Is sponsoring the Olympics worth it?

Sponsorship has received some of the most negative press of London 2012, with brands appearing greedy and controlling. How has it come to this?

The Olympic Games contain many stories. There are stories of sporting prowess, of endurance, pain, struggle, and of disappointment. There are political stories, of human rights issues, and of corruption taking place and being stamped out. And there are brand stories. These come in two forms: those that the corporations want to be told, which appear mostly in their advertising and PR, and those that they are perhaps less happy to see, which come predominantly from journalists, keen to expose the problems that lie within corporate sponsorship on this scale.

In the latter category, there has been a dripfeed of negativity for months around the sponsorship of the London 2012 Games. Much of this has focused on LOCOG’s rather draconian approach to ‘protecting’ its sponsors, which includes the introduction of ‘brand exclusion zones’, in which only official sponsors will be able to advertise, restricted trading in and around the Olympic Park and other event zones, and the issuing of heavy fines to any non-sponsors, however small, who attempt to use the Olympics in any form to promote products or events. There have also been questions raised about the appropriateness of certain brands being associated with the Games, ranging from protests over BP’s involvement to debate around fast food purveyors such as McDonald’s being a major sponsor of an event centred on sport and fitness.

What has been less discussed is the how all this has played out from the brands’ perspective. Does the sponsorship of these kinds of major sporting events still make sense for brands? How do they manage some of the criticism that’s thrown at them? And what do they receive for all that money?

The decision of who the official sponsors will be is of course made at the very beginning of the planning for the Games. There are three tiers of sponsors – Worldwide Olympic Partners, which number 11 brands, including Coca-Cola, McDonald’s, Visa and P&G, many of whom have sponsored the Games for decades; London 2012 Olympic Partners, of which there are seven, including Adidas, British Airways, and BP; and London 2012 Olympic Supporters (seven in total). Among the brands in the latter section is Cadbury, who came on board as a sponsor after the London bid was won. Phil Rumbold, then Cadbury UK’s marketing director (and now a founding partner at ad agency 101), remembers the process: “LOCOG, the organising committee, invited tenders from people, and the way they did it was category by category, essentially saying, ‘right, we’re looking to sell the sponsorship rights within chocolate, who’s interested?’,” he says. “Each interested party then put together a presentation and a proposal for why they would be a good fit, what they would do with it etc. Then LOCOG chose the winning bid, based on a combination of how much money people were offering, but also what they planned to do with it, and how good a fit it would be with the event.”

Cadbury, and its ad agency Fallon, proposed an idea around competing teams, involving the public, which became the campaign Spots vs. Stripes. The emphasis from the outset was on ‘play’, in an attempt to link the chocolate brand closely to sports and activity, and gain a deeper engagement between the brand and the event. “You have to allow it to seep through the veins of your organisation,” says Craig Wills, head of planning at Fallon of creating work for an event such as the Olympics. “I think if it just becomes a badging exercise, then you’ll probably fall foul to it. If you can really embrace it and deliver useful stuff that rewards people and links into sponsorship around the Olympics, you can have a great time with it, and you can also have a very rewarding sales platform.”

Commercial constraints

The need for brands to create rich, complex campaigns like this is in part due to the unique  circumstances of the Olympics, which allows no commercial messaging within the competition venues, meaning that brands cannot fall back on simply showing their logo as the world’s top athletes run by. “With the Olympics you actually get very little by rights,” says Rumbold. “If you think about the Champions League, or most other sporting things, for your money you’re guaranteed a presence at the venue – advertising boards, interview backdrops, all that kind of stuff – whereas at the Olympics it’s commercially much cleaner. Certainly in past Olympics, and I’m guessing in this, there will be very little or much less commercial presence. What that means is, when you sign up as an Olympic sponsor, really you’re paying that money for the table stake, you then have to spend a lot more time and money really capitalising on that sponsorship. If you bought the sponsorship and did nothing, you’d get absolutely nothing in return. The Olympics is one of the most expensive [events to sponsor], but it’s also the one that probably you get the least from.”

