Before the start of the Beijing Olympics, it was widely reported that NBC Universal intended its coverage of the games as an experiment in how audiences wanted to access video coverage: on TV, on the Web or even via mobile handset. But decisions made by NBC Universal about video format and access kept online viewership at www.NBCOlympics.com—and online video ad revenues—artificially low, according to an analysis by marketing research firm eMarketer.
That study estimates that the NBC Olympic site earned just $5.75 million from the pre-roll and overlay ads it attached to the 2,200 hours of live video it made available from the Web site and to the almost 3,000 hours of on-demand content.
The $5.75 million represents about 1.1% of the $505 million eMarketer projects will be spent on ads in online video this year.
Emarketer arrived at that figure by calculating video traffic of 4.5 million streams daily during the 17-day Beijing Games, positing a showing of 1.5 ads per stream, and then estimating a CPM (cost per thousand impressions) of $50 per ad.
While the NBCOlympics.com site saw strong traffic, relatively few of those visitors opted to watch video on the site. That was due in large part to a decision to use the Silverlight media player from Microsoft rather than the much more prevalent Adobe Flash player.
Compelling users to download a new media player probably throttled back the audience for on-site video, said eMarketer analyst David Hallerman. By Microsoft’s own estimate, as many as half the visitors to NBCOlympics.com arrived without having the Silverlight software loaded on their browsers.
Hallerman says the online Olympic effort was also gated by the fact that NBC Universal chose to air some of the most popular events only on TV, protecting its broadcast ad revenues.
“They winnowed out a lot of the most popular content,” he said. “That made the comparison [of offline and online viewership] less of a true test. For that, you have to compare apples to apples.”
The limits on available programming and the added complication of an unfamiliar media player are a few of the reasons NBC earned so much less on Olympic video advertising than rival network CBS Sports did with its online broadcast of the NCAA March Madness tournaments this spring. That coverage rang up $23 million in ads placed around its video streams. For the first time this year, CBS made the entire tourney available in live video and distributed those videos, with accompanying ads, to other sites such as YouTube.
Despite the relatively small video ad spend during the Beijing Games, Hallerman says NBC’s Olympics coverage does point out that sporting events can grow into a major component of video marketing.
“For a long time to come, especially for events that are available both on the tube and on the Internet, Web coverage will play a fill-in role,” he said. “Viewers won’t be choosing between one or the other medium as better.”
Online video programming may also provide supplemental audience by reaching Web viewers who would not have watched an event on TV. Hallerman points out that traffic to all Olympic-related sites spiked at noon local times.
“The at-work audience is not going to be watching television in most cases, but they could be watching over the Internet,” he said. “That’s another way to fill in potential audience.”
Viewers may have been drawn by the NBC Olympics site’s showing of full competition video in some niche events such as kayaking that would never get attention from either advertisers or programming directors on TV.
“These were often full stream with no announcer, so you were virtually watching raw footage,” Hallerman said. “I just got a kayak, so I found it very interesting.”
Hallerman also says the decision to compel visitors to use the Silverlight media player was an effort by Microsoft—a longtime NBC partner in other initiatives such as the MSNBC cable channel—to build out the installed base of its video viewing platform. Currently 80% of the video watched over the Web is viewed using rival platform Adobe Flash.
While the software change to Silverlight may have damped down viewing audiences and video ad revenues on the NBC site, Hallerman says, getting the software onto more browsers might actually give sports programming a higher profile on the Web in the future.
“It’s a good player and it’s going to be an important contributor,” he said. “It’s especially good for sporting events because it’s easy to rewind or fast-forward, which isn’t always possible on other platforms.
“It’s sometimes surprising to see companies have a longer-term view than just the current quarter,” he said. “But Microsoft and NBC may have been thinking beyond direct ad revenue here.”
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