Online Video Ads Make Inroads at the 2008 Olympic Games

NBC will look back on the 2008 Olympic games as a huge success from a TV ratings standpoint, as the history-making victories of swimmer Michael Phelps attracted one of the largest TV audiences for the summer games in recent memory. But when it comes to online video ads, the network didn’t quite make it to the winner’s podium.

According to eMarketer, video ad spending on NBCOlympics.com will reach $5.75 million by the time the games are finished. It’s a respectable number and by no means a failure, said the research firm, but it falls short of the pre-games hype.

The story here is not black or white, but grey,” said eMarketer senior analyst David Hallerman. “Almost all year people have been talking about the Olympics being a huge boost to online advertising and particularly online video advertising. It has not been huge a huge boost, and yet, as a singular event, yeah it has gotten pretty good results.”

To put the overall take in perspective, $5.75 million would represent 1.1 percent of eMarketer’s projection for this year’s online video ad spending in the U.S of $505 million. While $5.75 million is a significant amount for any single event, it’s not quite the windfall that many were expecting.

Among the primary reasons that number wasn’t higher was the fact that NBC required users to download the Microsoft Silverlight video player to watch the games (and by extension, the ads) online. (Silverlight is Microsoft’s answer to the much more prevalent Adobe Flash.) Any time a publisher requires users to download software, it is naturally going to lose some eyeballs.

“Their version wasn’t compatible with some older versions of Windows and Macintosh, and some people couldn’t use it from behind firewalls, meaning you lost the lunch time crowd who were [trying to watch video] from the office,” said Hallerman.

Another barrier was the simple lack of inventory. In order to protect its legacy business, said Hallerman, NBC intentionally didn’t upload many of the more popular competitions, preferring to make viewers tune into the games on TV. Meanwhile, with the games happening in Beijing, there were significant lag times before certain sports were uploaded, during which many viewers simply lost interest.

The good news, said Hallerman, was that scores of users have now downloaded the new player, which will increase the number of people watching online video ads — particularly for sporting events — in the future.

“The pro here is an investment in the future,” he said. “The quality of the video player was excellent, and is especially good for sports, because you can fast forward or reverse, and there are no glitches. It’s a very seamless player.”

EMarketer arrived at its estimates based on NBC’s announcement that it streamed 25.6 million videos in the first seven days of the games. The research firm then estimated the daily average audience along with an average of 1.5 ads per video and an estimated CPM of $50. Hallerman said most of the ads on the videos were either pre- or mid-roll. The numbers do not include any kind of ads on the site other than video.

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