Saturday, August 2, 2008

The merits (or otherwise) of Olympic Sponsorship

Sponsorship is now considered a major aspect of the modern games without which the global spectacular would undoubtedly run a crippling loss. In 1948 the event cost an estimated $1.2 million US, 9 Olympiads later, Athens spent $20.25bn, and in 2008, the Beijing Olympics is estimated at $38.91bn. This figure does not include collosal costs of security. Modern sponsorship is split between 12 global sponsors and 21 national-level sponsors. The global deals are sold on a four-year cycle, incorporating both a winter and a summer Games. For the 2006 Turin, and 2008 Beijing Games, firms paid $72m each. The Beijing Olympic organizers estimate $1 billion US has come from sponsorship allowing the 2008 Games to project a profit. The final figure is more likely to be $2 billion US. According to the Beijing Olympic Economy Research Association the direct revenue comes from sponsorship, licensing, advertisements, ticket sales and broadcasting rights. Sponsors are multinational companies keen to invest with the anticipated hope of positioning their products and services in full sight of the global audience as well as to promote themselves on the lucrative Chinese market. Recently the China Market Research Group undertook research to explore how effective Olympic sponsorship had been. Chinese men and women between the ages of 18 and 45 in 10 cities were polled and the results were quite revealing with almost 80% of the survey ambivalent to official Olympic sponsorship" when buying a product. The poll findings suggest consumers in China are brand loyal and choose products and services according to value as opposed to high profile advertising. adidas have been a long term sponsor of the global event. adidas decline to confirm the costs of sponsorship but it has been estimated at between $80 million to $100 million US in cash and extras. Despite this investment 40% of the Chinese respondents identified Nike as an Olympic sponsor. Another long term supporter of the games is Coke who have spend a fortune promoting their product on mainland China but the majority of respondents (60%) named Pepsi as a superior brand with a "wider range of products" and "better taste." Experts believe the ‘foreign devils’ (aka multinationals) need to do more that fund the Olympiad. The research group concluded one-time high concentration marketing, such as Olympic sponsorship will have less success than a concerted long-term brand-building program directed at consumers at the point of sale. Nike, who are not an Olympic sponsor, have demonstrated the benefits of building a successful brand image by cunningly associating their sports products with local personalities such as hurdler Liu Xiang, one of China's most popular Olympic athletes, and this has in the public mind created a long-term brand image. China will in the future represent the second highest market for shoe retailers (currently estimated at $3.6 billion) and the allure to dominate with more than 2.6 billion feet is the ultimate glittering prize. adidas hopes to gain a major market share by clothing tens of thousands of officials and volunteers suffice when Chinese athletes win medals, they will receive their awards wearing gear blazed with the Trefoil logo, even if they competed in garb from Nike or other sponsors. Skeptics are already suggesting Beijing 2008 may go down as the high-water mark of the Olympic sponsorship program with four major sponsors yet to sign up for the 2010 Winter Games in Vancouver and 2012 Summer Games in London.

No comments: