FELLOWSHIP OF THE RINGS

tauringhuang.

By DAVID OWEN
Friday, August 15, 2008
  
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IT


IS A QUARTER OF A
century since a video presentation submitted by the late Horst Dassler, the former Adidas boss, to the International Olympic Committee's 86th session in New Delhi, described the Olympic rings as “the most unexploited trademark in existence”.

Not any more. Sponsorship programmes now account for about 40 per cent of the revenues raised by the Olympic movement every four years. Only broadcasting contributes a larger sum.

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The rate of growth has been remarkable. When first devised and implemented over the 1985-88 quadrennium, incorporating the Calgary and Seoul Games, the IOC's TOP (The Olympic Partners) worldwide sponsorship programme raised a total of $96m from nine companies, including Federal Express, Philips and Brother Industries.

For the four years culminating with the present Beijing Olympics, the amount generated from 12 corporate partners has been $866m in cash and “value-in-kind” goods and services. Gerhard Heiberg, chairman of the IOC's marketing commission, is hoping to reach “around $1bn” for the next quadrennium, ending with the London Games in 2012.

But that is only half the story. There is also what is known in the movement as “domestic” sponsorship, raised by the cities actually organising and staging each successive Games.

This reached $796m in the last quadrennium, but could nearly double this time around due to the Beijing organising committee's success in attracting sponsorship from Chinese companies and multinationals keen to lift sales in the vast Chinese market. All told, it is thought that Beijing may have raised as much as $1.2bn in this way. That would be four times the $302m generated by Athens in 2004. Taking into account Turin, host of the 2006 Winter Olympics, it may push sums raised from domestic sponsorship in the four years to 2008 to an unprecedented $1.5bn.

Olympic marketing programmes operate on the principle of product-category exclusivity: for as long as Coca-Cola, for example, remains a worldwide Olympic sponsor, no other non-alcoholic beverage-maker can be signed up unless it is for a different product category.

Furthermore, if a particular product category is claimed by the IOC for the TOP programme, Games organisers must generally steer clear of it.

Part of the explanation for the high value companies place on the Olympics as a sponsorship vehicle is its truly global reach. “We operate in over 200 countries as well,” says Kevin Tressler, worldwide sports and entertainment marketing director for Coca-Cola, which has sponsored every Olympic Games since the 1928 Olympics in
Amsterdam.

Another factor is the set of values – fair play, integrity, global harmony and so on – that the five-ring Olympic logo is widely felt to embody. “When people know we are sponsors of the Olympics, they like us more,” says Tressler.

A third element is what an IOC insider described as the marketing platform's “malleable” nature. Olympic sponsors cannot display advertising on athletes' clothing or on the field of play, but they can do – and have done – almost anything else. This includes using Olympic trademarks in their own corporate advertising, entertaining their customers at the Games and using tickets and other rewards in consumer promotions and employee incentive schemes.

GE – a TOP sponsor – says that “something like $158m of incremental revenues have been generated from sales incentive programmes that have an Olympic element in them”.

Coca-Cola's initiatives for 2008 include an online project encouraging consumers to create, or collaborate on, digital designs for the iconic Coke bottle and the release of commemorative packaging in more than 150 countries explaining that “Coca-Cola” means “delicious happiness” when written in Mandarin. Coke says this will be the biggest packaging promotion tied to an event it has ever undertaken.

ANOTHER FUNCTION THAT Olympic sponsorship can fulfil is to demonstrate an organisation's ability to undertake complex projects in a high-pressure environment. In the words of Michael Payne, the former IOC marketing director, whose book Olympic Turnaround chronicles the shaping and development of the movement's business dimension: “With the whole world watching, the Olympic Games have become a unique platform for companies to launch new technologies, new ideas, new thinking, and to prove that they can perform and deliver under the most difficult and testing of environments.”

This helps to explain why Olympic sponsorship appeals to a wider range of companies than those behind classic consumer brands such as Coca-Cola and McDonald's.

Lenovo, the Chinese computer maker, is providing 30,000 pieces of computing equipment for the Beijing Games. “Our marketing/advertising strategy will continue to emphasise our role in one of the most logistically complex events of this decade,” it says.

Sponsoring the Games can also be a powerful tool for raising a company's profile in key individual markets, such as China. Peter Foss, head of Olympic programmes at GE, says: “In China, most people would not have known who we were – they thought we made cars. By the end of the Olympics, they will [know].”

Foss estimates that GE's Olympic effort has so far added about $500m to sales – “and we are still cranking away”.

If the value of Olympic marketing depends partly on the attributes associated with the rings and the movement, then it follows that this value could be affected if perceptions of the Olympics change.

Awarding the Games to China was widely seen as a risky strategy, likely to be good for business but potentially harmful for the IOC's image. The unrest that earlier this year accompanied some international stages of the torch relay and the resulting spotlight on controversial Chinese policies such as its stance towards Tibet may have had a knock-on effect on perceptions of sponsors.

