SBJ/Nov. 4-10, 2013/Olympics

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  • NBC bullish on profitability of Sochi Olympics

    NBC Sports executives are more optimistic about the Sochi Games than they have been about any Winter Olympics in the last decade.

    Ad sales are strong, internal research suggests viewership will be high, and the event is expected to be “comfortably” profitable.

    “We’ll be profitable, comfortably,” NBC Sports Group Chairman Mark Lazarus said during a dinner NBC hosted for Olympic advertisers and executives last week at New York’s Russian Tea Room. “Rights fees in the world are going up and up and up. When push comes to shove on [the] Sochi and Rio [Olympics], the deal was pretty flat, but [our profitability] is really indicative of the strength of the market. Sponsors are supporting it because of the ratings and the family viewing.”

    NBC agreed to pay $775 million for the rights to the Sochi Games. The price tag is slightly less than the $820 million the company spent on the 2010 Vancouver Games when NBC’s then-parent company, General Electric, reported a $233 million loss on the event.

    But Lazarus said the combination of its lower rights fee and a strong ad market means the company won’t incur a loss on the upcoming Winter Olympics.

    Advertising sales have been so strong that Seth Winter, NBC Sports executive vice president of ad sales, said the company is positioned to sell out its first Olympics in more than a decade. Ad inventory is more than 90 percent sold for the Sochi Games, a major reversal from the 2010 Vancouver Games when it was only 70 percent sold less than 100 days before the opening ceremony.

    “I’ve never walked into a Games feeling we’re this well sold,” Winter said. He added that he is concerned NBC Sports may not have “enough inventory to meet the demand in the marketplace.”

    NBC still has several key categories available, including beer and technology, and Winter expects to find advertisers in those categories in the coming months. He attributed the sales success for Sochi to demand among ad buyers for the strong ratings that the Olympics historically have delivered over 17 days. He also said NBC’s move to divide categories into more refined segments helped sales. He pointed to banking as an example. NBC sold retail, online trading, consumer banking and other categories. It landed deals with TD Ameritrade and Citi.

    NBC’s research shows that awareness of the Winter Olympics is at record levels. A survey of Nielsen subscribers that NBC conducts showed that intent to watch the Sochi Winter Olympics is at more than 52 percent, and NBC Sports chief marketer John Miller said that’s before the company has made its final promotional push around the Games. He expects the intent to view to rise closer to the Games and believes the addition of a day of competition on Feb. 6, the day before Sochi’s opening ceremony, will boost viewership for the ceremony.

    “My sense is there will be a significant number of people surprised by [Feb. 6],” Miller said. “Then social media will explode between the 6th and the 7th [of February]. More people will watch the opening ceremony, and the number of people who watch the opening ceremony often affects how many people view the Olympics.”

    NBC and ad buyers did not discuss any specific ratings projections or share what guarantees have been offered to advertisers. The Vancouver Games averaged a 13.8 rating and 24.4 million viewers for its 17 prime-time broadcasts.

    Miller and other NBC executives acknowledged that few Americans know about the actual host location of Sochi, but they’re not concerned about that.

    “The stage of the Games is the Winter Olympics,” Miller said. “The location flavors it, shapes it a little, but the Winter Olympics is fascinating to people whether it’s Sochi or Cleveland.”

    NBC hopes to overcome the lack of knowledge about Sochi by emphasizing that this is a Russian Olympics. They believe that recent political news about the country has raised Russia’s profile in the U.S., and they hope to capitalize on that.

    Over the past year, Russia has been in the news for everything from granting Edward Snowden asylum to brokering a deal between the U.S. and Syria to remove chemical weapons from the Middle Eastern country. Russian President Vladimir Putin also wrote an editorial in The New York Times, and the country’s anti-gay propaganda law has generated extensive news articles in the West about protests and potential boycotts.

