FOR IMMEDIATE RELEASE
Thursday, January 11th, 2018
TRANSCRIPT – NBC SPORTS GROUP AD SALES UPDATE CONFERENCE CALL
Dan Lovinger
Thursday, January 11, 2018
Chris McCloskey: We’ll hear from Dan Lovinger, our EVP of Ad Sales for sports. He’ll make brief opening remarks and then we’ll open it up for questions.
Dan Lovinger: Good afternoon, everyone. Thanks for this opportunity to speak with all of you today. I really appreciate it. We’re a short 24 days away from February 4th when NBC will broadcast Super Bowl LII and then just four days later the XXIII Olympic Winter Games from PyeongChang, South Korea. As you likely all know by now, this is the first time in history that one media company has had both events so close together.
Everyone working here in sales at NBC Sports feels incredibly privileged to have this unprecedented opportunity and challenge. As a result of some inspired work being done here, we have some good news to share with you all. And it’s good news, not just for us here at NBC, but we also believe for the industry.
We’re nearly sold out for Super Bowl LII with only a handful of game units left. Advertisers continue to recognize the massive scale and reach of the Super Bowl as evidenced by the fact that we’ll average more than $5 million for a 30-second spot in the game.
In addition, our pre- and post-game units are also well sold, as is our special presentation after the game of This Is Us. Looking at this holistically, we expect February 4th will set the single-day record for advertising revenue generated by a single media company.
Olympic sales are also going very well. With 28 days to go, we continue to pace ahead of Sochi and we expect to exceed $900 million in national ad sales, which would be a Winter Games first. Advertisers continue to value the scale and the dominance of the Games and are particularly proud to associate their brands with the Olympics.
As I’ve mentioned before, we’re selling the Games for the first time with Total Audience Delivery (TAD), which measures simultaneous viewing across multiple platforms.
Primetime, for example, we’ll have simultaneous coverage across NBC, NBCSN, and our digital platforms. And as you know, primetime will be live across the country, a first for a nondomestic Winter Games.
Now, speaking of live, these Olympic Games will have more live hours of coverage than ever before. The 14-hour time difference between PyeongChang and Eastern Standard Time means, for instance, that 10 a.m. in PyeongChang is 8 p.m. here on the East Coast.
As you all know, many of the snow and sliding sports require natural sunlight. So we are chock full of great events ready to be broadcast live in primetime, from skiing and snowboarding to bobsled and even figure skating.
It’s worth mentioning that there are also a number of brands that are buying across both events, seizing upon this unique opportunity to further amortize their investments in creative end media by reaching an audience of extraordinary scale.
At last report I told many of you that roughly a quarter of our revenues tied to these two events came from advertisers that are participating in both of the events. That number has steadily increased to roughly a third of all revenue.
So over the course of 22 days in February, we expect to deliver close to $1.4 billion in national ad sales for the Super Bowl, its pregame and postgame, and for the 18 days of the Winter Olympics. Now you’ll probably understand why our marketing department is using the phrase #bestfebever.
I want to see if I can get a little more detail from you on a number of spots. When you say handful, some buyers I’ve been talking to is less than 10. Can you give us more concrete number on how many you have left to sale?
Dan Lovinger: That’s accurate. It’s less than 10.
And the buyers also suggest that when you say north of five, that price would probably encompass not only the spot but also Spanish language and digital. Does that sound accurate to you?
Dan Lovinger: Yeah, we’re packaging the Spanish language and the digital with our NBC broadcast. So it’s all one number.
And the category of Super Bowl, who is stronger and how many freshmen advertisers you may be seeing?
Dan Lovinger: Category-wise it’s a fairly traditional mix relative to other Super Bowls. I would tell you that certainly the automotive category and the studio categories are strong and well represented.
In recent years, you’ve seen CPG pick up and certainly that will be well-represented. Consumer electronics are there and teleco, of course.
So you’ve got that plus some of the other traditionals, i.e., beverage, and it makes for a pretty broad, diverse group of advertisers.
As far as freshmen, I don’t have a breakdown for you on first-time ever. I imagine we can get that to you some other time, though.
Could you go through the Super Bowl numbers again, total revenue and average price per spot?
Dan Lovinger: I said we would be averaging north of $5 million per spot.
You said something about the total revenue for the day will be a record?
Dan Lovinger: Yeah, well, we believe it will be. We’re looking at a combination between pre-and post-Super Bowl. Obviously the game itself and our special presentation of This Is Us, we are very confident that this will drive a record revenue for the day.
