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.

Both comments and pings are currently closed.

2 Responses to “Olympic Sponsorships (Part 1). What a Waste of Money”

  1. Charles Frith says:

    July 31st, 2008 at 2:45 pm

    There’s a huge and lengthy response to this which is no way a defense of the sponsorship model. Sponsorship is invariably lowest common denominator marketing but it does work in ways that aren’t covered in your post.

    First off is the idea of Low involvement processing. No amount of research will prove conclusively what is going on at this level although MRI and neuromarketing psychobabble is pointing in some directions. Just pointing you understand.

    I’ll explain it like this. Trust is one of the most important dimensions of markteting. Just by appearing on TV with a banal FMCG ad or whatever the marketing people like to think that it is sending a message. However actually, we now know that messaging is less important than feelings and emotions conveyed by marketing activity.

    Make people feel something and they will be far more likely to act than by spitting out marketing messages to them. I like to call this wrapping messages around emotions for creative briefs but the complexity also exists in so much that feelings can be summoned through text alone. Or even straight forward information. Google have an awesome business model based on this and also the other end of the marketing spectrum. They deliver. Which is the best marketing anyone can do. The stuff in between they aren’t so good at. Giving people who don’t know what they do excitement about them. Advertising could probably fix that but they make bundles anyway.

    But let’s park that for a while because the outake from Sponsorship is not about did I remember who sponsored what (evidence suggests that it’s often wise to ignore what people say – we do it in real life anyway all the time – people will be ignoring this for example) but the outake is all about Trust.

    I might not remember that Nike didn’t sponsor the Olympics but I might not have considered Adidas before, and now that I’ve got them plastered all over the Olympics sponsorship visual frame of reference, I might not even remember this as a fact, but the truth is advertising/sponsorship works in mysterious ways and at a low involvement processing end of the communications spectrum is fair to say that the logic goes something like this inside peoples heads.

    You’re everywhere as a brand, I don’t remember the specifics but I do know it costs a lot of money and when I make a relevant purchase I’m going to factor in that you must great at what you do because you are succesful enough to secure my attention.Not my memory but low involvement processing.

    There’s a hundred other ways of looking at this issue which I should blog about but as ever with these things I only get animated when others spark them off 🙂

    The most heretical idea in this is actually about the value of research because we’re using it to make risk averse decisons and really the point of advertising is to gain attention first so the research model needs to be flipped to investigate making risky decisons.

    Research is invariably a waste of time in the hands of researchers which is why advertising dreamt up the Planning discipline 40 years ago almost to the day.

  2. Chris Devonshire-Ellis says:

    August 1st, 2008 at 12:56 am

    CMR have of course focussed on the China public’s view. However, the Beijing Olympics are expected to be watched by over 4 billion people globally. (Athens: 3.9 billion, Sydney 3.6billion). Total viewer hours are expected to exceed 40billion hours.

    Basing the perception that Olympics Sponsorship is a ‘waste of money’ when only concentrating on 25% of the total viewing market (China) then is a little premature. 3/4 of the viewers are not in China.

    Additionally, for 40 billion hours of prime coverage, laying out USD1 billion for the privilege starts to look cheap – 0.25 cents an hour.