Are Olympics Sponsorships Worth It?

An article today in Business Week, suggests that for some blue chip brands, the answer is no. High profile sponsors who are supporting Beijing, but not prepared to sponsor future games include Kodak, Lenovo, and J&J.

The Lenovo example is pretty self-explanatory. Its sponsorship of the 2006 Winter Games in Turin and the 2008 Summer Games in Beijing will be a one-time shot for the Chinese PC maker. For Kodak, a sponsor of the games since 1986, the returns just aren't there. Antonio Perez, CEO says "It's just not the best way for us to spend our money."

While China is seen as an opportunity to get a brand in front of millions of new consumers, some research suggests few consumers even notice who is backing the Games. In a survey of 1,500 Chinese city dwellers earlier this year by London's Fournaise Marketing Group, only 15% could name two of the 12 global sponsors, and just 40% could name one sponsor: Coca-Cola. Adding to the confusion for consumers are 21 additional national-level sponsors, including Adidas and Volkswagen.

Others see it differently. Coke has signed on through the 2020 Games. "Coke has not in the least reconsidered its Olympic sponsorship," says Kevin Tressler, director of Coke's Worldwide Sports & Entertainment Marketing.

The Chinese games potentially offer a unique set of circumstances to sponsors. As well as restrictions in the IOC charter that ensure nonsponsors' ads are restricted in and around Olympics venues, Beijing has extended the ban to all outdoor advertising in the city's airports, buses, and billboards within the city center.

In recent games, the debate as to whether to sponsor the officials of the IOC and host government or the competing athletes has probably come down on the side of the latter. Nike especially have made much of the fact that their shoes are won by the gold medal winners while official sponsor Adidas shows are worn by the men in suits. However, in China, things are different. Government officials will notice which companies show up in support even if consumers don't, a major factor for sponsors in a country where guanxi, or relationships, are such an integral part of doing business.

London 2012 will be a different story. Marketers will have to weigh whether there are more cost-effective ways to reach consumers and leverage Olympic enthusiasm without having to pay the high price. Frank Vial, strategy director of branding agency Landor Associates, argues that in a world that's moving toward targeted marketing, "maybe the Olympics will have to reinvent itself as something other than a global, monolithic brand."