    “What people do know [about Sochi] is it’s Russia,” Lazarus said. “We believe in the mystery of Russia, and people want to understand Russia. There’s a curiosity around that with the American population.”

    Print | Tags: Olympics
  • Countdown event grows in size, stature

    When the 100-day countdown to the Torino Olympics began eight years ago, Kellogg’s didn’t hold a press event or announce a marketing program. In fact, it did next to nothing.

    More than a dozen sponsors participate in the 100-day-countdown event for the Sochi Olympics last week in Times Square.
    Photo by: GETTY IMAGES
    But when the same countdown began for Sochi last week, the company gathered six Olympic athletes in New York, unveiled a series of digital videos featuring each one and announced it will give breakfasts to children each time the athletes’ videos are viewed and shared online.

    “It used to be a struggle to get sponsors to do something early,” said Ted Morris, U.S. Speedskating’s executive director and the former head of marketing at U.S. Ski and Snowboard Association. “Now a lot of sponsors are finding more ways to get beyond the two weeks of the Games, and it’s good for everybody.”

    The 100-day countdown is becoming a major milestone, and that’s resulted in more sponsors unveiling Olympic marketing programs earlier than they did historically. For example, Procter & Gamble, The North Face (a USSA sponsor), Ralph Lauren, Oakley, Chobani, TD Ameritrade and others last week made announcements around a 100-day-out celebration in New York, and Citi announced its program the week before to avoid the crowd.

    Olympic Sponsor Plans

    BMW — Working with USA Bobsled to assist in designing the bobsleds for the upcoming Games; plans to unveil its marketing program early next year.
    BP — Announced six athletes; launched a microsite with video on athletes and information about Sochi; running a social media campaign and digital banner advertising between now and the Games.
    Budweiser — Signed five athletes for point-of-sale materials due out next year.
    Chobani — Announced six athletes and doing sampling at Road to Sochi tour stops.
    Citi — Running its “Every Step of the Way” program, which will use social and digital media to give $500,000 to sports-related nonprofit organizations chosen by nine sponsored athletes.
    Coca-Cola (North America) — Signed four athletes who will be featured in digital advertising, packaging and point-of-sale.
    Hilton — Partnered with Visa on a sweepstakes awarding three Hilton HHonors members trips to the Sochi Games.
    Kellogg’s — Running its “From Great Starts Come Great Things” campaign, which highlights the importance of eating breakfast. The program uses social and digital media to give free breakfasts to children in need. Kellogg’s is promoting it by featuring the stories of 11 athletes on a microsite.
    Liberty Mutual — Title sponsor of the Road to Sochi tour; signed 14 athletes; running a sweepstakes until Nov. 15 that awards Team USA merchandise and an all-expense-paid trip to the Games.
    McDonald’s — Five restaurants in Sochi debuting new items to Russia, including grilled chicken and smoothies. Running its “Champions of Play” program, which awards children worldwide trips to the Games.
    Oakley — Released a special-edition line of goggles and sunglasses.
    Ralph Lauren — Unveiled Team USA closing ceremony apparel on the “Today” show.
    Procter & Gamble — Running its “Thank you, Mom” campaign, which focuses on the stories of 20 athletes and the support their mothers provided them through the years; developed a “Raising an Olympian” film series to tell those athletes’ stories; giving $1,000 gift certificates to 357 moms of Team USA members.
    Samsung — Announced it will give Samsung Galaxy Note 3 phones to every athlete competing in the 2014 Olympics, a first for the company. Also developed a custom Wireless Olympic Works mobile application and interactive demos featuring Olympic winter sports.
    Smucker’s — Named eight athletes who will be featured in advertising and digital marketing across four brands.
    TD Ameritrade — Signed seven U.S. athletes and plans to roll out a marketing program closer to the Games.

    Note: Coca-Cola, AT&T, Budweiser, Chobani, Folgers, The Hartford, Hilton, Jif, Kellogg’s, United and Smucker’s jams are sponsoring the USOC’s Road to Sochi Tour; 24 Hour Fitness, Dow, Deloitte, DeVry, United and Visa haven’t announced official plans yet.

