Every two years, businesses all over the world look to advertise on one of the biggest marketing platforms around, the winter and summer Olympics. Not only is it one of the most-watched events of the year, but advertisers also are often able to reach an audience that they may not have been exposed to with their regular campaigns.
Many advertisers plan their annual budgets around the games, and others adjust existing campaigns to ensure they can get the most out of advertising in such a high profile event. However, expectations can sometimes fall short of reality.
This year, NBC had difficulty reaching the expectations of their advertisers, delivering lower than expected ratings for the Rio Olympics. There are several factors that could have contributed to the decline in viewership, including the change in media consumption. While in the past, people would simply gather around the TV to watch the games, they are now watching them on TV as well as streaming on a computer or mobile device. Medialife reported that more than 80 million people streamed at least one Olympic event in 2016. This is likely not only due to changes in consumer habits, but also potentially due to the tape delay on several of the events.
So, what happens when the broadcaster doesn’t meet the expectations of the advertiser? When an advertiser purchases TV spots with guarantees on ratings, but those ratings are not achieved, the vendor (NBC) is responsible for making up any deficit to the advertiser. Because Olympic viewership was down this year, NBC is now responsible for providing advertisers with makegood spots. A makegood is the previously planned spot running again, in a similar program or time slot that would reach the missing viewership.
If NBC fails to provide acceptable makegood arrangements, advertisers and media buyers will be less likely to continue to buy TV spots, especially sports and specials, as there is potential that the ratings will not meet expectations.