Monday, October 28, 2013

Economics of Olympic Advertising

The Olympics, while a global event, are advertised differently in different countries. When examining this advertising, it is important to remember what parties benefit the most from advertising the Olympic games. With the Olympics being one of the most-watched televised events of the year, broadcasting stations are the first to come to mind in terms of benefitting from advertising. In the United States, NBC entered into a $4.38 billion contract for broadcasting rights, but in Russia, host country of next year's Winter Games, a triumvirate of government-owned television stations hold these rights. The differences between these entities can clearly be seen in their advertising efforts for the upcoming event.

The above image is one most commonly used in Russian advertising for the Sochi Olympic Games. It features the official logo of the games, and is also used by the networks that will be broadcasting the games. However, this image has no outside advertising material on it whatsoever and reflects only the official graphics designed to promote Russia's image in the games. 

This image, while similar visually to the Russian logo, is an example of NBC's marketing approach to the 2014 Olympic Games. Because NBC not a government entity, they are concerned with the profitability of their broadcast as a return on their immense initial investment. 

Primarily, the difference in advertising and marketing between these organizations stems from economics. As explained here, NBC's race to ensure that advertising during the broadcasts of the Olympics is indicative of a dire need to ensure profitability of their contract. The Russian broadcasting stations, on the other hand, have no such incentive. Because they are government-owned, there is no need to guarantee separate funding for these news stations, thus no need to include a logo or broadcasting information in the image for the games. Money from Olympic sponsors will still ultimately be used by the government to promote Russia's image in this event.

In order for NBC's investment to be a success, not only do they have to gain the backing of many advertisers, but they also need to guarantee those advertisers a large viewing audience. Because the initial contract ensured NBC primary coverage for the next 4 Olympic Games, the audience during Sochi will determine whether or not advertisers decide to continue their support of NBC's coverage. Russian broadcasting companies have no such concerns. The main three stations did not make any investments to broadcast the games, and their advertising will not be determined by the viewers of the games. On the contrary, it is the Russian government that has invested the most in both hosting and broadcasting the Olympic games, thus their marketing materials seek to reflect the Olympic spirit of the games while promoting Russia's image worldwide.


2 comments:

  1. The qualities of the advertisements seem so different to me. This is interesting when we realize the different government structures involved. The american structure, which is founded on capitalism, is concerned primarily with profit, and delivers what I believe to be a more visually interesting ad. The socialistic Russian government has no need to invest in the ads, because their profit is guaranteed. I say that the American ad is more pleasing to me, which is only an opinion, but the attention and finances each ad received in production is a more concrete assessment of the quality.

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  2. The difference in the visual detail of the two ads is just so obviously. One can really tell how NBC is trying to get viewership through eye-catching ads. As you pointed out in the two visual samples, the difference even fundamentally comes down to the logos. NBC's branding looks very sophisticated while the Russia logo looks like it could have been made in Office Word. Russian broadcasters do not have to jump through hoops for advertisers because they are not strained by a profit-driven system. Of course, Russian broadcasters have other problems to deal with in a government centered system, such as censorship and audience voice, but this is one clear benefit. This topic also reminds me of the prime time importance of the Olympics. Because NBC has to jump through those hoops to make back its investment and (hopefully) generate profit, it has to keep the Olympics airing during American prime time hours. The Olympics cannot run on American television while adhering to the Russian time zone; it would weaken viewership and consequently NBC's almighty wallet.

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