Analysis of more than 138,000 comments about Olympic sponsors posted online during the relay's international leg conducted by Futures Sport + Entertainment, a sponsorship consultancy, found that 60 per cent of references were negative and only 6 per cent positive.

Research conducted on behalf of the IOC in five countries – China, Brazil, India, the US and the UK – suggests, however, that most people believe that Olympic sponsors should not be targeted by protesters. Nearly two-thirds of those participating in the research, conducted by Sponsorship Intelligence, thought targeting sponsors was wrong, with 11 per cent thinking it was right.

“Clearly there have been a number of challenges related to the Beijing 2008 Olympic Games, particularly with regards to the international Olympic torch relay,” says Timo Lumme, the IOC's marketing director.

“However, recent IOC research… demonstrates that the vast majority of people feel positive towards the Olympic Games and the Olympic movement.”

Certainly, one of the strengths of the Olympic movement is its durability. The present question-mark over its judgment in selecting China seems relatively minor compared with the political boycotts and the corruption scandal from which it has recovered in the past. The power of that five-ring logo to inspire remains, for now, largely intact.

tauringhuang.

A third element is what an IOC insider described as the marketing platform's “malleable” nature. Olympic sponsors cannot display advertising on athletes' clothing or on the field of play, but they can do – and have done – almost anything else. This includes using Olympic trademarks in their own corporate advertising, entertaining their customers at the Games and using tickets and other rewards in consumer promotions and employee incentive schemes.

GE – a TOP sponsor – says that “something like $158m of incremental revenues have been generated from sales incentive programmes that have an Olympic element in them”.

Coca-Cola's initiatives for 2008 include an online project encouraging consumers to create, or collaborate on, digital designs for the iconic Coke bottle and the release of commemorative packaging in more than 150 countries explaining that “Coca-Cola” means “delicious happiness” when written in Mandarin. Coke says this will be the biggest packaging promotion tied to an event it has ever undertaken.

tauringhuang.

ANOTHER FUNCTION THAT Olympic sponsorship can fulfil is to demonstrate an organisation's ability to undertake complex projects in a high-pressure environment. In the words of Michael Payne, the former IOC marketing director, whose book Olympic Turnaround chronicles the shaping and development of the movement's business dimension: “With the whole world watching, the Olympic Games have become a unique platform for companies to launch new technologies, new ideas, new thinking, and to prove that they can perform and deliver under the most difficult and testing of environments.”

This helps to explain why Olympic sponsorship appeals to a wider range of companies than those behind classic consumer brands such as Coca-Cola and McDonald's.

Lenovo, the Chinese computer maker, is providing 30,000 pieces of computing equipment for the Beijing Games. “Our marketing/advertising strategy will continue to emphasise our role in one of the most logistically complex events of this decade,” it says.

Sponsoring the Games can also be a powerful tool for raising a company's profile in key individual markets, such as China. Peter Foss, head of Olympic programmes at GE, says: “In China, most people would not have known who we were – they thought we made cars. By the end of the Olympics, they will [know].”

Foss estimates that GE's Olympic effort has so far added about $500m to sales – “and we are still cranking away”.

If the value of Olympic marketing depends partly on the attributes associated with the rings and the movement, then it follows that this value could be affected if perceptions of the Olympics change.

Awarding the Games to China was widely seen as a risky strategy, likely to be good for business but potentially harmful for the IOC's image. The unrest that earlier this year accompanied some international stages of the torch relay and the resulting spotlight on controversial Chinese policies such as its stance towards Tibet may have had a knock-on effect on perceptions of sponsors.

tauringhuang.

Analysis of more than 138,000 comments about Olympic sponsors posted online during the relay's international leg conducted by Futures Sport + Entertainment, a sponsorship consultancy, found that 60 per cent of references were negative and only 6 per cent positive.

Research conducted on behalf of the IOC in five countries – China, Brazil, India, the US and the UK – suggests, however, that most people believe that Olympic sponsors should not be targeted by protesters. Nearly two-thirds of those participating in the research, conducted by Sponsorship Intelligence, thought targeting sponsors was wrong, with 11 per cent thinking it was right.

“Clearly there have been a number of challenges related to the Beijing 2008 Olympic Games, particularly with regards to the international Olympic torch relay,” says Timo Lumme, the IOC's marketing director.

tauringhuang.

“However, recent IOC research… demonstrates that the vast majority of people feel positive towards the Olympic Games and the Olympic movement.”

Certainly, one of the strengths of the Olympic movement is its durability. The present question-mark over its judgment in selecting China seems relatively minor compared with the political boycotts and the corruption scandal from which it has recovered in the past. The power of that five-ring logo to inspire remains, for now, largely intact.