Big Winter Olympic Advertisers Cut Spending for 2018 Games

By Alexandra Bruell 

NBC said it set a record for national advertising sales in this year's Winter Olympics, even as some of the biggest spenders of recent years are pulling back at the 2018 Games.

Big Olympic advertisers including General Motors Co., Procter & Gamble Co. and AT&T Inc. are expected to spend less on this year's Games than they did in 2014, according to people familiar with the situation.

Ad buyers attribute the cuts to a number of factors. Some advertisers are moving away from big, expensive events in favor of more targeted media and digital platforms. Others are concerned about viewership for the Games, because of changes in consumers' media-consumption habits and less buzz around the winter edition than the summer Games.

An NBC Sports spokesman said in a statement the network will have national TV and digital ad sales of over $900 million from the Pyeongchang Games with roughly 60% from new advertisers, "a sign that the Olympic movement remains of great interest."

"As the U.S. rights holder through 2032, building a diverse group of relationships is a long-term benefit," the statement said.

Still, the cuts by stalwart Olympics advertisers raise questions about whether their concerns could resonate with other brands in the future.

The weeks-long, live sporting event on Comcast Corp.'s NBC kicked off on Thursday from Pyeongchang, South Korea.

Consumer products giant P&G and telecom provider AT&T are both expected to trim their Olympic ad spending by at least 30% compared to their outlays during the last event in Sochi, Russia, the people familiar with the situation said. Both companies had increased their ad spending substantially in the previous two Winter Olympics cycles.

P&G, which spent $51 million on U.S. TV ads in the 2014 Games, said it has found more "efficient and effective" ways to spend through the Olympics. "As a top sponsor since 2012, we have found ways in every Olympics to get more efficient and effective in building our brands across all consumer touch points including in digital, e-commerce, TV and in-store," said a P&G spokeswoman.

General Motors, which spent $148 million in the 2014 event, is also planning on spending roughly 10% less this year, said a person close to the business. GM's Olympics shift is part a broader strategy to cut back on big, expensive events, according to people familiar with the matter.

GM, P&G and AT&T were the top three TV ad spenders in the U.S. during the 2014 Games, according to WPP-owned ad-tracking firm Kantar Media.

People close to Coca-Cola say the beverage giant also anticipates spending less in this year's Games.

"We think overall advertising demand for the Olympics is somewhat less than we had initially expected, for both local and national," said John Janedis, an analyst at Jefferies.

In Sochi, the network generated $1.1 billion in revenue, according to financial results reported by NBC-parent Comcast Corp. An NBC spokesman said that figure included national and local ad sales, plus other revenue. The $900 million-plus figure for this year does not include local sales, he said. The spokesman declined to provide apples-to-apples figures for the two years, but said national ad sales for the Sochi event were more than $800 million. He also said the network is still booking business.

The Olympics is one of the few live events through which advertisers can reach large audiences globally, but it faces a number of hurdles. The live sports arena has grown cluttered with more games and events for advertisers to choose from, especially with a number of big events this year, including the World Cup, Olympics and Super Bowl.

The Games are also subject to the same pressures happening more broadly in the TV industry, as more people migrate from traditional cable and broadcast TV to digital services.

Some advertisers can reduce ad spending simply because the dynamics of their industry have changed, or they were launching a big product one year but aren't the next. GM cut its ad spending dramatically in the 2010 Winter Games, when the auto industry was still recovering from the recession.

BMW, which was a sponsor in Sochi, is cutting back since it ceded its sponsorship role to Toyota, according to people familiar with the matter.

NBC has asked advertisers to commit to multimillion-dollar Olympics ad packages, as well as to spending on other NBCUniversal properties. Thirty-second ad units in popular Olympic primetime slots cost between $700 and $750 million, according to ad buyers.

"It's an expensive property. In order to make an impact, you have to spend a lot," said one ad buyer. "This year is a specifically huge year, between the World Cup, Olympics and just the natural sports landscape. Advertisers have to make decisions."

New spenders have come in with "significant money," said another buyer.

It helps NBC that it is guaranteeing advertisers that it will reach viewers based on a metric that includes all people over the age of two watching live across all platforms, such as traditional TV and online streaming. That's new for the Winter Olympics. Previously, the network guaranteed audience reach based on a certain number of households that tune in. "That alleviates some pressure and allows them to sell more," said the buyer.

Contributing: Suzanne Vranica

Write to Alexandra Bruell at [e-mail]

(END) Dow Jones Newswires

February 09, 2018 18:10 ET (23:10 GMT)

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