NBC's Own Olympic Event: Selling 11,000 Ads in Two Weeksby
Commercials at the Super Bowl are famous for being expensive, aggressive, attention-grabbing, and over-analyzed. They’re known for their high-quality productions, compelling story lines, and celebrity cameos. The single-game event limits the amount of airtime that can be bought, raising average prices and forcing every brand to do its best at creating a one-hit wonder, most examples of which are quickly forgotten by viewers.
Ad spending for the Olympics is exactly the opposite. While Super Bowl ads averaged $4 million, Olympic ads will be much cheaper—around $100,000 per spot, according to new research (PDF) from Kantar Media. Two weeks’ worth of games allows for a mass-market approach to buying and selling commercials. Instead of the pricey and precious approach of purchasing a limited quantity of Super Bowl ads, the Olympics will see about 11,000 ads run across NBC’s networks. There will be hundreds of hours of events to fill across multiple channels. Estimates put NBC’s total Olympic pull at a cool $1 billion, with a cost of about $775 million to pay for rights (and another $100 million to produce).
NBC makes money by increasing the number of hours of coverage—something that Super Bowl broadcasters can’t do. This year in Sochi, NBC will broadcast 539 hours on TV, with another 1,000 hours streaming online.
Remember that most of the Olympics TV coverage is actually on NBC’s cable networks (think USA, MSNBC, CNBC). The cable channels are key to its growth. That Czech Republic vs. Latvia men’s hockey match you want to see will be on live at 3 a.m. Valentine’s Day morning on MSNBC. Then switch right from there to NBCSN for some cross-country skiing at 5 a.m.
Winning at the Olympics is all about quantity, not quality. Average prices per viewer can go lower as long as there’s more total money coming in the door.
The Olympics provides a nearly endless amount of possible airtime. The audience can be fragmented away across a broadcast network, cable affiliates, and online streamers—and the money will still come in.
Despite the vast majority of total hours being pushed online, about 90 percent of the viewership—and 90 percent of the revenue—will be from TV.