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Olympics Ad Spending Bucks Downward Trend
8/7/2008

NBC has generated more than $1 billion in ad sales for the Olympics, even as dire forecasts continue to emerge from media buyers.

NBC Universal executives told the press this week that the target revenue goal was passed just as the network and its multiple sibling outlets prepare to launch into an unprecedented 2,900 hours of live coverage. The Games begin Friday, Aug. 8, at 7:30 p.m., with the opening ceremony at the Bird“s Nest. Both the extent of the coverage as well as the ad revenue booked represent record-setting amounts, as does the $894 million NBC spent for the broadcast rights to the Games.

Meanwhile, New York media buyer Carat lowered its spending expectations for the year to less than 3 percent growth over last year, according to BtoB Online. It had previously pegged 2008 growth at more than 4 percent. BtoB further reported that a rebound was not expected for another couple of years. The prognostication reflects comments proffered earlier this year by News Corp. chief Rupert Murdoch, who said the economy was in for a rough ride over the next 18 months. Murdoch said reined-in ad spending would slow growth of his empire“s profit from around 20 percent to somewhere in the neighborhood of 5 percent.

Carat“s prediction was based on a survey of marketing executives in which 75 percent said ad budgets would be either flat or down this year. Other media buyers are making similar downward adjustments, although simple deduction would be just as sufficient as surveys.

Retailers are filing for bankruptcy in droves and taking ad budgets with them. Mervyns, Linens n“ Things, Sharper Image and the Bombay Company are among the casualties. Starbucks announced the closure of 600 stores--all from the fallout of millions of variable and interest-only mortgages written during a real estate bubble. And since a substantial chunk of auto loans are written on home equity, the real estate implosion hit the automotive industry--the single biggest buyer of TV ads.

The Wall Street Journal estimates that advertising by the auto industry comprises about 28 percent of revenue at local TV stations and nearly 12 percent on broadcast networks. Most of the pullback is coming from the big automakers like General Motors, which is cutting its ad budget by around $20 million, according to WSJ. Spending by local dealerships continues to be relatively strong by comparison.

Diminishing ad revenues from retail, automotive and other industry sectors will be offset this year by the Olympics and political spending. Both will intersect during the Games with around $11 million worth of airtime having been booked by presidential candidates John McCain and Barack Obama. McCain“s campaign was reported this week to be putting down $6 million to run ads during the Olympics. Obama“s last week signaled it would spend $5 million, marking the first time a presidential candidate bought national airtime during the Games in 12 years.

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