The price tag for the deal made news, but as the Times explained, sporting events are becoming one of the last bastions of the traditional broadcast-advertising model. The paper writes, “As more viewers consume media on their own schedules, often without commercials, broadcasters regard live events as the only content that compels most viewers to watch in real time, as one vast audience, without filtering out advertisers.” But just because the broadcast-ad model still performs well during sports, does that mean major brands should be ceding that territory to media companies? If fans love sports so much, did mega-brands miss an opportunity when they failed to bid against NBC?
Today, viewers are trained by the millions each month to consume content “over the top” using services like Netflix and Amazon—and soon HBO GO, ESPN, and CBS. We watch content on-demand, across devices, from a variety of different providers. And increasingly, consumers are showing a desire to consume this content without ads—along with the willingness to pay to do so.
But if consumers are, increasingly, skipping the ads that interrupt the experiences they enjoy, how will marketers build brands in the future? Today, early investors like Western Digital and IBM are starting to build strong connections with their prospective customers by creating and publishing/broadcasting the original stories their customers want. As content-consumption habits continue to shift rapidly, the question has become: Should mega-brands be bidding against media companies for rights to some of the world’s greatest stories? In short, should Coke have bid for the Olympics?
Let’s do the math in today’s dollars, to keep it simple. Coca-Cola spends approximately $4 billion annually on marketing, according to a recent interview with its former CMO. That amounts to $44 billion between 2022 and 2032. If Coke wanted to go against NBC for the exclusive broadcast rights—across all devices and formats—to the Games, it would have needed to commit about 17 percent of its global marketing budget. For reference, since NBC acquired only the U.S. broadcast rights, Coke does 21 percent of its sales in North America.
This would have been a significant bet for Coke. On the downside, acquiring the exclusive rights to share Olympic stories would consume a major part of its total marketing spend, even if Coke could negotiate a discount for buying globally. On the positive, every two years, the entire world would have turned to Coke for the month of the Games—and the buildup in the quarters preceding them—for stories that made them happy.
Brighter minds than mine at Coca-Cola, McDonald’s, Anheuser-Busch, and MasterCard will need to decide whether buying broadcast rights to the Olympics, World Cup, or Super Bowl might make sense one day. But one thing is certain: The broadcast-ad model is in accelerating decline, and sharing the world’s greatest stories is one way mega-brands might be able to differentiate in an over-the-top world.
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