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Protests, Ambush Marketing Hurt Olympic Brand

Reuters
Tuesday, 22 Jul 2008 | 12:47 AM ET

Protests against China's policies at home and abroad, as well as marketing techniques used by companies that are not official Olympic sponsors, have made the Beijing games a risky proposition for some sponsors.

"When any corporation wants to hitch its wagon onto an event, they're doing it because it is perceived to have a certain popularity and charm," said Andrew Zimbalist, a professor of economics at Smith College in Massachusetts.

"If the event loses some of that -- because of pollution or domestic repression or because they're sponsoring a genocidal regime in Sudan -- there's no question some of the shine wears off," he added.

The Beijing Games, which start next month, and the 2006 Winter Olympics in Italy, have already brought in about $4.4 billion in rights and sponsorship deals. Contracts for so-called "top partners" span at least four years to include both winter and summer games.

The International Olympic Committee (IOC) has 12 global sponsors -- paying up to $100 million apiece -- including Coke ; General Electric , which owns NBC Universal, the holder of exclusive U.S. TV broadcast rights for the Games; and McDonald's .

In China, sponsors are not getting what they pay for, according to Shaun Rein, managing director of China Market Research Group in Shanghai. His firm polled Chinese consumers and found most do not know or care who the Olympic sponsors are.

"Most sponsors are going feel very disappointed with the return on investment for their sponsorships," Rein said. "There is so much clutter. It's unbelievable how many Olympic-themed messages are popping up all over the place."

Ambush marketing, in which companies try to identify themselves with the Olympics even if they are not official sponsors, does not make it any easier for the official partners.

Germany's Adidas may be the national Olympic sponsor in China, but Rein pointed out Chinese rival Li Ning arranged for the sportscasters of CCTV, China's largest TV network, to wear its apparel during the Games.

Nevertheless, Chinese officials earlier this month dismissed critics, saying complaints of human rights abuses were just so much "noise pollution."

Coke officials dismiss critics as uninformed, pointing out that the company is working with nonprofit groups to deliver relief supplies and health care services in Darfur. It said it also has committed at least $5 million to address the need for clean water in Sudan.

"As a business, we recognize that our role is important, but it is also inherently and appropriately limited," Coke spokesman Petro Kacur said in an e-mail. "We are neither a government, nor the United Nations."

Coke is the longest continuous Olympic corporate sponsor, dating back to 1928, and it recently signed a deal to extend that relationship through 2020.

Many say sports and politics should not mix.

"The Olympics should be about the athletes. It should not be politicized," GE spokeswoman Deirdre Latour said. "In every single country we operate in, we influence change by how we conduct business in that country."

GE has rung up $700 million in infrastructure sales in China and is targeting more than $1 billion in advertising sales on NBC Universal's networks related to the Games, she said.

But, despite the dangers, selling to China's 1.3 billion consumers is too lucrative an opportunity to pass up.

"There's really nothing else comparable to the Olympics for your branding," said Ed Hula, editor of Around the Rings, a website devoted to the business of the Olympics.

The cost of a global sponsorship has risen close to $100 million for a four-year period, compared with $30 million to $40 million in the 1990s, he estimated.

Others -- such as swimsuit maker Speedo and Nike, the world's largest athletic shoe and apparel maker -- prefer to avoid the big cost of a global sponsorship, focusing instead on national teams or individual athletes.

Not all companies are quiet, however. The chief executive of Germany's Volkswagen, the first foreign automaker to enter the Chinese market and a national Olympic sponsor in China, in April urged the host nation to open up its society.

French retailer Carrefour, not an official Olympic sponsor, said its trading in China suffered when it became a target of Chinese demonstrations, sparked by pro-Tibet protests in Paris.

Being associated with the Olympics is a must for many companies, which see the Games as the best known global brand, said Neal Pilson, the former head of CBS Sports at U.S. television network CBS. "In a growing marketplace of clutter and choice, these major events create greater value because they virtually guarantee public attention."

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GE
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KO
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NKE
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MCD
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