Therefore the brands that create the most compelling, inventive advertising campaigns have the most chance of breaking into the public consciousness during the Olympics. This is a task that is of course made easier if there is a natural connection between your brand and sports: Adidas, for example, has created a simple yet powerful campaign for this year’s Games, themed around the tagline ‘Take The Stage’ and featuring striking portraits of top athletes. [Even such an immediate link doesn’t automatically lead to success, however, as was witnessed in the Fifa World Cup in 2010, when Nike gazumped Adidas with its epic ad Write The Future, which while it didn’t explicitly mention the event, led many to believe that Nike was the official World Cup sponsor, instead of Adidas.]

For brands where the fit between the company or product and the Games is more elusive, a connection has to be built artificially. Brands that do this most successfully will usually get the most from their sponsorship, at least in terms of public recognition. Coca-Cola, who with a relationship to the Olympics stretching back 84 years is the longest continuous sponsor of the Games, has achieved this by creating a link between the brand, youth culture and sport. For London 2012, it has focused particularly on music as a way of attracting younger people to the campaign. “We have the benefit of having London as a beautiful backdrop with all of its cultural heritage, and music history,” says Claudia Navarro, global Olympic marketing director at Coca-Cola. “So for brand Coca-Cola, we’re using a creative construct that uses music to draw upon youth and get them closer to sport, get them talking about sport. That is a difference between London and previous games from a creative perspective, but the value and the ambition of youth and sport remain the same.”

To gain a strong presence in the Olympic Park, Coca-Cola has created a bespoke pavilion, called the Beatbox, with the architects Asif Khan and Pernilla Ohrstedt. Interestingly, while it is designed in red and white, the distinctive colours of Coke, there is no overt branding or logo on the pavilion itself. “The building itself was inspired by a song that we composed for the Olympic Games with the help of Mark Ronson,” continues Navarro. “It’s actually a very, very, unique structure, it almost looks like a garland. We think it will be difficult to miss that it is the Coca-Cola pavilion and we trust that it’s going to be so special and unique that there’s definitely going to be word of mouth around it.”

Brand power

It is important to note that advertising isn’t the only reason that a brand will sign up to be a sponsor for events such as the Olympics. While the costs to the brands involved might be vast, they stand to gain in ways that are far more subtle than just being able to place their logos alongside the word ‘Olympics’. “One has to realise that there are many multiplicative reasons why you might do this, and it certainly doesn’t just arise from the ability to put the Olympic logo on your product,” says Rory Sutherland, vice-chairman of Ogilvy & Mather UK. “There are very limited opportunities to establish yourself in that way, as widely as this. A totally global event of this kind only happens every four years and it is certainly unique. Depending on your corporate ambitions, there may be few alternatives for doing this, and the cost of achieving that degree of fame through other means, such as advertising, may indeed be greater.

“There are advertising people who dismiss sponsorship because they say it doesn’t say anything,” Sutherland continues. “That’s not true. It may not overtly say anything, but it signals a very great deal…. There is a very strong thing in human behaviour called the recognition heuristic, which is that we react very differently to enacting commercial exchanges with companies we’ve heard of versus companies we haven’t. My degree of confidence in buying from a company which is famous and enjoys a widespread reputation is considerably greater than from buying from someone I’ve never heard of, and I will pay a considerable price premium in the marketplace for the reassurance that fame brings me. Also, what one shouldn’t forget is the effect of the recognition heuristic operates at all levels of the company. It isn’t just a matter of selling to consumers, it is much easier to recruit highly talented and motivated staff if you’re British Airways than if you’re Air Zog.”

Corporate discomfort

With fame though, can come an impression of power that might not always be useful to brands. While the particular commercial restrictions of the Olympics has led to some creative responses from brands, it has also led to the perception of LOCOG as the sponsors’ guard dog, protecting their needs above and beyond what the public is necessarily comfortable with. This is not the fault of any individual sponsor, yet it has led to an image, that has been actively fuelled by the press, of the Games pandering to sponsors’ needs over those of the people attending the Games and wanting to engage with them. “There is a risk of widespread kickback, if the sponsorship is too heavyhanded,” agrees Sutherland. “The eradication of any competing beer from the stadium, for example, and the fact that you’re not allowed to bring other brands into the stadium with you. My only concern about that is what vision of capitalism does that convey? Does that convey that really your fantasy is to become an overweening monopoly eradicating all public choice? Actually that conveys a slightly Stalinist view of the aspirations of large commercial concerns.

