How Companies Should Play the Olympics
Normally, the Olympic Games are a positive force in marketing. Worldwide marketing expenditures increase as official sponsors and unofficial free-riders attach themselves to the Olympic logo, to particular sports, national teams or individual athletes. Global brands, in particular, see the Olympics and World Cup soccer as the two most important international sporting events; brand linkage to these events can boost brand awareness, preference and sales over competitors who cannot afford the global sponsorship prices set by the International Olympic Committee.
This year, however, concerns over the Chinese government's role in Tibet, Sudan and other alleged human rights abuses threaten to derail its plans to stage the Olympics as China’s coming out party. Tight security in Beijing may take some of the fun out of the Games, not just for the sports fans and athletes but also for the sponsors.
Take Lenovo, for example. The fourth largest personal computer manufacturer in the world is the first and only Chinese company to be a global sponsor of an Olympics. Lenovo's investment in the Games is around $100 million. The company paid millions, along with Samsung and Coca-Cola, to sponsor the torch relay. Lenovo’s sponsorship will doubtless reinforce its brand preference rankings in China. However, around the world, Lenovo hardly wishes to be known as the Chinese PC company that consumers find convenient to boycott.
Here are some trends I'm seeing among sponsoring companies:
First-time sponsors have a lot more to lose than long-term investors.
Lenovo, as a first-time global sponsor whose future depends heavily on success this year, has much more at stake than veteran Olympics sponsors such as Coca-Cola, Visa and McDonald’s. These companies are long-term investors in the Olympics; if Beijing fails to realize earlier commercial expectations, London in 2012 can make up for it. Around the world, the veteran sponsors may be careful not to over-identify with Beijing. They will emphasize sponsorships of national athletes and national teams rather than focus on the Olympic rings. But, in China, the Western multinationals will pursue a much more aggressive strategy. They will build goodwill for their brands by creating China-specific advertising and promotion programs that tap Chinese pride in hosting the Games.
"Two-faced" approaches.
Those companies that are not global sponsors of the Games will also take a two-faced approach, supporting the Games in China while being disinclined to associate with them in North American and European markets. Given the prominence of China as a supplier and customer, it is unlikely that we will witness grandstanding boycotts of the Games by any company. Most consumers around the world do not let their political views affect their purchase decisions. However, we are likely to see websites promoting boycotts of Chinese brands such as Haier, TCL and Lenovo.
Late campaign purchasing as a safety hedge.
The International Olympic Committee continues to argue that the Games and the aspirations and achievements of individual athletes should be independent of politics. The reality is that the Chinese government has always intended to use the Games to its political advantage and that further escalations of violence in Tibet could diminish public support and lead to national team and individual athlete boycotts, as occurred in Moscow following the Soviet Union's invasion of Afghanistan. As a result, marketers are not over-committing funds to Olympics-related brand advertising and promotions and the normal Olympics year advertising boost may be less than expected. Instead of long-term preset media advertising buys, many companies are planning short-term promotional bursts that they can activate as late as July and August if all appears to be in place for a successful, trouble-free Games.
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John Quelch was one of ten marketing experts profiled in the 2007 book, Conversations with Marketing Masters, authored by Laura Mazur and Louella Miles. A professor at Harvard Business School since 1979, he is known worldwide for his research on global marketing, global branding and marketing communications.
Comments
While I have recommended that consumers boycott Olympic sponsored products, I do think that even if the people in North America and Europe boycott some products, the sponsors will spend more of their advertising dollars on trying to woo the Chinese consumers.
One reason why I think Beijing won the Olympics over Toronto and the other cities is that China represents a growing market for Olympic sponsors. North America and Europe are saturated with Coca Cola and McDonald's. It is better for the sponsors to advertise in China where they will get better returns for each dollar, euro, or yen invested.
- Posted by Mé
April 21, 2008 18:11
We can classify the sponsors into four distinct categories:
1. Chinese sponsors trying to make it big in the Western world
2. Chinese companies targeting the Chinese audience
3. Global companies targeting a global audience
4. Global companies targeting a global audience
I think the worst affected would be sponsors belonging to the first catogory. The rest can find a way of participating by not losing much.
- Posted by Anand Kashyap
April 25, 2008 10:12
John hit the nail on the head with "Most consumers around the world do not let their political views affect their purchase decisions"
Wise companies will continue to support the Games (and China's continuing development), the few misinformed/misdirected people with discretionary income may alter one or two purchasing decisions before inherent human selfishness or forgetfulness kicks in and they go back to normal.
Also, just think of the money to be made in China...? 1.5 billion consumers! Is there any comparison?
- Posted by Michael
May 2, 2008 05:28
"Most consumers around the world do not let their political views affect their purchase decisions."
And that's the tragic part.
As a socially active consumer, I find it disturbing that no one I know cares whose suffering they're prolonging or even aiding, as long as their iPod is a nickel cheaper than it might be if it were made by someone whose rights were not denied and who made a decent living wage.
- Posted by Tim
May 5, 2008 11:27
What's the ROI on Olympic "sponsorship"? Does McDonald's sponsorship reinforce the consumer perception that its burgers are better than Burger King's or Wendy's? Or that the brand is larger than the sum of its products? As a sponsor, Adidas' name shows up on billboards at the stadiums, but the footwear worn by athletes is Nike. Who comes out ahead? I think sponsorship of major events has lost its panache, and the risks heavily outweigh any marketing gain. Tibet will be the elephant in the stadium no sponsor wants to talk about.
It's ironic... Sponsorships attempt to celebrate the spirit of individual achievement, but risk co-endorsing the suppression of individual expression, something becoming increasingly evident with Beijing'08.
- Posted by From The Stands
May 5, 2008 12:43
Hi John,
I generally agree with your comments. My next book, "The Olympic Games Effect" comes out in July and in it I discuss the impact of political issues on sponsor investments (among other 'effects' from sponsoring the Olympics). Unless something catastrophic happens, the chances of sponsors pulling out are very low, and part of reason is the separation consumers make between purchase decisions and political issues, as you point out. One of the more intriguing arguments Beijing has made regarding Tibet and Darfur is that the Olympics should not be made into a political issue. That sounds grand, but the reality is that the Olympics have been one of the biggest stages in the world for decades, serving as a magnet for a wide range of political and social interest groups seeking a vehicle to air their views. Beijing, again as you point out, has used the Olympics platform for their own political purposes. If the Olympics, beyond the bringing together of nations to celebrate athletic achievement, serve as a catalyst for social change and examination, perhaps that type of 'politics' is not so bad?
John
- Posted by John A. Davis
May 5, 2008 20:55
As author correctly mentioned "Most consumers around the world do not let their political views affect their purchase decisions."
And this is tragic truth which even marketing people understand.
Associating with a event like olympics will provide a excelent platform for global audience whether for good reasons or bad reasons.
Moreover, at present no one can ignore the vast market ready to be explored in China and as such olympics will provide an excllent opportunity for any company ready to enter China/Asian market. with recession in US economy nobody can ignore Chineese market and as such olympic. But yes I feel campaign this time will be more passive and in background.
Ankur J
TCS
- Posted by Ankur J
May 6, 2008 06:26