Inside NBC's London Olympics Sales Pitch
The road to the Olympics is lined with challenges for an athlete. That's true for NBC Universal, too.
While giants such as Coca-Cola, McDonald's, Visa and Procter & Gamble are some of the biggest sponsors of the Olympic Games, their agreements with the International or U.S. Olympic committees don't require them to buy advertising on any of the NBCU networks, which are covering the events via broadcast, cable and digital.
As a result, NBC Sports Sales Chief Seth Winter and his staff must gear up for new ways to approach advertisers on each Olympics.
For this summer's Olympics in London, problems included unloading a huge amount of digital inventory and a still-fragile economy that has financial-services and other categories less likely to invest Olympic-sized sums. For example, Bank of America's USOC sponsorship ended in 2008, leaving the U.S team without a major financial-services sponsor.
With creative packaging, however, NBC has sold more than $900 million of advertising for the upcoming games, Mr. Winter said, compared with the amount sold for its telecast of the 2008 Summer Olympics in Beijing, in the mid-$800 million range. (Some ad buyers privately suggest NBC may have sold slightly less.)
"They are having a good market," said one ad-buying executive with knowledge of the situation. But "the later part of any market is tougher than the first part. I think they have a lot more inventory and a lot more hours of programs to sell."
To help get advertisers interested, NBC has broken up sponsorships for certain ad categories. A smaller pact can be especially attractive if budgets are tight or public scrutiny is intense."We segmented the financial-services category more finely than we did in the past," offering sponsorships in retail banking, self-directed investment and wealth management, Mr. Winter said. Working with the U.S. committee, NBCU got Citibank onboard as retail-banking sponsor. TD Ameritrade signed on in self-directed investment.
NBC also experimented with the auto category. Because BMW is a USOC sponsor (known as a "rings" holder), NBC had to offer the company the opportunity to be the exclusive auto sponsor -- something that requires "an enormous investment," Mr. Winter said. At the same time, General Motors was making an aggressive push to advertise.
NBC saw a synergy. The two automakers didn't consider themselves direct competitors, so the network was able to assemble an approach "that allowed us to have a relatively clutter-free environment," Mr. Winter said. Neither marketer would have to worry about a deluge of ads from a broad array of others in the auto category.
Persuading advertisers to buy the Olympics is crucial to NBC Universal. Comcast recently agreed to a $4.3 billion contract that will keep the Olympics at the network through 2020, and Comcast CEO Brian Roberts has vowed to make the broadcasts profitable.
Corporate fortunes aren't the only thing riding on the Olympics. NBC hopes for massive viewership to which it can promote the fall lineup. It's also using the Olympics to test how live video streaming affects the TV audience. NBC Sports intends to broadcast every event live in some form and will show more than 3,600 hours of Olympics programming across its outlets. NBC begins selling Olympics ad berths immediately after the previous event. Olympic committee sponsors are approached first, followed by others that bought TV advertising during the event. A second phase involves seeking sponsors that may not be able to invest so far in advance. Indeed, initial success in the telecast can spur further demand. NBC Universal has collected $15 million to $30 million of advertising while the games are in progress, said Mr. Winter.
"It's not like the 'We're Sold Out' sign goes up at any point," said Ira Berger, brand media director at independent shop Richards Group in Dallas.