Imagine if your birthday, wedding and college graduation, all scheduled to take place over a two-week period, were suddenly pushed back by a year. That’s how companies that were depending on the 2020 Tokyo Olympics to take place this summer must be feeling today.
A decision to postpone the athletic extravaganza to 2021 due to the coronavirus pandemic, unveiled today by the International Olympic Committee and Japanese Prime Minister Abe Shinzo, will throw corporate plans into disarray and set in motion an arduous process among dozens advertisers who expected to weave promotional pitches alongside scenes of top athletes swimming, running and playing volleyball, among other feats.
“There are so many moving parts,” says one media buying executive familiar with advertiser negotiations for the Olympics. Organizers may have announced a 2021 timeframe, but ” they still don’t know when the Games are,” this buyer says, sparking continued confusion among sports advertisers who are already grappling with the cancellation off the NCAA’s “March Madness,” and the suspension of the current seasons of the NBA and the NHL.
The postponement will likely lead to a host of hiccups in the flow of advertising to TV networks. “It’s going to be impossible for advertisers to take that Olympics money and spend it, last minute, to have anywhere near the kind of reach, brand and sales impact that the Olympics buy would deliver for them – especially in an election year,”says Fred Chasse, a senior vice president at Analytic Partners, a marketing consultant that examines how best to allocate advertising dollars. Some companies may take a portion of their Olympics spend “and take to the bottom line or put towards more appropriate marketing for the economic conditions,” he suggests. “And brands that weren’t advertising during the Olympics will be indirectly affected too – where the Olympics advertisers choose to put the money back in market, the additional competition for existing inventory will lead to media inflation.”
The list of the Games’ biggest sponsors includes some of the industry’s best-known names: Procter & Gamble, Coca-Cola, Samsung, Toyota, Visa and General Electric are among the event’s most prominent supporters.
Millions of dollars are at stake. The 2016 Olympic Games from Rio de Janeiro in Brazil captured nearly $1.97 billion in advertising, according to Kantar, a tracker of ad spending – representing a massive 47% jump from the $1.33 billion the London Olympics scored in 2012.
But there’s more in the way of lost opportunity. NBCUniversal, which has the rights to broadcast the Olympics in the U.S., was going to use it to help spark interest in its soon-to-launch Peacock streaming-video service. NBCU had already sold more than 90% of its ad inventory for the Tokyo Games, a haul valued at more than $1.25 billion. And Discovery, which holds the rights to broadcast the Games in Europe, has been eager to harness the event to goose its presence overseas.
The two companies are in public being very supportive of the decision, despite the logistical and financial challenges it raises. “NBCUniversal is actively working with our advertising partners to navigate this postponement, and we’re exploring all options to best serve their brands and our consumers this year, and into 2021,” the company said in a statement. But in a filing with the U.S. Securities and Exchange Commission Tuesday morning, NBCU parent Comcast declared the fallout from coronavirus “could have a material adverse impact on our results of operations over the near to medium term.” The company added: “At this point, it is impossible to predict such extent and duration and the degree to which supply and demand for our products and services, including advertising, will be affected.”
Meanwhile, Discovery said “Our essential planning and deliverables are complete and will now shift into next year. We will continue to develop our products and offerings to best serve our customers and marketing partners in 2021.”
Both companies have billions invested in the event. Comcast agreed to pay $4.38 billion for the U.S. media rights to four Olympics from 2014 to 2020, and $7.75 billion for broadcast rights to the Olympic Games between 2021 and 2032. NBCU vaulted away from its last Summer Olympics, the 2016 Games in Rio, with approximately $250 million in profit. Discovery, meanwhile, in 2015 agreed to pay approximately $1.44 billion for the European rights to broadcast the four Olympic Games between 2018 and 2024.
The traditional Olympic torch relay had already started earlier this month in Olympia, Greece. There will be even more pressure to make sure the flame already sparked eventually gets to its destination.