Tuesday, August 26, 2008

Olympic Games - the value of a viewer

This week we have seen a lot of articles about NBC’s huge success with the Olympic Games. It’s a bit difficult to get all the final and consistent numbers but it seems that NBC have had close to 300 million TV viewers and almost 100 Million Online viewers for their Olympic coverage. In total NBC got $1 Billion TV Advertising revenue but only a bit over $10million Online Revenue. So, what does this mean in terms of monetized viewers in the TV versus Online world? NBC got $3 for a TV viewer while it received only $0.1 for an Online viewer, that is a 30:1 value ratio.

Why? Is the TV viewer 30 times more profitable for the advertiser? Is advertising to the TV viewer so much more impactful? No, the economic value difference can’t be explained by the different potential impact for advertisers but by the simple economic balance between demand and supply. There is a much tighter relationship between demand for TV spots and supply than with the demand and supply for Online advertising. Why? Because marketers still haven’t figured out the true value of viewers in both these channels, so the majority sticks with what they are used to. And this is TV. And it might get them some tickets from NBC or the media companies to some of the more interesting Olympic events. But to be fair we can't forget that there is objectively a much higher supply for Online space than for TV spots. Both these factors drive the tremendous value difference, not any ROI driven intelligence.

2 Comments:

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