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Olympic Sponsorship: Is it Worth It?

June 6, 2016


Tom Wiesman, Senior Director, discusses strategies and expected ROIs from sponsorships in this summers' 2016 Rio Olympic Games

Background

 

Following the 2014 FIFA World Cup, the attention of the international sporting world will again be centered on Brazil this summer in anticipation of the 2016 Rio Olympic Games. As with the World Cup, there is a strong desire for corporations to remain top of mind with so many eyes and ears focused on the Games.

The International Olympic Committee is expected to generate over US$5 Billion for the upcoming Rio event with over US$2 billion coming from several forms of corporate sponsorship. So will it pay off for some of these organizations to invest over $50MM apiece to have their name synonymous with these Olympic Games? Let’s dig into the details of the sponsorship programs to help shed some light on the question.

 

Olympic Partnership Overview

 

Olympic Games Sponsorship programs fall into 2 groups:

  • ‘The Olympic Partners’ (TOP) program
  • Olympic Games Domestic Partnership

 

TOP Program

 

Beginning in 1985, ‘The Olympic Partners’ (TOP) program was created by the International Olympic Committee to develop a diversified revenue base and to establish long-term corporate partnerships that would benefit the Olympic Movement as a whole. The TOP program operates on a four-year term – the Olympic ‘quadrennium’.  The chart below illustrates the revenue generated through the program since inception per four year term, with about 60% expected to occur during the summer games. The TOP VIII (since this is the 8th generation of the program) corporate sponsors consists of ten partners, also shown below, with Bridgestone becoming a partner in 2017 but acquiring marketing rights in Brazil for the Rio Games. With sponsorship, each corporation is granted the rights to specific Olympic intellectual property and global Olympic marketing opportunities throughout the quadrennium.

 

 

 

Olympic Games Domestic Partnership

 

The Olympic Games Domestic Partnership program is managed by Organizing Committees for the Olympic Games (OCOG) within the host country under direction of the IOC. Participation in this program grants marketing rights within the host country only. The number of partners varies significantly between games (peaking at 111 in Atlanta in 1996 with as few as 26 during the winter games in Nagano in 1998). In Rio, this level of sponsorship is expected to generate over $1 billion through about 40 partners and suppliers to supplement the TOP program.

 

Return on Investment to vary and take time to recoup

 

While short-term ROI can be difficult to comprehensively measure for major sports marketing sponsorships, we expect significant variation in how brands are able to capitalize on such a partnership over time.  Long-term partners, such as Coke and McDonalds, with immense scale, global presence and high purchase frequency, will likely benefit both in the short-term (through incremental sales) and the long-term (by building equity and brand loyalty). The domestic sponsors' ROIs are even more difficult to quantify as their level of involvement varies from “official sponsors” (e.g., Nissan), to “supporters” (Cisco), to “suppliers” (Nike). Smaller organizations will likely find strong returns harder to attain due to scale. Generally speaking however, brands that will have the best short-term performance are those that effectively activate around the sponsorship.

 

Regardless of the short-term impact of the investment, for the majority of the companies involved, the value of the sponsorship will be in building longer-term equity and aligning themselves with the Olympic Movement. One of the core benefits to the Movement is that sponsors develop advertising and promotional activities that help to promote the Olympic Ideals. By promoting these ideals - such as peace, education and the role of women through sport - corporate sponsors develop brand images that are synonymous with these values and generate deeper brand trust and ultimately brand loyalty and hopefully affinity.

 

The Impact of Mobile: Broadcast Dynamics and Content Changing

 

One of the key trends sponsors will need to manage is the medium in which content is distributed. As mobile device usage surges, an increasing amount of coverage and advertising will be delivered through mobile devices.

 

Consider the online and mobile statistics during the London Olympics in 2012:

 

 

Now consider that in 2012, there were 200MM more global online users than mobile (1.5B vs. 1.3B). However, within the last four years, mobile usage has surged past that of online and likely to eclipse the 2.0B user mark by the time the Olympics roll around. The number of online users has remained relatively stable and expected to remain below 1.8B.

With such a strong shift to mobile, owned properties such as Brand websites, Facebook pages as well as other social media presence, such as Twitter, will become even more vital to generate social engagement and online interaction that enhance sales from any paid activities. More recent Analytic Partners studies have shown that Owned and Earned engagement can boost returns from Paid marketing an additional 10%-20% or more. This enhancement, if executed well, can mean the difference between a successful and unsuccessful marketing investment.