McCain, Obama Overcome Olympic Hurdle, Beat Madison Avenue Ad Rates

Both John McCain and Barack Obama have shown at least some ability to rein in costs. Each is spending no more than $250,000 on average for a prime-time Olympic spot, dramatically below what other advertisers are paying.

The candidates' respective deals with NBC Universal mean they have locked in unit costs at a significant discount to the $700,000-plus going rate, multiple sources familiar with pricing said.

Federal regulations mandate that candidates are entitled to the lowest unit rate, but that's within 60 days of an election. With Election Day in November, McCain and Obama did not have that benefit when they made their deals.

The sources that are familiar with Olympic pricing expressed some curiosity about how the candidates were able to secure such favorable pricing. On average, their costs could be as much as $500,000 per spot less than what some of the country's largest advertisers have paid. All spots in the Games bought by both campaigns are 30 seconds.



"Whoever bought this, I want working for me," said a Madison Avenue executive who has purchased Olympic time.

Washington area political consulting firms--Media Ad Ventures for McCain, and GMMB for Obama--negotiated the agreements with NBCU.

"Put it this way: if two small agencies down in D.C. are getting these prices, everyone in New York would be out of business from a buying standpoint," said an agency executive who is familiar with the Olympic price structure.

All Olympic deals are not created equal. Pricing can vary based on where spots run, including in which events and in what positions. Costs can also be based on an advertiser's flexibility in allowing a network to alter a schedule.

Also, McCain and Obama are not receiving audience guarantees for their spots (as many Olympic advertisers do)--a possible help in negotiations.

But an executive involved with Olympic deal-making said forgoing guarantees can lower pricing, but not markedly. The executive called the prices McCain and Obama paid "extremely low" and "a good chunk below market."

An NBCU representative did not comment on the difference in pricing that the candidates received compared to other advertisers, but said: "We worked very closely with both campaigns to provide them with this singular opportunity to reach millions of American voters."

Records filed with NBCU show that McCain bought $6 million in Olympic time and 25 prime-time spots. Obama is spending $5 million and has 20 prime-time spots.

Based on those figures, if each candidate only bought prime time, the average unit rate for McCain would be $240,000, while Obama's would be $250,000.

But both also bought more than 100 other spots in other dayparts, effectively dropping the prime average.

McCain has purchased 110 other spots on NBC's late-night, weekday and weekend broadcasts and on cable networks such as USA and Oxygen. Obama, similarly, has bought 119 spots across those properties.

For all Olympic inventory, McCain's $6 million gives him 135 total units, while Obama's $5 million brings him 139. That's an overall average of $44,000 per spot for McCain and $36,000 for Obama.

Nielsen figures show that the average costs for spots in all dayparts at the last Summer Games--Athens in 2004--was $339,000. Two years ago at the Winter Games, it was $350,000.

NBCU apparently struck the deals with McCain and Obama without an intensive focus on unit rates, focusing more on negotiating a total dollar figure and then what would come with it.

In the records of political ad buys that broadcasters are required to make public, NBCU released only the total dollars committed by each campaign; the number of spots bought; and how many spots will run in which dayparts. There were no unit costs provided. Those apparently would be available if it were within 60 days of the election.

On Thursday, NBCU said it had sold considerably more than the $11 million McCain and Obama bought. It said with one day to go before the Opening Ceremonies, it had deals for revenues exceeding $1 billion.

Word that first Obama and then McCain had purchased Olympic time was first reported by Advertising Age. It is rare for presidential candidates to buy ads on broadcast networks, as they prefer to run targeted local spots in battleground states.

"We are pleased that for the first time in many years the candidates running for President of the United States have chosen the Olympics to deliver their messages to the nation," the NBCU representative said.

NBCU files show that discussions with the Obama campaign about buying time (not necessarily in the Olympics) began on May 22--two weeks before Hillary Clinton conceded the nomination. Curiously, the McCain campaign contacted NBCU that same day.

Discussions between NBCU and the campaigns continued through the summer about various possibilities. At one point, NBC tried to sell the Obama campaign on an opportunity that might have helped it appeal to women voters: 206 spots in "Days of Our Lives" for $10,000 each.

The Obama campaign was also offered 16 prime-time spots (30 seconds each) to run between June 23 and August 10 at a cost of $94,000 each. And the campaign was offered a $59,300 unit rate for spots on "The Tonight Show." But the campaign did not go through with any of it.

Conversations with McCain's campaign included an effort to persuade it to buy time during the Olympics, but not during the competition. It offered weekday spots on NBC News programs from Beijing, including the "Today" show for $58,700 each and "Nightly News" for $55,300. Those conversations did not yield an agreement.

Wendy Davis contributed to this story.

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