Olympic Sponsorships (Part 1). What a Waste of Money

Thursday, July 31, 2008 12:02

There is no hiding the fact that the Olympics has a large commercial element to it.  Media companies pay billions for exclusive broadcast rights, McDonald’s makes sure they have the only restaurants on the green, and athletes are all fully kitted up with the logo of the highest bidder.

It is fair to say that the firms who have “invested” billions should expect a return on their investment, and recently there have been a few commentaries that I not only found interesting because both are from credible sources.. but they are seemingly in direct conflict with each others.. and there are things about both that i will highlight that should be further explored.

In his article Beijing Olympic Sponsorship’s A Waste, Shaun Rein of China Market Research Group who recently presented his argument on Bloomberg (see clip below) believe that the hundreds of millions of dollars that firms like McDonald’s, Adidas, and Lenovo paid was a waste.

According to the article, CMR found the following key things (I have cherry picked):

Nearly 80% of those Chinese consumers we polled said they “did not care” who the official sponsors were and the vast majority “did not consider official Olympic sponsorship” when buying a product.

The vast majority of consumers we interviewed failed to identify the official sponsor when given several choices in nearly all product sponsorship categories, from beverages to credit cards to automobiles.

40% of respondents felt that Nike was the official Olympic sponsor, vs. 50% for the actual sponsor, Adidas, and 10% for Chinese brand Li Ning.

Only 10% of respondents for all categories said that they were “more likely” to buy a product if they knew the product was from an official Olympic sponsor. Price, safety of product, ease of purchase and style were all considered more important than Olympic sponsorship.

Rein’s explanation for his findings were best explained on a recent Bloomberg spot where he presented his findings:

  1. The Government’s constant 10 year Olympic “go for the gold” message has dulled consumers
  2. Ambush marketing (Li Ning sponsoring CCTV newscasters – DHL’s recent advert) has created confusion
  3. Lack of creativity in marketing firms – lots of copying of advertisements and messages

When Rein first put out this article a few months ago, I found myself nodding and scratching my head at the same time.  there were things that I agreed with 100%, and things that I thought needed to either be sliced further, researched further, or followed up on after the games.

Note to readers: the comments in italics are those of Shaun himself who responded to an email on the issues.

First, Where I agree:

  1. I would agree that firms the amount of money being spent is a phenominal amount and that it is important to research whether or not it is really effective
  2. I would agree that there has been a real lack of creative marketing.  I recently saw some great UPS advertisements, but I cannot remember seeing a Lenovo or Adidas ad that directly linked themselves to to Olympics (Omega did a discovery piece that I thought was well done)
  3. I would agree that sponsors have had to deal with their fair share of ambush marketing, and that has created confution (consider the DHL advert below and what UPS’s view of it is)
  4. I would also agree that firms like McDonald’s and other consumer goods have already penetrated so far that their realistic gains in China are going to be marginal at best

Second, where this study needs some context:

  • China is not the world, but the Olympics are global.  So, for a firm like Lenovo which is known not to make much money on shore, and who is looking to expand their offshore exposure as their IBM logo is about to disappear… their angle on the sponsorship may actually have nothing to do with increased sales in China.
  • there is a real difference between consumer and industrial products, so it should be said that this study was only of consumer players.  In fact, if you speak to the major industrial sponsors, many will speak about the benefits of their sponsorship

YEs, our research was consumer focused.  I agree and have stated in interviews (often gets sliced out) that for companies like BHP Billipon and GE and B2B being the sponsor probably has made a lot of sense as they try to get contracts with the Government or get support. 

  • This study was done before the real push to the Olympics was underway,  and it may be premature to say that there was no benefit as the prime time marketing has not taken place

Third, this study needs a follow up.  His idea to study this was a brilliant one, and I would love to see some addtional slices that measure how the constant global sport events plays a role.  It would also be interesting to measure consumers who have not seen or been to a McDonald’s to see what impact there is after the games.

If we have time and resources, I woul.d like to do a follow up study.  M guess is that the am ush marketing will have an affect…. we have not done antyhing scientific but in recent months we have heard more people thining Li Ning is an official spnosor for instance.

Tomorrow, I will post the counter arguement for sponsoring the Olympics using a recent WSJ article on Samsung and a few conversations with industrial firms as the basis.

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