    — Compiled by Tripp Mickle
    The reasons for the earlier unveilings include the U.S. Olympic Committee’s creation of a 100-day-countdown event in New York, NBC’s expansion of its Olympic marketing efforts around that day, and sponsors’ ability to use social media to drive consumers to Olympic-themed websites with athlete-related content.

    The USOC created its first 100-days-out celebration in 2009 for the Vancouver Games. Seven sponsors committed to participate and set up booths around the ice skating rink at Rockefeller Center in New York.

    For the London Games and Sochi Games, the USOC moved the event to Times Square and convinced more sponsors to participate. More than a dozen sponsors took part in the Sochi event last week. Anheuser-Busch brought its Clydesdales and Chobani passed out yogurt. The event was expected to draw 170,000 people, and several sponsor executives said it prompted them to roll out their activations last week.

    “Because the USOC is getting messaging out there, it does make consumers aware and creates a natural timing for programs to launch,” said Sandy Uridge, senior director of integrated consumer promotions at Kellogg’s, which didn’t do any marketing around the 100-day-out mark for the 2006 Torino Games.

    NBC’s approach to the 100-day-out mark adds to sponsors’ interest in doing something then. The Olympic broadcaster has treated the date as a marketing milestone, releasing additional commercials and scheduling Olympic-related programming on everything from the “Today” show to NBC Sports Network’s “SportsDash.” The noise it’s able to make has been amplified since the Comcast merger gave NBC six more channels to promote the Olympics across beginning that day.

    P&G took advantage of that last week, arranging for skier Lindsey Vonn to appear on the “Today” show and discuss the company’s “Thank you, Mom” campaign. That opportunity led P&G to roll out its Olympic marketing campaign last week.

    “We worked closely with the USOC and NBC to make sure our plans match with theirs,” said Jodi Allen, P&G North America vice president of marketing and brand operations. “Their best learnings are that starting [100 days out] then is the best way to build momentum.”

    Both Kellogg’s and P&G developed websites with digital videos that tell their athletes’ stories. Several other sponsors, including BP and Citi, did the same thing. The sites are inexpensive compared with the print and TV media that sponsors would have needed to buy years ago to support Olympic campaigns this early, and sponsors can use their athletes’ Twitter feeds, Facebook pages and Instagram accounts to push consumers to the sites before the Games.

    “Ten years ago, it would have been very expensive and highly ineffective to come out with an Olympic program now,” said Dave Mingey, president of GlideSlope, which works with Citi and Dow on their Olympic sponsorships. “But in terms of how we consume mass marketing these days, people are willing to accept the start of Olympic marketing now through digital and social. It flows into an overall marketing trend where people can customize the messages they receive, and you’re seeing that window [of Olympic marketing] becoming much broader.”

    Not every sponsor has bought into the idea of releasing its Olympic-marketing program 100 days before a Winter Games. Many executives look at the calendar and prefer to wait until after Thanksgiving and Christmas to release their programs.

       
    Ralph Lauren’s “Made in the U.S.A.” uniforms for Team USA are unveiled; freestyle skier Alex Schlopy sticks his landing; more than 170,000 fans were expected at the Times Square event.
    Photo by: GETTY IMAGES (3)
    Others have other sponsorships that they prefer to emphasize during the winter. For example, Visa, which used to be one of the first sponsors to go to market in the U.S., has opted to concentrate on its NFL sponsorship in the fall and wait to unveil its Olympic marketing program closer to the Winter Games. AT&T, a longtime USOC sponsor, is concentrating on college football until the end of that season.

    “We want to keep focused on one message,” said Ryan Luckey, AT&T’s assistant vice president, corporate sponsorships. “The Olympics can be phased in later, probably early next year.”


    Print | Tags: Olympics
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