NBC clears Olympic hurdle

Network exceeds $1 billion in ad sales

By DANIEL FRANKEL

NBC Universal has traveled its long road to Beijing amid a tight advertising market, but the conglom says it still managed to reach its goal of exceeding $1 billion in ad sales.

With rights fees for the 2008 Summer Games approaching $900 million, and production costs adding an additional $100 million or so to the price tag, NBC's bar to Olympic profitability was set high from the beginning. And its challenge was accentuated in the second quarter of this year, when advertising's "scatter market" began to go south along with the souring economy.

"I think they've done well in a slow marketplace," says Andy Donchin, director of national broadcast for ad-buying agency Carat North America, referring to NBC's recent announcement last week that it had sold in excess of $1 billion of advertising across a range of platforms for the Games.

Getting to that point required a late sprint from NBC sales execs, who still had somewhere between $150 million to $300 million worth of Olympics inventory left to unload once upfront negotiations with advertisers started in early June.

Selling the first 70% of its inventory hadn't been a problem for NBC, thanks to base-level support from perennial Olympic enthusiasts like Johnson & Johnson, Coca-Cola, McDonalds and Visa. These brands, along with NBC parent General Electric, are among an elite group of a dozen companies that collectively paid $866 million to be worldwide Olympic sponsors this year.

But beyond this core group of huge sponsors, NBC had to sell much of the inventory amid its sprawling 1,400 hours of broadcast and cable Games coverage to a lot of smaller fish with recently cut ad budgets.

"The tough part is selling that last 30%," says a source close to NBC's broadcast and cable negotiations for the Games, which run Aug. 8-24. "With the Super Bowl, it's a one-time shot and it's easily done, but with the Olympics, it's 16 days going across a lot of dayparts and a lot of platforms. (NBC) wasn't going to drop its pants to sell that inventory, but it had to get creative."

Getting creative, the source says, entailed packaging Olympic spots with other parts of NBC's broadcast and cable skeds and discounting the latter. "The goal was to maintain pricing on the Olympics," he says. "This is common. It happens all the time."

That pricing -- reported on the high end to be around $750,000 for a 30-second spot on NBC broadcast prime -- seems on par with what advertisers were paying NBC in 2004 for the Athens Games.

This time around, the volume associated with having so much Olympics coverage is in NBC's favor, with lower-priced opportunities for advertisers on smaller budgets proliferating across cable platforms including USA, MSNBC, CNBC, Oxygen and Telemundo.

There have also been some fortunate breaks. For example, the Barack Obama and John McCain camps bought $5 million and $6 million worth of Olympics ads last week, respectively, defying a trend among recent presidential campaigns away from national broadcast TV ads. In fact, the last presidential hopeful to purchase such advertising was Bob Dole back in 1996.

"If they are where they say they are, I give (NBC's) sales guys a lot of credit," Donchin says. "They probably had to look under a lot of rocks to make it happen."