September 2006 - The Olympic Effect

Understanding how the 2006 Winter Games caused significant shifts in the media landscape, and what media buyers can do to prepare for the 2008 Summer Games.

By Dick Wechsler

Major events, like the Super Bowl and the Academy Awards, have a significant impact on both viewership numbers, the size of the audience, and viewership patterns-what they are watching and when they are tuning in. These fluctuations can have a significant effect on the DRTV advertiser. In DRTV, every commercial clearance matters. As a result, it is incumbent upon the DRTV planner and buyer to anticipate these swings in viewership to most effectively achieve the return on investment they desire.

This year, the Winter Olympics fell in the middle of first quarter. From Friday, February 10 through Sunday, February 26, the NBC network and its cable group, including CNBC, MSNBC and Bravo, presented the most exhaustive coverage ever of the Winter Games. Monday through Friday, daytime coverage could be seen on cable. Prime coverage was carried by NBC from Monday through Sunday. On weekends, daytime coverage was carried on all participating NBC properties.

In the past, before the television audience was as fragmented as it now is, the Winter and Summer Olympic Games caused significant shifts in television viewing patterns. A study compiled 12 years ago by Ogilvy Mather Direct concluded that non-Olympic networks lost about 20 percent of its viewership to the Olympics. This study was done when ABC, CBS and NBC ruled the airwaves, before the rise of cable.

There is a far different landscape today. As a result, the Olympic effect was felt across a variety of cable networks and DRTV campaigns. Interestingly, responsiveness improved for some and deteriorated for others. To better understand the cause and effect of these swings Lockard & Wechsler Direct of Irvington, N.Y., conducted a study of the television viewing patterns during the February 2006 Winter Olympics. Eddie Wilders, a senior analyst at Lockard & Wechsler Direct, designed the study.

“We wanted to identify shifts that might advantage or disadvantage the DRTV advertiser,” says Wilders. “Did the overall TV audience grow? What networks gained audience and which networks lost audience? Was the effect of Olympic coverage greater during daytime or primetime?” Wilder explains.

“The bottom line is this: there are few if any other television events that dominate the airwaves for as long a period of time as the Olympics,” Wilders notes. “Understanding what took place during the Winter Olympics would give us a better road map to follow for campaign planning during the 2008 Summer Games, as well as future Olympics beyond that.”

The Olympic analysis covered 17 cable networks from Friday, February 10 through Sunday, February 26. It looked at changes in overall viewership, as well as daytime and primetime delivery. Response rates were also analyzed, as were four specific active DRTV campaigns.

The networks covered by the study spanned a broad spectrum of programming. Included were those covering the Olympics: CNBC, MSNBC and Bravo; news networks like Fox News and CNN; the female networks Lifetime and LMN: sports and male networks, ESPN and Spike; the documentary networks A&E, The History Channel and Discovery; the entertainment and music networks ABC Family, USA, TBS and TNT, and MTV.

The Winter Olympics caused a significant and sustained spike to the total television viewing audience. Overall, the percentage of households using television (HUT) jumped from 38.1 percent, the week of January 30 through February 5, to 39.5 percent from February 7-12 (the Olympics started on February 10) and 39.4 percent from February 13 through February 19 and 39.5 percent from February 20-26. The fact that HUT levels dropped back to the pre-Olympic levels of 38 percent immediately following the games, confirms that the event attracted new viewers to television.

In total, 5 million more people watched television during the Winter Olympics. The audience grew by 3.8 percent during primetime and between one and .6 percent during the day.

Five million additional television viewers are a potential boom to DRTV advertisers. It’s simple math. More viewers per dollar spent should translate into improved efficiencies and a lower cost per response. Surprisingly, the increased viewership, did not translate into increased viewership on individual cable networks. Only TNT benefited from the increased viewership.

Viewership of Fox News, a DRTV stalwart, dropped 30 percent in primetime during the Olympics (see Fox News chart below). This loss in viewership had negative repercussions on several campaigns. Another big loser was CNN. In primetime, the networks ratings dropped more than 30 percent, falling from .56 down to .39. While Fox News primetime audience returned immediately following the Olympics, CNN’s remained more than 14 percent below average the week of February 27.

A&E, which like CNN reaches an older audience, also lost viewers to the Olympics. While its audience held steady during daytime, it dropped in prime from a pre-Olympic average of .76 down to .58 (see A&E chart below).

USA, another of the most-watched cable networks, also suffered audience attrition during the Winter Games. USA’s daytime ratings dropped from .62 down to .56. Primetime ratings dropped more than 25 percent, from a pre-Olympic 1.75 down to 1.29.

While four of the most watched cable networks lost share to the Olympics, the most surprising finding of the study was the relative stability of cable viewership. Lifetime and LMN held steady, as did Spike, ESPN, MTV, TBS, Discovery, ABC Family and The History Channel.

The stability of the overall cable audience is also reflected in the performance of several DRTV campaigns over this same period. The cost per order of Product 1 (see chart below), which targets women, increased only marginally during the Olympics. Product 2, a personal care item (see chart below) saw its CPO improve by 40 percent despite the fact that the CPO on Fox News increased three-fold during the same period. The CPO on Fox News came back in line immediately following the Olympics.

Product 3 saw its cost per lead improve 11 percent during the Winter Games before returning to its pre-Olympic levels. Another lead generator in the natural supplement market enjoyed a 14-percent improvement during the Olympics.

It’s hard to explain why the products analyzed performed as well as they did during the Winter Olympics. Consumer confidence may have a lot to do with it. First-quarter results are often buoyed by seasonal optimism, which carries over from the holidays into the New Year. The second factor may be that cable networks unrated by Nielsen benefited from the higher HUT levels during the Olympics. Thirdly, the networks we analyzed largely lost viewership during primetime. Daytime ratings held constant and daytime cable remains the keystone to so many DRTV campaigns. Finally, despite all of the expanded coverage, the Winter Olympics remained a primetime viewing event and the majority of the 5 million additional viewers who came to television found their way to NBC.

Despite the higher HUT levels during the Olympics, its impact on DRTV was negligible. However, it is important to note that the news networks CNN and Fox News lost a large percentage of their viewers, as did A&E. As the study was limited to 17 networks, it’s likely that other news networks and older skewing networks should be avoided during future Olympic broadcasts.

Another consideration is to discount rates during special television events like The Olympics. The Ogilvy Mather study indicated that inventory on non-Olympic networks should be discounted by 20 percent during the Games. It is important to note that the Ogilvy analysis covered the spot television market and that the Big Three broadcast networks cast a larger shadow. However, Carolyn Sura, executive vice president and media director at Lockard & Wechsler, reports that she still used the Ogilvy findings to plan and buy during the 2006 Winter Games.

Finally, it seems, that unlike 12 years ago, when the major networks still dominated the marketplace, the fragmentation of television has brought broader stability and efficiency to the marketplace. Viewership is certainly affected by events like the Olympics, but its impact on DRTV is nowhere near as extreme as it once was.

Dick Wechsler is president and CEO of Lockard & Wechsler Direct in Irvington, N.Y. He can be reached at (914) 591-6600. We would appreciate your feedback. To submit comments, e-mail the magazine at [email protected].


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