NBC Hedges Its Olympic Bets: Buy A TV Ad, Get A Web Banner, Too

NBC Hedges Its Olympic Bets: Buy A TV Ad, Get A Web Banner, Too

NBC U (GE) has has sold at least 85% of its online ad inventory for the Olympic Games. How? By selling TV ads.

NBC is bundling its Web inventory along with broadcast buys. The move suggests advertisers are getting a bargain on the online ads, but it also helps NBC sell TV at a premium in a very tough ad market.

NBC U has already said it will report a combined viewership number for TV, online and mobile as one number, signalling it believes the impressions on different platforms are interchangeable.

It plans to follow through on that belief, too: It is going to try to use Web inventory to fix any shortfalls in its TV performance. NBC is airingthousands of hours of TV coverage--some of it with extreme niche-appeal. While the men's swimming final on NBC primetime will deliver predictable ratings, it's hard to know how many people will tune in for badminton and greco roman wrestling on MSNBC. NBC can make up any shortfalls by promising additional online impressions.

Is the strategy working? NBC says ad rates are up 10% since from the 2004 Games, which isn't terribly impressive given that it was four years ago. A 30-second spot in NBC's primetime coverage is running $750,000. NBC is predicting a $1 billion advertising haul for the Games, $850 million from national TV and $150 from local.

Whatever NBC U ends up attributing to online ad sales, it won't be keeping all the cash. NBC shares revenue with MSN, which is providing the infrastructure for NBC's Webcast of the Games online, as well as distribution on MSN.com. MSN also gets compensation from NBC U for traffic delivered to NBCOlympics.com.

A side statistical bonus: traffic from the games will accrue to MSN, just like traffic from the NBC U-MSN joint venture, MSNBC.com.

One thing seems certain: the Games will surely set a new viewership record for live sports on the Web and may become the most-watched Webcast, ever.

That's what MSN's GM of Entertainment and Sports Rob Bennett is expecting. He told us Microsoft (MSFT) has spent the last eight months building a system to accommodate demand, built around Microsoft's Silverlight media player and bandwidth from Limelight (LLNW).

Because it shares in revenue, MSN has incentive to push the Games. To that end, MSN is working on a redesign to accomodate editorial content from the Games. An Olympics "super-banner" will be stripped across MSN's homepage, with news from the games, a live medal count, and video from NBCOlympics.com.