NBC's Olympic Ratings Surpass Goal, But Video Ads Lag

Beijing 2008 Olympics logoNBC Universal's $1 billion advertising bet on the Beijing Olympics has paid off with ratings surpassing the network's expectations. But the $5.75 million spent on online video ads is only a drop in the bucket, according to a new estimate by eMarketer.

Requiring users to download Microsoft's Silverlight media player to watch video coverage on NBCOlympics.com -- rather than relying on the more ubiquitous Adobe Flash software -- limited the potential size of the video audience, according to eMarketer.

The firm came up with its video ad estimate by multiplying an estimated 4.5 million streams daily by 1.5 ads per stream at a CPM of $50. NBC issued data on Aug. 20 showing that 10 million users had watched more than 56 million streams during the first 12 days of the Games.

NBC could not be reached for comment Friday on the eMarketer estimate for online video advertising on its Olympics site.

Before the Olympics began, NBC touted offering an unprecedented 2,000 hours of live coverage online, along with another 3,000 hours of on-demand content. The network came under criticism in some quarters, however, for not putting the entirety of its Olympics programming online and airing the most popular events exclusively on TV.

Even so, eMarketer concluded NBC's online effort further showed the strong market for online video surrounding major sports events. "If not setting standards, it's an indicator for what can be done just as CBS did with full streaming online of the NCAA tournament," said David Hallerman, senior analyst at eMarketer.

He added that sports programming is especially well suited to online video "because of the way it can be sliced and diced by the audience." It can be offered live or on-demand, packaged as highlights or mined for archival material. And advertisers can be confident their brands are matched with professional content.

Hallerman also doesn't fault NBC for not simultcasting the entire Olympics online. "While NBC is certainly protecting its legacy TV business, that isn't necessarily, in the short term, an unwise thing to do," he said. "It's a test to see how much you can put online and how much traffic you can get."

However, Alan Wurtzel, NBC's president of research, acknowledged in a conference call two weeks ago that rather than cannibalizing the TV audience, the Internet actually was helping fuel interest in the Games. Had NBC opted to simulcast the Olympics, he suggested TV ratings wouldn't have been hurt.

According to NBC's Total Audience Measurement Index (TAMI), tracking Olympics audiences across media, TV viewership during the first week of the Games hovered around 100 million while online ranged from about 4 million to 8 million visitors.

While NBC may have limited its video audience by using Silverlight, the positive user experience would benefit the network in future Web video initiatives. "Having a good (media) player is going to be one of the elements that helps to grow online video advertising," Hallerman said.

Last week, eMarketer issued a revised forecast of $550 million for Web video ad spending in 2008, up from $324 million last year. The category is expected to hit $5.8 billion in ad dollars by 2013.

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