“Now it may be that each individual concern starts with the best of intent but all of them individually trying to get the best out of their sponsorship leads to a collective effect, which the crowd finds a plague on both your houses. We’ve all known cases where commercialism just backfires.”

For this reason, sponsorship in and of itself is no guarantee of success for a brand: you can’t simply buy your way into the hearts of the public by simply attaching your brand to an event that will be popular. Instead the perception of the brands sponsoring the events is one that is delicately woven by the media, the event organisers and the audience. “There is a danger where the sponsorship, which in a much kinder world would be seen as simple generosity – at the most benign and pro-corporate level you would interpret this as generosity – at the worst level is interpreted as the exercising of monopoly power, anti-competitive and overbearing,” continues Sutherland.

One of the biggest brand backlashs of the 2012 Games has been against its corporate association with fast food brands, in particular McDonald’s and Coca-Cola, which has seen even the IOC President Jacques Rogge quoted as saying there was a “question mark” over the sponsorship due to obesity concerns (Rogge quickly clarified how much the Olympics valued the brands’ support when his remarks hit the press, however).

For Claudia Navarro at Coca-Cola, such criticism offers the brand an opportunity to reiterate its message, in particular its ambition to encourage young people into sport. “One of the things that we’re very proud of is that thanks to our sponsorship, we actually enable athletes from around the world to make their dreams come true – basically thanks to the sponsors, you have the Olympic Games,” she says. “The second thing we like to call out is that we’ve been doing this for 84 years, way before there was any talk of whether this is good or bad. We’ve had this solid commitment to youth and sport for 84 years, people don’t realise that… It doesn’t worry me to see more questions asked, it gives me the opportunity to give more answers, so that’s okay.”

McDonald’s similarly stresses that while it listens to the criticism, it also plays an important role in allowing the Games to take place. “We listen to anyone who has good things to say about us, and we listen to people who have not-so-good things to say about us,” says Matt Biespiel, senior director of global brand development at McDonald’s, “because it’s a way for us to understand our customers, it’s a way for us to understand where stakeholders’ heads are and it’s a way for us to get better. It’s nothing new in terms of hearing both good things and criticism.

“The fact of the matter is the Olympic Games needs significant funding to happen, whether it’s supporting athletes the way we do or whether it’s actually putting on the Games themselves. I can imagine that some people might think that that funding is out of balance. From where we stand, we believe in the power of the Olympic Games to move our business. We love the fact that the athletes like to eat our food. We love that our money goes to support Olympians all around the world in their quest to become athletes and to become Olympians and hopefully Olympic champions. All the noise that may go on around that doesn’t deter us from why we’re in this in the first place, which is to support sport and ensure that our brand stands tall.”

Here to stay

What is certain is that the Olympic Games and other such events would be impossible to stage without brand support, at least in anything like the form that they take now. Global partners allow the host country to spread the cost of the event to the rest of the world, and in return they are given a platform for advertising and promotion like no other.

When viewed in a purely financial light this may not always make sense to everyone, however: “The cost of sponsorship has grown massively, particularly for the really blue chip events like Champions League, World Cup, Olympics,” says Phil Rumbold. “I think if you assess all of those in the cold light of day, from a kind of return on investment, I really wonder if they would all generate enough of a return.” Yet for others, the magic of being attached to events such as the Olympics lies beyond only financial considerations, and instead brings benefits to the brand in ways that can’t be counted in pounds or dollars. “For us it’s an unbelievable opportunity for us to touch people in a very profound way that once in a lifetime a brand can do,” says Claudia Navarro. “I love the Olympic Games and I think the fit with brand Coca-Cola – which is all about togetherness and happiness – couldn’t be better. So for me it’s an absolute no brainer.”

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