Are we talking about $500 million?
Dan Lovinger: I don’t know that we’re ready to give you the exact number.
You said $1.4 million in February and you said $900 million for the Olympics?
Dan Lovinger: North of $900 for the Olympics. You can do the math.
$500 million?
Dan Lovinger: Close to it if not there.
And can you just get me a statement just about the value of live television right now? Obviously this is where, I’m pretty certain as an advertiser you’re going to be able to see my commercial. How valuable has that become in light of everything that’s happening with scripted television?
Dan Lovinger: Certainly the value of live is evident. We see it through all of our sports. I think what’s also incredibly valuable is big ratings, and when you look across whether it’s the Super Bowl or the 18 days of the Olympics and a number of other events frankly on NBC, i.e., the Golden Globes, there just aren’t a lot of places you can find big ratings in a live environment. So advertisers do clamor to those types of opportunities, largely because it’s communal viewing.
People are watching and there’s social amplification that goes on of not just what’s going on with the content but also with the advertisements.
What does your research show about audience intent to view and enthusiasm for the Olympics? And how does that compare to previous times in Sochi and Vancouver cycles?
Dan Lovinger: Right now, at this stage, intent is right where we want and expect. It’s at or above where Sochi was at this point leading up to the Games.
And quite frankly, we’re just starting to turn our marketing spigot on, which I’m sure you’ll be hearing more about and seeing more across NBCUniversal and even off of some of our properties in the media landscape.
So we’re very, very pleased with intent to view and awareness is picking up, as it should be at this point, about a month out.
I know you said you were going to be selling for Super Bowl, digital and TV together, but are you selling any digital-only ad packages?
Dan Lovinger: Yes, we are. We have a handful of packages that are digital-only. And that’s a first as well. Similarly, in the Olympics, although you didn’t ask, I can just give you this information, in the past we would not sell digital on its own in the Olympics, but we’ve started to do that with the PyeongChang Games for the first time.
Can you talk at all about rates?
Dan Lovinger: No, I’d rather not, because I mean the packaging is really the predominant way to do things. But each deal is different. So it would be kind of pointless to give you a rate structure.
And I was just also curious, if there was any – the Super Bowl is usually, you know, not connected to ratings for the rest of the season, but I was curious if this is coming up in conversations at all with advertisers?
Dan Lovinger: You know, it’s not. And I think most of the advertisers, if not all of them, have a pretty good understanding of sort of the power of the Super Bowl and consistently over the past five to six years the Super Bowl delivers 110 million, roughly, viewers.
Whether it’s a great game or a blow-out, regardless of the matchup, I think people recognize that the Super Bowl sort of transcends sport and even the game itself. So we’ve not had that concern. In fact, the heavy sellout levels to me indicates that advertisers are leaning in and confident that the game will deliver.
What about politics, with the kneeling, has that come up at all?
Dan Lovinger: No, all we’ve seen is enthusiasm for the Super Bowl. I think, as I said, the game itself is – it almost transcends the season. And people are looking at it as, again, an opportunity for communal viewing. It’s the only environment where viewers actually admit that they look forward to the commercials as much as the content itself. So it’s really about that phenomenon.
I was hoping you could talk a little bit about the importance of the digital sort of cross-platform selling and especially the kind of content you’re creating for Snapchat, BuzzFeed around the Olympics. Can you give us a big picture look at that?
Dan Lovinger: Yeah, first off, I think the definition of digital has almost become irrelevant. It’s really, are they viewing our content? And if so how do we capture those viewers on behalf of an advertiser? So digital can mean everything from PC-based viewing to Connected TVs. And if I’m watching on a Connected TV from my living room sofa, that’s no different than watching through a set-top box.
As far as how we have packaged these together, we do it in a way with our Total Audience Delivery. We create a common denominator, P2+, which is a demographic that you can pivot from linear to digital and back again. It’s the only demo that sort of is common to both linear and digital.
So if we see a spike in consumption on our digital platforms, we can move our delivery to those digital platforms and deliver on a campaign promise more effectively. So that use of a common metric, P2+, that’s, again, a first for us in the Olympics. And it’s going to allow us, I think, to be much more effective at delivering, regardless of where the viewing comes from.
Do you think that will generate incremental revenue, or how much do you think that is going to drive the overall numbers higher this time?
