Olympic Sponsorships (Part 2). Worth Every Penny

Wednesday, August 6, 2008 9:27
Posted in category Going to Market

Following my post earlier in the week Olympic Sponsorships (Part 1). What a Waste of Money, I wanted to follow up with a post that reflected some of the benefits of sponsoring the Beijing Olympics which have less than 48 hours before getting underway.

To recap, my original post was in response to – or was catalyzed by – Shaun Rein’s recent interview on the BBC. It is a topic I have spoken about with others, and as the sums of money that are being committed by sponsors are so enormous, it makes a lot of sense to study just how effective the dollars spent are.

One of the first showing of support for their sponsorship was the article Samsung Sees Big China Boost With Olympics in the WSJ about Samsung’s Olympic sponsorship, and what they believe it has brought them. As this is a subscription only article, I will simply post what I feel is the critical paragraph to this subject:

Mr. Park said the Olympics sponsorship has greatly increased Samsung’s profile in China. The Games have had “a relatively big impact on our business,”

MSNBC’s article China’s huge market is biggest Olympic prize takes a wider approach and quoted a Forbes survey:

According to Forbes.com, a survey by China’s largest market research firm uncovered that more than two-thirds of the respondents “consider Olympic sponsorship a stamp of approval with regard to the quality of a company’s products.” About half planned to buy products made by an Olympics sponsor. Among the 2,000 people surveyed, Coca-Cola stood out as the brand most associated with the Games.

It is another WSJ article (GE Expects Gains for 2012 Games) that provides the strongest statement by a sponsor:

This year’s Olympics have prepared GE to supply other major events in China, Mr. Beccalli-Falco said. “We learned how to develop major projects like the Olympic Games, which before we were not really able to do, because we had a more engineering kind of approach, to sell a specific item or a specific application,” he said.

GE also will apply lessons learned in Beijing to the Shanghai World Expo and the Asian Games in Guangzhou, China, both in 2010, Mr. Norbom said. The buildup of casinos in Macau is an opportunity for GE to sell equipment for lighting, security, energy and water treatment on a grand scale, he said. Macau surpassed Las Vegas in gambling revenue in 2006.

Keeping in mind that I am not in consumer marketing or research, where I think the largest fissure in Olympic sponsorships and their measurable impact is that industrial goods firms are very different from consumer good firms, and I have yet to hear a single industrial product group question their sponsorship.

In fact, it is just the opposite.

Industrial sponsors have a huge leg up time wise on their consumer good counterparts by the very nature of their business. They are not advertising driven, they are operating in a space where your product (take steel for example) really speaks for itself, and no amount of billboards in the world are going to secure a 6 city stadium deal. So, this allows them to sell their sponsorship before the ink on the contract is dry.

For these firms, sponsoring the Olympics is an immediate entrance ticket into that circle where they are able to immediately leverage this into other deals . By process and contract, the consumer goods firms have to wait for BOCOG to approve logo placements, assign billboards, provide preferential TV spots, etc before they are able to effectively gain the full benefit of their sponsorships.

Industrial firms are looking for small circles to see that it is their steel, lighting fixtures, security camera, logistics software, airport scanners, etc that ensured the success of the Beijing games, and it is this that provides them with future orders across China and around the world (sales outside China will come after domestic).

Let’s not overlook guanxi either. If you are a sponsor of the Beijing games, and the firm provides security equipment to Beijing (cameras, swipe cards, scanners, etc), that firm will be introduced to projects in other cities and will see benefits.

To measure this, simply look at the income statements of the firms who have sponsored and see what how China sales of similar products have performed. I bet if you were able to compare, you would find that the sales figures for these products grew faster than other products that firms sells.

Once again, I think the research that has been done (Shaun, Forbes, and others) have all yielded some important findings, but on the whole their research is studying consumer goods firms. I think it would be very interesting to see further research in both areas as these groups have rightly identified that some measurement of the benefits needs to occur, and I hope that at some point a formal study is released so that we can really slice out the data and see what the data shows us about who is successful, who should be sponsoring, and how to squeeze every ounce of benefit out of sponsorships.

tomorrow, I will used this series to highlight some lessons that we can learn about conducting research and analysis in China.

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