Brian Wallace, Founder & President, NowSourcing

NBCUniversal hopes that its broadcast of the Tokyo Olympics will provide American viewers with a spectacular sports spectacle they can enjoy at their leisure. As more people view the Games at their own time, advertisers are beginning to get frustrated.

According to sources familiar with negotiations between NBC, sponsors and advertisers, traditional TV viewing has dropped significantly for the Summer Games. Simone Biles' decision to withdraw from the team competition early last Tuesday morning has caused anxiety among advertiser executives. It was also not helping that her exit occurred within hours of Naomi Osaka's expulsion from the tennis medal competition.

NBC's Olympics beat rival programs every night, but early ratings for NBCU’s TV broadcasts aren't what NBC, their agency, or their clients expected, according to one media buying executive. The buyer pointed out that there were not enough must-follow stories for athletes early in the competition, streaming was unavailable in the morning and the lack of fans attending the Games because of the coronavirus pandemic. These factors contributed to a decline in viewing. The executive stated that early viewership trends were "disappointing".

Nielsen reports that Friday's opening ceremonies attracted 17 million viewers. This is a 36% decrease from the audience for the 2016 opening ceremony of the Summer Games in Rio. Although viewership has increased for every primetime broadcast, advertisers are still concerned by the magnitude of the declines following the Rio Olympics. They are believed to have invested more than $1.2 billion in this sports extravaganza.

It's not surprising that NBCU has entered into negotiations with several media agencies to "make goods," which is a form of ad inventory that sponsors receive when a program fails its original viewership guarantee. Ad buyers have asked NBCU to sell unsold Olympic inventory to clients, pointing out that very few regular-season TV events can draw the same consumer impressions as the Olympics. According to NBCU, the company believes that it has included enough make-goods into its modeling of Olympics sales to give advertisers the impressions they promised.

It is not a new topic to have advertisers and NBCU discuss the Olympics. The number of viewers who stream video has increased steadily as more people switch to streaming. This includes traditional TV events such as the broadcasts of original episodes of "This Is Us" and "Young Sheldon", or the annual telecasts of the Oscars and Super Bowl. NBCU holds commercial inventory in reserve to cover ratings shortfalls. Advertisers can, depending on how much money they have spent and the terms and conditions of their agreement, press for the most ad time possible. NBCU made approximately $250 million profit in Rio 2016 by meeting advertiser promises and granting sponsors additional commercial time.

Some advertisers have reason to be optimistic. NBCU's digital platforms have seen an increase in streaming activity. Viewers have watched 735 million minutes of Tokyo Olympics content through Sunday -- 24% more than the time frame for Rio Olympics 2016 and 41% higher than the 2018 Pyeong Chang winter games.

NBCUniversal executives have advised advertisers to look at the long-term, noting that there could be more Games that will see star athletes emerge. They also point out that the results will take longer to achieve.

NBCU doesn't just want to show how many people saw the Olympic ads, but it is focusing on the connection they make to those who watch them. Last Monday, NBCU released stats that focus less on mass reach and more on the attention and recall that Olympic commercials generate from the audience. According to a source familiar with NBCU's operations, commercials that are run elsewhere won't produce similar results.

NBCU will continue to hear from sponsors until the Olympic telecasts gain more traction.

About the Author: Brian Wallace is the Founder and President of NowSourcing, an industry leading infographic design agency in Louisville, KY and Cincinnati, OH which works with companies ranging from startups to Fortune 500s. Brian runs #LinkedInLocal events, hosts the Next Action Podcast, and has been named a Google Small Business Adviser for 2016-present. Follow Brian Wallace on LinkedIn as well as Twitter.