Dan Lovinger: I don’t know that I would put it that way. I think what it does is it allows us to be more agile and efficient with our viewership so we’re not wasting viewers. We’re able to make sure that wherever the viewership comes from, we can place the ads effectively against that viewership. So it’s hard to give you sort of an incremental number, but it’s definitely an efficiency driver. And frankly it allows us to deliver against our promises with better likelihood.
You said that Super Bowl consistently delivers 110 million, I think you said viewers, is that 110 million households or viewers?
Dan Lovinger: Viewers.
Viewers?
Dan Lovinger: Yes.
Alright. The $5 million for a 30-second spot, I don’t expect you to know what it was for other networks, but how does that compare to the last time you aired the Super Bowl which would have been three years ago, right?
Dan Lovinger: Yeah.
Do you know what the comp number is?
Dan Lovinger: I don’t know the exact comp. But it’s definitely double-digit growth.
Chris, could you get me the comp number if that was ever available?
Chris McCloskey: Yes, absolutely. We’ll talk after.
As it regards to the Super Bowl, do you have the total ad inventory for the Super Bowl? Like, how many minutes are available for sale and whether you have changed that? There’s been some concern that there’s too much ad inventory. How did you go about trying to monetize the Olympics? How many —
Dan Lovinger: Super Bowl or Olympics?
The Olympics, sorry. The Super Bowl is kind of baked. But how much ad inventory do you have there? And could you do a quick description of how you’re going to move that advertising to the different platforms that – give an example of how you’re going to move the advertising to a platform to chase viewers. So that’s two questions: The total ad inventory for the Olympics and a sort of practical description of how you’re going to shift that advertising to hit the number.
Dan Lovinger: Yeah. I mean, what I would tell you is the Olympics are one of the less-commercialized programs in primetime television. So viewer perception might be that they’re more commercialized or over commercialized, but I would argue that’s only because the viewers are so much more intoxicated by the programming content that any break in the action to them is difficult.
But in reality we are no more commercialized. In fact, we’re less commercialized than sort of the average primetime.
As far as your second question how do we plan to essentially pivot delivery, I guess the best way would be to give you an example. If we made a deal with an advertiser where we guaranteed them – I’m making these numbers up, obviously – but we guaranteed them that a million viewers would be delivered to them across the 18 days of the Games – obviously a low number because the deals are significantly more, but a million viewers across the 18 days of the Games. In the past it would be very strictly regimented that it would be 800,000 viewers on television and 200,000 viewers digitally.
And the definition of a viewer would be different. It might be a household viewer on television and it might be a stream or a P2+ stream in digital. Now what we’ve done is we’ve said we’re going to guarantee you a million viewers, period, end of story.
It might start as, in our plan, 800,000 in television and 200,000 digitally, but if we see a spike in viewership and decrease in linear or vice versa, we can deliver you 700,000 through TV and 300,000 through digital.
So it gives us a little bit of flexibility to take advantage of those changes and viewing habits, because the Olympics typically does sort of, I would say, lead a lot of these viewing-consumption changes.
We saw, as an example, in Rio over 30 percent of all digital minutes consumed were consumed through Connected TVs. That’s up from zero percent in Sochi because there were no Connected TVs in Sochi.
So viewership essentially moved digitally from PCs and iPads and devices to over-the-top, 60-inch television screens, that digital consumption.
That number may grow. It may grow to 50 percent in PyeongChang. And we want to make sure that we’re able to take advantage and deliver the viewers wherever they are for the advertisers.
So there’s been a lot of issues with Facebook and Google and whether you’re delivering the ads that you say you are. This seems pretty complicated. How are you going to make sure this happens?
Dan Lovinger: Well, it’s all measured by Nielsen. There’s no complication. And this is all on our own domain. There’s nothing off domain. It is, in fact, the safest and purest digital environment you can buy.
So can you tell me, in terms of just your learning what you took away from Rio when there was a shortfall in the expectation for the television numbers, how does that narrative come up in your conversations with advertisers for South Korea? And how did you reassure them in those conversations about going into South Korea?
Dan Lovinger: Yeah. You know, what we really realized in Rio was that consumption patterns were changing. Viewers were viewing in different ways. And so I think we’ve all been trained and we need to retrain ourselves, and frankly that’s what calls like this are about, to think beyond old metrics.
An overnight household viewer is really just part of the story. And the same is true, by the way, in our primetime entertainment programming. When you look at the actual audiences, in many cases the audiences are adding up to more than they ever were before. But you just have to stitch them together because they’re viewing in different places.
So, for instance, as I mentioned in my opening remarks, in primetime for the Olympics, a viewer might view on NBC or NBCSN or they might view through some of our digital platforms.
