates already. In March he dialed back his prediction from $27.5 billion to $25.9 billion as the first wave of the receding economy kicked in, and earlier this month reduced that figure to $24.9 billion.

Yet Mr. Hallerman remains bullish that video will be the highest growth sector in Internet advertising and predicts it will more than double its revenues from $505 million in 2008 to $1.15 billion in 2010. The secret lies in sports, he said.

"It has so much going for it in that it can be live or delayed, full games or highlights, fill-ins for longer TV-based productions like the Olympics, or what CBS did with the NCAA," Mr. Hallerman noted. "Sports can still fill in the content or capture a part of the audience you wouldn't have gotten otherwise."
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