NBCU Olympic Ad Revenue Is Snowballing

According to a new report from Kantar Media, given NBCU’s declared intention to air 539 hours of coverage from Sochi (a 24 percent increase compared to the 434 hours devoted to the 2010 Vancouver Games), the total volume of commercial time could add up to as much as 5,500 minutes. 

Over the course of the last three Winter Olympics—Salt Lake City played host in 2002, followed by Torino (2006) and Vancouver—commercial time accounted for 17 percent of NBCU’s total coverage. All things being equal, NBC is likely to have set aside some 91.7 hours for sponsor messages in this year’s telecasts.

Should that estimate pan out, NBCU could be on track to rake in around $1.05 billion in overall ad sales revenue, an estimate arrived at by multiplying the average cost of a 30-second spot in the 2002-10 Games ($95,500) by Kantar’s prediction that as many as 11,000 30-second units were carved out of the Sochi coverage.

Naturally, the amount paid by individual marketers can vary considerably depending on a number of factors, including the client’s overall commitment and its balance between premium and less desirable inventory. On its face, the $1.05 billion projection would eclipse the previous high-water mark for a Winter Games ($851 million, Torino). That said, to reach that number, one would have to factor in local/affiliate ad sales volume. 

Kantar’s blended average rates for the last three Winter Olympics include time on NBCU’s broadcast flagship as well as its sibling cable nets. In 2010, NBC aired 43 percent of its overall Vancouver package, while USA Network, MSNBC, CNBC and Oxygen carried the other 57 percent.

While NBCU once again plans to expand its digital and streaming offerings, the Sochi estimates only cover the media conglomerate’s linear TV inventory. Per Kantar, while “digital ad spending is growing, external estimates still place it at less than 10 percent of total ad revenue for the Olympics.”

NBC last week said that it has sold north of $800 million in Olympic ads, adding that it will hold back an undisclosed percentage of available inventory as a hedge against make-goods. Should its Sochi coverage meet or surpass ratings guarantees, those bonus spots are pure gravy and will sell at a premium. Should the overall sales approach the Kantar estimates, the commercial time should cover the cost of producing the Olympics. (In other words, NBC could break even on the Games for the second consecutive time. The company lost $223 million on the Vancouver Olympics.)

Most of the heavy lifting at the Olympics is done by a select group of blue-chip advertisers. According to Kantar, the top 10 clients accounted for $334.6 million in Vancouver sales, or 41 percent of the $809 million booked. U.S. Olympic Committee sponsor AT&T was the biggest investor four years ago, spending $50.3 million, while IOC global sponsor General Electric—then a 49 percent stakeholder in NBC—spent $45.9 million.

The top categories in the 2010 Games were: automotive ($130.8 million), financial services ($68.4 million) and telecom ($58 million).

While NBC declined to comment on its ratings targets, media buyers said the network is making lower guarantees than in years past, setting a 12.6 household rating as the benchmark for Sochi. The Vancouver Games averaged a 13.9 HH rating, per Nielsen live-plus-same-day data.

The Sochi Games are the first in NBCU’s four-event, $4.38 billion package, which includes the 2016 Summer Olympics in Rio de Janeiro and the 2018 Winter Olympics in Pyeongchang, South Korea. Tokyo will host the 2020 Summer Games.

NBC’s coverage of the 2014 Winter Olympics begins Feb. 6 and extends through Feb. 23.