NBC mines China for winter gold

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Call it the Beijing factor.

It might still be two years away, but the allure of the 2008 Summer Olympics in China is already helping NBC to sell this month's Winter Olympics.

The Turin games didn't look like the most promising sales story for NBC. The games fall a mere five days after the Super Bowl and have to go up against March Madness; they are being sold by a struggling network that has relatively weak prime-time ratings, making promotion tough; and, unusually, they have a rampaging TV phenomenon to compete against, namely "American Idol."

Maintaining price

Still, all the indications are that NBC's sales team, lead by Senior VP-Sports and Olympics Sales and Marketing Peter Lazarus, has managed to maintain its asking price-$500,000 to $700,000 for a spot-and has sold more inventory than many expected. NBC claims it will meet its revenue goal of $900 million, up 22% from the 2002 Winter Olympics, which was a domestic event and therefore typically pulls better ratings.

So what was Mr. Lazarus' killer sales tool? China. NBC is offering a deal whereby advertisers that buy into the Turin games will get a post-Winter Olympics window a few months long in which they can negotiate a level of exclusivity in the Beijing Games. Their options will be dependent on the level of their Turin commitments. Because the 2008 games are seen as a hot market for advertisers, it's a tempting offer for many buyers who want to make sure they are primed for the best spots in the Beijing marketing extravaganza.

An estimated 30% of NBC's Turin ad sales revenue is coming from the marketers known as The Olympic Partners. Coca-Cola Co., Atos Origin, General Electric Co., John Hancock, Eastman Kodak Co., McDonald's Corp., Panasonic, Samsung, Swatch and Visa International paid $75 million each to be the exclusive global sponsors to the International Olympic Committee for the 2006 Turin Games and the 2008 Beijing Games. Other major Olympic advertisers include AT&T, Johnson & Johnson, DHL, Lenovo and Nike.

Beijing inspiration

"The Beijing games as a whole are inspiring people to get involved in the Olympics now," said Mr. Lazarus in an earlier interview with Advertising Age. "For marketers like J&J, Lenovo and AT&T, this was a logical step for them before Beijing."

That base of advertisers was pretty crucial to NBC given the environment in which it is selling.

"The Olympics are not anything like they were ten years ago, where they'll sell out in advance of broadcast," said Rino Scanzoni, chief investment officer at Media-edge:cia. And it doesn't help, he added, that the Winter Olympics have to go up against other major first-quarter sports events, including the Super Bowl and March Madness. "While Winter ratings tend to be more stable, Summer, because it's in a less competitive situation, is easier to achieve the sales goals," he said.

It is an even more competitive situation this time around because of the incredible success of Fox's "American Idol."

"It's really the clash of the titans," said Shari Anne Brill, VP-programming at Carat USA. "This is the first time Olympics and `Idol' have ever squared off against each other and, unlike [the 2002 Olympics] in Salt Lake City, you don't have the perceived live-ness or immediate patriotism for U.S. and Americana on the heels of the 9/11 tragedy. ... In terms of sheer number of viewers, I almost think `Idol' could beat the Olympics."

Given such hot competition it's unsurprising that NBC isn't completely sold out yet, with some buyers reporting that it has tried to get some existing prime-time advertisers to move their scheduled slots into the Olympics.

But Mr. Lazarus is still working his magic, and said he'd be selling right through the opening ceremony in the hope that some of the recent media attention for the games will boost ratings.

Character-driven stories

And there have certainly been some stories: American slalom skier Bode Miller made headlines when he admitted to CBS's "60 Minutes" that he'd skied drunk ("hungover," he now clarifies). And figure skater Michelle Kwan will be back for her third Olympics, trying to snag the gold medal that's eluded her during her previous two runs. Marketers are counting on the returning stars, too. Coca-Cola, for example, has crafted creative around Ms. Kwan, short-track speedskater Apolo Anton Ohno and bobsledder Vonetta Flowers, who's graced People's 50 Most Beautiful People issue.

From a national media buying perspective, the Olympics can mean bad news for other networks. The Olympics tends to depress pricing on other networks since the premium NBC is able to extract for it takes more money out of the market than the ratings points it generates. Especially hit hard this year is the cable market, which has seen a large chunk of money move to NBC Universal.

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