A viewer is a viewer. If they’re passionate about the Olympics, it doesn’t matter whether they’re on NBCSN, on broadcast network, or digitally. We just have to find ways to put it all together, and that narrative has definitely changed. It’s changed drastically.
So Rio was definitely an eye-opener for us. It forced us to think about things like TAD and what it also encouraged us to do is to work with our advertisers so that they understand that as well.
So back in November, a year ago November I should say, we invited all of our top sponsors of the Olympic Games – IOC, USOC, TOPS – here to 30 Rock to share and learn together. And that’s where we introduced this notion of Total Audience Delivery.
And all of them nodded and leaned in and said, of course, we want to capture the viewers. We want our ads to run where those viewers are, and we want them to run in pure and clean environments that offer the action of the events, which is why NBC is frankly the only place to get that.
In terms of just monetary parity, I mean is that still a speed bump for you – I mean, just in terms of what you’re getting for the TV side as opposed to the digital side? Or is it purely because there’s still more on TV as a whole than there is on digital? Or is there still sort of a blind spot between the two?
Dan Lovinger: I’m not sure I understand the question. Can you maybe rephrase it?
So for advertisers, is there still like a psychological barrier, perhaps, just because of the measurement issue, right? In terms of a TV spot versus a digital spot?
Dan Lovinger: No. I think at least our experience in both the Super Bowl and the Olympics and these larger events is that a viewer is really a viewer. Advertisers are interested in reaching them wherever they are because they’ve chosen to come to this quality environment. And an advertiser’s commercial is still running in this quality environment.
So we haven’t seen that kind of differentiation that you might be, I guess, getting at in sort of the long tail of digital content. This is very, very clearly premium content that advertisers are willing to pay for regardless of where it’s taking place.
We’re coming off an NFL season that featured some really interesting experimentation in terms of the ad experience, picture-in-picture, six-second ads. If any game, as you say, transcends the season, it’s obviously the Super Bowl. But what can you say in terms of units or the overall viewer experience? Are we going to see some new wrinkles? Do you feel it’s starting to move away from the traditional 30’s? What can you say there?
Dan Lovinger: I might surprise you with this answer. What we’re seeing is more interest in long form than in short form.
You’ll see more longer form, longer than 30’s, I should say, in this game than you probably have in any other Super Bowl. And I really think that it just comes down to advertisers look at this as the ultimate platform to tell a story and storytelling takes a little bit of time. And it’s also a platform where you’ve got viewers that are actually interested in that storytelling.
So advertisers are actually stepping up and while we don’t see the finished product for a little bit, the creative concepts that we’ve seen and the storyboards that we’ve seen are marvelous. I think you’re going to see really entertaining stories being told.
Are make goods going to play a role at all in the Super Bowl and the Olympics?
Dan Lovinger: Remains to be seen. I imagine to some degree, as always in these events, there could be, but only if it makes financial sense for both the advertiser and us. It’s really less about anything other than that.
I just had a question about if you could go over, I kind of jumped on late as well, could you go over one more time, you said that it’s more than $5 million for 30-second spots during the game, and pre-and post-units have sold pretty well? And somebody asked a question whether there’s less than 10 left to sell. Was that for the Super Bowl or Sochi?
Dan Lovinger: That was for the Super Bowl.
And for Sochi, can you talk a little bit, you mentioned that you guys are pacing ahead. Can you tell me about the record that you guys are expecting to set?
Dan Lovinger: PyeongChang. Sochi was a few years back.
Sorry. For PyeongChang.
Dan Lovinger: We expect that PyeongChang – we will pace ahead of Sochi, and we’ll finish in excess of $900 million in national ad sales. And breaking the $900 million barrier would be a Winter Games first.
Total Audience Delivery in the past, I guess, some of the metrics that were provided for that number came from Nielsen and other third-party sources. What do you have in mind now as that has developed over the years?
Dan Lovinger: Obviously the television viewership comes from Nielsen. It’s a P2+ number. The digital viewership also comes from Nielsen. And we add the two together.
So it’s all Nielsen. It’s all their digital content ratings or total content ratings, whatever they –
Dan Lovinger: In general. I should say there are deals with some advertisers that prefer other sources of measurement and we’re happy to do it where available. But that’s the general, yeah. That’s the baseline.
In the past we have heard in the recent past about all this interest in added data to a lot of TV programming. Obviously with big high-level events like the Super Bowl and the Olympics, obviously people want to be in them, and in the past there hasn’t even been any necessarily ratings guarantee for the Super Bowl. Are there any advertisers that are looking for, to make any guarantees beyond what you’re offering for some of the first-party data or anything like that?
