Wade Armstrong

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What The Olympics Can Tell Us About Targeting Products and Services

Posted Thursday February 23, 2006 in Business

I was going to write another entry in the feasibility analysis series , but, instead, I’m sufficiently moved to complain about the way that NBC is televising the Olympics. I’m not complaining about the announcers, or about what shows the games do or do not pre-empt; I’m dismayed by the network’s failure to capitalize on their portfolio of television and cable stations to provide the most desirable possible programming to the widest variety of audience segments possible — and profit off of that.

NBC is scheduling the Olympics in order to deliver a fairly high total number of hours of programming from Torino, and, with four or more channels showing Olympic events, has succeeded. But is maximizing the consecutive hours of Olympics really the goal? The Games are getting clobbered in the ratings, while NBC has pre-empted its regular, highly-rated prime-time shows; meanwhile, MSNBC shows programs like Rita Cosby Live and USA shows the mega-blockbuster hit Johnny English during prime time. I like Rowan Atkinson as much as the next guy, but that hardly seems like a good trade-off, ratings-wise. There’s a better use to the many channels in the NBC family.

By scheduling its programming the way it has, NBC has made the assumption that essentially everyone watching the Olympics wants to see the same programming mix — the same events, the same announcers, the same features, all the same. I can understand that it is difficult to get past the idea that the Olympics are a tremendously large and expensive production, and to panic that such a program must be milked for the largest possible amount of money. However, the key to monetizing the Olympics is probably not televising the most hours possible — a strategy that’s been around, and essentially perfected, since the ’80s — but in getting the most people to watch the most Olympics possible. The two goals are similar but not identical.

In particular, the second goal acknowledges that all Olympics viewers are not equal, and that all Olympics events are not equal. Some events are more popular than others, some viewers like some events and not others, and many viewers likely like certain groups of events or announcers. NBC already delays the televising of some events, why not offer packages of related events on its different channels? Each package could target a specific set of people who like specific sports, or who expect different things from their announcers, or who want more or fewer feature stories, and so forth.

So USA could become the channel to watch for people who like snowboarding and moguls and other up-and-coming X Games-style events, with ultra-hip announcers; MSNBC could have the businesslike speed-skating and downhill events; NBC could show super-popular events like Figure Skating at prime time; Bravo could show Ice Dancing and human-interest stories over and over again; and CNBC could have announcer-free non-stop looped events, with no pause between competitors, just sport after sport after sport. These different packages could be shown at different times or, even, at the same time, because, in most cases, two packages won’t attract the same viewers — Ice Dancing and the halfpipe on two channels at the same time will probably attract about twice the audience of Ice Dancing and halfpipe on one channel consecutively. And, with hours of Olympics programming available on many of NBC’s channels, any given channel could easily break away for a highly-rated program now and then.

This strategy is an application of a technique called “segmentation,” a technique at which NBC should be good, since networks have to do it all the time. The concept behind segmentation is simple: there are non-obvious groupings of people who have similar preferences, and these groupings share other traits, traits which can be measured independently and which can be used to consistently predict which segments individuals lie within. The preferences of these segments are themselves very consistent, and different segments do not have identical preferences. If a company can deliver a targeted product that reaches a high-value segment, it can gain preference, loyalty, and consistent profits. Products aimed at a general audience, however, tend to be very vulnerable to products highly-targeted at segments; a segment will choose the product that best serves that segment every time, not the product that best serves the largest number of people.

Segmentation can also offer strategic advantages. If you understand who likes you and why, that can lead you to other people who may appreciate the same factors; that knowledge can also help focus your sales and marketing strategy. In my first company, we had no target segment; instead, we felt that we could sell to anyone, thanks to the quality of our product. I still believe that we had assessed our quality correctly, but our general focus didn’t help us answer the questions:

• What specific abilities do we need to develop internally and then highlight in our sales process?
• Who should we be pitching these abilities and services to?

We ended up trying to sell to anyone, anywhere, which didn’t work too well — we spread ourselves thin and didn’t build networks that led us from one sale to the next, and we didn’t build the skills that were needed to make the next sale bigger than the last. Proper segmentation forces you to make the choices that drive long-term strategy, and far too few firms really have a strategy, especially small, entrepreneurial firms.

Just like my first company, NBC needs to better segment its product. Right now it can’t beat House, because it can’t put on a program that the viewers of House prefer to House; but there are probably Winter Olympics sports which House viewers enjoy, and which they would choose over House — especially given that the Winter Olympics only come around every four years. The trick is to find that sport (and to understand House viewers well enough to know where to start). Then build an entire programming schedule around that segment, drawing them away for the duration of your very expensive Olympics purchase (and feel free to put that schedule on one of the eight cable stations you own). Don’t put on an undifferentiated, linear, tape-delayed show of the Games — that gets you nothing but bad ratings and viewers who are bored half of the time.