Marketing Activities - Beijing 2008 - Part I
Corporations compete for Olympic marketing gold
Trend description
The race is well and truly on for companies looking to profit from the Beijing Olympics. Corporations have long traded on the feel-good spirit and massive audience associated with the world’s biggest sporting event, but the Beijing edition is shaping up to break all the records. For those who can catch a ride on the Olympic bandwagon, the potential financial rewards are high - more than one billion Chinese are expected to tune in, not to mention a half-million international visitors and a worldwide viewing audience of four billion. The sponsorship programme developed for Beijing 2008 is the most comprehensive Games package ever created, and ad campaigns from Olympic sponsors such as Visa, Coca-Cola and Lenovo are already in full flow.
With cheaper labor and fewer security concerns, Beijing is spending just US$2.6 billion – half of what Athens spent – to build athletic facilities for the 2008 Games. However, it’s also spending another US$200 billion to give itself a major pre-games makeover, including permanent upgrades for the city’s transportation and communication infrastructures, to prepare itself for its anticipated future role as a world-class commercial megalopolis. Much of this financing is coming from the pockets of national and international corporations, recruited as Olympic partners, sponsors and suppliers.
Cases
Adidas
To win its coveted partnership, the German company beat its two strongest rivals in China, the global market leader Nike, and Li Ning, the leading local sportswear company. Adidas also paid handsomely, investing between US$80 million and US$100 million (619.5 million and 774.3 million RMB) in cash, services, products and uniforms.
The Games are a key driver in the company’s ambitious growth plans. Adidas already has more than 2,000 stores in more than 300 Chinese cities, and plans to have at least 4,000 stores in China by 2008. The company is investing millions more in marketing, sponsorship, licensing and business development activities surrounding the Games. Adidas will supply sportswear for staff, volunteers and technical officials at the Beijing Games and outfit the Chinese Olympic teams competing in Beijing. It is also the only brand licensee partner for the Olympic Games, which means other sponsors can market and distribute products co-branded with the Olympic logo, but only Adidas can sell them. Earlier this year, Adidas introduced its first co-branded retail products, such as clothes and caps, in its Chinese stores.
Coca-Cola
The American soft drink marketer is also using the next year’s Games to compete with a strong global rival, in this case PepsiCo, which has a strong connection with Chinese youth through hip marketing and associations with pop stars such as Jay Chou. Coke has been fighting back by partnering with the popular world of Warcraft online gaming, which is enormously popular with Chinese youth, and now through the Olympics and its sponsorship of Chinese track-and-field superstar Liu Xiang.
Coke launched a Coca-Cola 2008 Olympic Pin Program last August that lets consumers design and trade Olympic-themed pins. The company has been associated with pin trading since it sponsored the first official Olympic pin trading center at the Calgary Olympics in 1988. The marketing campaign was kicked off by Liu Xiang, who designed three pins. China’s Olympic fans can take part in a nationwide pin design competition called “Show China to the World”, in which Chinese can nominate local landmarks that capture the spirit and traditions of their hometown for pins, and participate in pin design. The best designs will be selected by public vote, through the company’s online community, i-Coke, and marketed together as a special collection.
General Electric
General Electric has won contracts worth US$160 million (1.23 billion RMB) for projects related to the 2008 Olympic Games, such as generation and distribution of electric lighting, water treatment services and security. GE Plastics, a US-based unit of GE, also will be involved in this sponsorship.
The decision reflects GE’s status as one of the International Olympic Committee’s 11 “The Olympic Partner” (TOP) sponsors. These global sponsors have paid tens of millions of dollars to associate their brand with the prestigious sporting event, as well as the chance to pursue lucrative business opportunities surrounding the Games. For an industrial giant like GE, that means big bucks to help build infrastructure, as well as business-to-business marketing opportunities. GE ultimately hopes to win $800 million (6.19 billion RMB) in contracts for next year’s Games, and the company has an estimated operating budget of US$2 billion (15.4 billion RMB) for Beijing 2008.
Trend impact
Beijing’s selection as Olympic host has piqued the interest of global and national sponsors, companies with aspirations to influence the Olympic rings both internationally and locally. The motivation for sponsoring the Beijing Olympics is completely different from that of the Athens Olympics. In Athens, sponsors were interested in the global platform the Olympics provided, but were not especially drawn by local market opportunities. In Beijing, sponsorship will have a double effect. Firstly, a company that signs up for global sponsorship will be able to link with the Olympics, aligning its brand with Olympic ideals such as “excellence” and “victory” in its communications. Secondly, and more profitably, the company can strengthen its presence in the Chinese market.
The run-up to the Beijing Olympics will be ultra-competitive for marketers, and for those that cross the winning line first, the prizes will be big. Firms must therefore be creative to take the lead. Brands, marketers, and sponsors must adopt, as Adidas has, an attitude that “Impossible is nothing.” Whether it is for the prospects of “China Inc.,” for brands that are lining up to participate, or for those that may attempt an ambush marketing effort (when competitors of official sponsors find ways to associate their brand with the event), next year’s Games are on the minds of many in China. In the same way the Olympics in Beijing will showcase China, world-class brands now have the chance to showcase their world-class marketing strategies.
Addendum: Not in China
China’s Advertisement Law, which took effect in February 1995, prohibits the use of certain themes in advertising. Advertisements must not:
• Contain China’s national flag, emblem, or anthem
• Use the names of state organs or their functionaries
• Make claims such as “state-level”, the “highest-grade”, or the “best”
• Hinder social stability or harm public interest
• Violate Chinese social customs
• Use pornography, superstition, terror, or violence
• Discriminate based on ethnicity, race, religion, or sex
• Harm the environment or natural resources
• Create circumstances prohibited by law