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NBC Chases Millennials With Every-Viewer-Counts Olympic Strategy

NBC Wants Every Viewer to Count in New Olympics Ad Strategy

(Bloomberg) -- Two years ago, NBC’s Summer Olympics audience in Rio fell sharply, especially among millennials, forcing the broadcaster to give advertisers free airtime to make up for the shortfall.

This year, for the winter games in South Korea, the network hopes to avoid a similar fate by selling commercials a new way: based on total viewers regardless of how they’re watching. So whether a fan is following figure skating on the NBC broadcast channel or tuned into curling online, that person will count the same toward the audience NBC is promising to advertisers -- and cost the same for a marketer to reach.

NBC Chases Millennials With Every-Viewer-Counts Olympic Strategy

“A viewer is a viewer, regardless of what platform they’re watching on,” Dan Lovinger, executive vice president for ad sales at NBC Sports, said in an interview.

The change shows how programmers like NBCUniversal, Comcast Corp.’s entertainment division, are trying to adapt to a world where more people watch online and fewer watch on television at home. NFL ratings slumped 9.7 percent this past season after an 8 percent drop the prior year. Last Sunday’s Super Bowl, also on NBC, drew the smallest audience in nine years.

At the summer games in Rio, NBC was forced to give advertisers “make goods,” or free commercial time, after providing separate guarantees for TV and online audiences and then coming up short on television viewers. Such promises become daunting as more consumers watch programs both ways. NBC is airing 2,400 hours of Olympics this year on its broadcast network, cable channels like NBCSN, CNBC and USA, and online.

NBC tallied up its total Olympics viewership two years ago and found that online audiences and those tuned in to its NBCSN cable sports network lifted total ratings by 7 percent, or almost 2 million people. That would have amounted to similarly higher advertising revenue had NBC successfully employed its new strategy, Lovinger said.

In the past, conventional and online advertising deals were based on different metrics, with TV spots pegged to households and online commercials focused on total viewers. For the Olympics, NBC is selling them all based on total viewership.

Old Fashioned

And while a few marketers have only purchased traditional TV commercials or only digital ads, the “vast majority” of sales were based on total viewership, Lovinger said. Eventually, the network hopes to make that metric the basis for selling ads against other programming, he said, raising the prospect that NBC will be paid more for viewers who don’t watch on television sets.

Not everyone is buying NBC’s new math. David Cohen, president of the ad buyer Magna in North America, said the new ad strategy will likely boost NBC’s Olympics revenue and make it less likely the company will fall short of its audience guarantees. But he said the value of an online viewer may be greater than a TV viewer, given the potential for interaction.

“I do think there is value in each of those platforms,” Cohen said. “Whether they’re equivalent or not, I think that’s to be determined.”

NBC Chases Millennials With Every-Viewer-Counts Olympic Strategy

So far, NBC’s ad sales for the Winter Olympics have surpassed $900 million, topping the total for the 2014 Sochi games, when the company sold “north of $800 million,” Lovinger said. NBC is still selling commercials for the games as they begin this week. A few nights in the first week, including the opening ceremony, are sold out, he said.

But some marketers have decided to buy fewer spots this year after finding that multiple ads didn’t add up to more business, according to one buyer who asked not to be identified. Lovinger said NBC has attracted many new brands to the games, with about 60 percent having never participated in the Winter Olympics before.

While ratings for the Rio games fell, NBC still made a $250 million profit on the games. The company also expects to make money from Winter Olympics, a spokesman said.

To contact the reporter on this story: Gerry Smith in New York at gsmith233@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Rob Golum

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