Olympic Sponsors Plan to Stay Put Despite Protests
While passing the Olympic torch has become a focal point for demonstrations over China's human rights record, major sponsors of the games aren't expected to flame out over the controversy.
Advertising and marketing pros say the protests over Chinese actions in Tibet and against its own people will be shunted aside in August, when the rest of the world enjoys the majesty of the Olympic games.
So far, protests in Paris and London have drawn international media coverage. And an anti-China demonstration in San Francisco attracted thousands when the torch passed through that city Wednesday.
There are billions of dollars at stake in the Olympic games. Ad revenue alone is expected to reach about $1 billion for CNBC parent General Electric, which spent $3.5 billion for the Olympic broadcasting rights from 2000 to 2008.
Dozens of other companies have anted up millions to get their names associated with the games--including Coca-Cola , which said it has no plans on pulling back its efforts, as well as Johnson & Johnson , Adidas , McDonald's , Visa , UPS and Budweiser .
Corporations that have already committed to sponsoring the competition likely will not back out, though they're flying under the radar for the time being.
"They're all committed now," says Al Ries, of Ries & Ries market strategy firm in Atlanta. "The Chinese have milked every possible sponsor so there's not a question of backing out anymore. They're obviously going to go ahead with the promotions but I think they're laying low right now because they don't want to associate anti-China (sentiment) fundamentally with their Olympic promotions.
"But I think the mood is going to change when the Olympics starts. There's something about the competition. You're going to have an enormous amount of day-to-day coverage."
The controversy, which has arisen in large part from China's violent suppression of a Tibetan uprising, couldn't come at a worse time for China and the array of multinational companies looking for a commercial foothold in the nation.
During the past four years, China has been making bold moves to find its place as a major emerging market in the global economy. Footwear giants Nike and Adidas are in a pitched battle to assert themselves in the marketplace as Chinese consumers become increasingly modernized and seek out hipper products.
Despite the massive unrest over Chinese policies, analysts don't foresee widespread consumer backlash against companies that sponsor the Olympics, while the sponsors themselves are hoping to stay above the fray.
"Adidas is conscious of the exceptional importance of the protection of human rights. Sponsors, however, should not be expected to solve political issues," Adidas said in a statement to CNBC.com. "In China, we focus on the protection of human rights, fair labor and environmentally sustainable conditions in the factories manufacturing our products. We believe that boycotting the Olympics is counterproductive and will therefore uphold our commitment to the Olympic Games."
Bush May Skip Opening Ceremony
Not everyone agrees that the protests during the torch run will not have lasting effects. Chinese security officers swatting away protesters to clear a path for the torch, coupled with previous memories of the thwarting of the Tibetan unrest, have created powerful images in the minds of those wary of Beijing's standing in the world community.
The White House, meanwhile, has indicated that President Bush may skip the opening ceremonies, which other international leaders may boycott, though he is expected to attend the games themselves.
"The more this happens, the less desirable it's going to be to be associated with the Olympics," says Ambar Rao, a marketing professor at Washington University in St. Louis. "Now you hear that (President) Bush may not go to the opening ceremony. It becomes a contentious situation as opposed to a great sporting event.
"I think that a lot of companies which would otherwise be delighted to go and get this sort of exposure will think twice," Rao added. "Some of them may actually cut back or cancel."
Allison Mooney, director of trends and research at Fleishman-Hillard, has been monitoring much of the unrest, including a slew of Websites on the Chinese mainland and around the globe, yet doubts that the impact will be felt through corporate Olympic sponsorship.
"China's just too big of an opportunity right now," Mooney says. "Corporations tend to shy away from picking sides in politics anyway."
NBC Chief Executive Jeff Zucker on Monday said advertisers are not shying away from getting their messages placed during the telecasts, with 75 percent of the ad time filled. Zucker also said ad prices are "incredibly strong" in the face of all the media coverage of the Chinese unrest. Olympic ads are expected to generate about $1 billion in revenue.
"The fact is the Olympics are a sporting event on the world stage," Zucker told Reuters. "It's not surprising that some would try to use that stage to further their own causes, and we understand that, but at the end of the day this is about the event and both the advertisers and our viewers understand that."
Few expect the China-Tibet situation to escalate into what happened in 1980, when the Soviet Union invaded Afghanistan and US President Jimmy Carter refused to send an American team to the Moscow games that year.
"I don't think it's like Afghanistan," says Jack Trout, of Trout & Partners in Old Greenwich, Conn. "This Tibet thing is nothing compared to what's going on in other places of the world. Sponsors are getting a little immune to this kind of stuff."