Dan Lovinger: Not in either of these two events. But I should tell you that data and big data played a large role in some of our sales activities for the Super Bowl, in particular. We came to market with a research study we called the “Super Sized Ad Model,” which basically, we used computer learning to analyze all of the spots in the past three Super Bowls.
We were able to look at over 575 different variables in each of these spots – for instance, is there a celebrity? Is it a 15, a 30, a 60? Is there light? Is there darkness? And is it comedic?
And we were able to, essentially, use a computer where the human eye wouldn’t be able to process all of this to create algorithmic predictions on what are the most important variables if you’re trying to achieve certain outcomes, such as winning the ad meter, or driving search, or creating engagement.
And so for the first time we actually went to the market with this kind of databased computer learning, and we were able to help advertisers that might have sort of struggled with the challenge and both creatively and otherwise of the Super Bowl get over the hump. And I think that’s what contributed to some of our earlier sellouts in the game.
How many advertisers took you up on some of this stuff?
Dan Lovinger: We had over a hundred meetings. And we continue to work with many of the folks that have committed to the game, we can run their storyboards through the ad model and we’re able to help them sort of tweak their intention, or tweak whatever their in tented commercial looks like to get closer towards that ultimate goal, whatever it may be.
You offered up how much sellout you were in the Super Bowl. Where are you with the Olympics? Can you give us sort of some guidance as it turns to where you are at least in prime time with the Olympics on the network?
Dan Lovinger: Yeah, I mean, the Olympics is a different phenomenon because it’s over the course of 18 days. So we have some days that are completely sold out and some days that aren’t. But overall, we’re extremely well sold, because as I mentioned earlier, our expectation is to exceed $900 million, and we believe the ratings will be somewhere close to Sochi’s ratings. So if we’re growing our revenue against relatively stable or flattish ratings, your sellouts go up.
Could you offer up what might be, I guess, the total audience guarantee, calling it maybe content audience delivery, guarantee? We kind of know what they were on the household basis in past Olympics, at least sources. Can you give us an idea where they, a range where they might be, what you’re thinking of?
Dan Lovinger: I mean, the metric or the demographic is P2+. As far as what that CPM guarantee is, it varies by advertiser depending on what events and days that they’re participating.
I’m sorry if I missed it, but did you provide any context and color on category-specific for the Super Bowl autos, movie studios, strengths there?
Dan Lovinger: Yeah, I think my comment was that you’re going to see a relatively stable representation of Super Bowl advertisers by category.
Certainly automotive and studio are strong. I mentioned that again CPG seems to be an emerging category in the Games. Certainly consumer electronics are there. And the standbys, i.e., beverage and financial services and teleco, are all well-represented.
So auto, you said, continued to be strong?
Dan Lovinger: Yeah, auto is particularly strong.
You said there’s less than 10 Super Bowl spots left. I think back in October you said only a handful of units remained. How much progress between October and now has been made? Trying to get a little bit of concept of how much movement there’s been.
Dan Lovinger: No, there’s been a ton of progress. I think the difference is in October we had eyes on the units in terms of advertisers expressing interest and working negotiations. Many of those have closed since then, to the point where, after you get through all of that, now we’re really down to the nuts and bolts of a handful of units.
I wanted to ask you about Universo. Again, are there any Universo specific ads being sold, or is that all in the context along with the English language and the digital situation?
Dan Lovinger: I would tell you that the majority of the ads are sold as sort of a single package across NBC, our digital platform, as well as Universo. But Universo is also selling some on their own.
So you’ll probably see a dozen or so advertisers on Universo that you wouldn’t see on NBC. Quite simply, that’s because there are some advertisers that don’t have Spanish creative. So we can’t force somebody to buy Universo. But they might not have call centers as an example equipped to handle Spanish language. So why would they want to advertise in Spanish.
So we certainly make exceptions. And that’s where you’d see Universo plugging those holes with Spanish-only advertisers.
And you guys will sell out on what day on the Super Bowl?
Dan Lovinger: You tell me.
So Mike Reynolds can come in and buy a spot for $5.5 million because he’s a newcomer, right?
Dan Lovinger: We might even give you a little break on that, Mike. No, I think we’re in real good shape and I’m not worried about final dates of sellout. I’m worried about making sure we do the best business for NBCUniversal and, frankly, for our advertising partners.
