Beijing 2008: The Commercial Contest
Olympic sponsors target markets, minds & money.
Trend Description
With less than 400 days before the Beijing Summer Games kick off, one event that has already started is generating fierce competition. Eager to cash in on next year’s sporting extravaganza, Chinese and overseas corporations have been rushing to sign sponsorship agreements they hope will bring increased market access and monetary gain.
Companies have long traded on the feel-good spirit and massive viewing figures associated with the world’s most famous sporting occasion, but the Beijing Olympics are shaping up to break all the records. For those who can catch a ride on the Olympic bandwagon this time round, the exposure and potential financial rewards are high - more than one billion Chinese are expected to watch, not to mention a half-million international visitors and a worldwide viewing audience of four billion.
Summing up the marketing frenzy that already surrounds next year’s Games as an “orgy”, Tom Doctoroff, China CEO of JWT, the international advertising giant, has commented, “Every single company under the sun has, or is preparing, some kind of Olympic pitch.” Beijing’s organizing committee has vowed officially to present the “best ever” Olympics - an event bigger, glitzier, better-organized and more lucrative than any other. Never before has a global sporting event been so entwined with commercial opportunity and profit.
Case Studies
Olympic Partner: Lenovo
Spending several hundred million dollars a year advertising the privilege of being an Olympic sponsor is a waste if it doesn’t reach the consumers likely to afford your product. “Target” is the watchword of smart sports sponsorship. Keen to be seen as a global company coming out of China, Lenovo used the two weeks at the 2006 Turin Winter Olympics to unveil its new image. However, Lenovo didn’t swamp Italy with expensive billboards. Instead, it had its name displayed in strategic locations, promoting its right to supply the communications technology driving the Games, and laid on internet cafes for athletes.
In April the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG) unveiled the Lenovo-designed Beijing 2008 Olympic Torch and announced Lenovo’s role as a Worldwide Partner of the Olympic Torch Relay. Lenovo’s design, the “Cloud of Promise,” was chosen over 300 competitor themes and will be carried by torchbearers around the world in the Olympic Torch Relay preceding the Beijing 2008 Olympic Games. Lenovo has also recently released a special “Sporty Lenovo Olympic ThinkPad Laptop” to commemorate the Games.
Image source: Lenovo
Olympic Partner: Adidas
Adidas hopes to make hay while the Olympics shine, and is looking to more than double the number of its retail outlets on the mainland by 2010 as a result of the Olympic effect. The company had a relatively slow start, but more than a decade after Adidas sneakers were first introduced at a shopping mall in Beijing, the brand has now become a household name.
The success of Adidas in China coincides with the country’s growing enthusiasm for sports. Nationwide, there are now more than 2,500 Adidas outlets in 300 Chinese cities attract millions of sports fans. The world’s No.2 sporting goods maker is expecting the number of its outlets in China to grow to over 5,000 by the end of the decade.
The German company is estimated to have paid as much as $100 million in cash and extras such as uniforms to win the Beijing Olympics sponsorship bid. The company will supply approximately 40,000 volunteers, staff and technical officials with sportswear.
Image source: Adidas
Olympic Effect: Advertising Boom
Consulting firm PricewaterhouseCoopers (PwC) believes the 2008 Olympic Games in Beijing will boost the advertising market by more than 20%. PwC said in its global entertainment and media industry outlook for 2007 to 2011 that the Chinese advertising market is expected to grow at an average annual rate of 15% to $22 billion by 2011, about half of the size of the Japanese market. However, the growth in 2007 and 2008 will be over 20%, as advertising clients increase spending.
PwC estimate that spending on digital advertising, mainly on the internet, will double to $2.2 billion in two years. TV advertising will continue to dominate with a 70% market share, while newspaper advertising will drop from 15% in 2006 to 11% in 2008.
Image source: Xinhua
Trend Impact
In Beijing, Games sponsorship will have a double-sided impact. A company that signs a global deal will be able to link its name with the Olympics, aligning branding with such ideals as “excellence”, “friendship” and “victory” in its international marketing efforts. Secondly, and more profitably, the company can strengthen its presence in the Chinese market. According to a recent study, 68 percent of Chinese sports fans are more likely to buy brands that sponsor the Olympic Games than those that don’t, and Chinese people are sure to embrace corporations who boast integrated, insightful, China-centric sponsorship strategies.
To truly succeed in the Chinese market, both local and multinational companies must find ways to engage the 100 million young affluent Chinese consumers who have the money for premium brands. In a crowded market, standing out can be a problem. The fact that Liu Xiang already has marketing deals with Visa, Coca-Cola, Yili Group and Nike, plus several others, underscores both the allure and challenge of advertising at next year’s Games. A recent survey by Chinese marketing consultancy R3 and research firm TNS found that Chinese consumers associated Liu Xiang with a head-spinning 19 brands.
Organizers and corporate partners are also worrying about ambush marketing - their concern is understandable, given China’s poor track record in enforcing intellectual-property rights and the piracy that affects most sectors of the economy. As the Games approach, sponsors are pressuring the Beijing Organizing Organizing Committee for the Games for protection from unethical marketers. During a recent press conference in Beijing, the organizing committee’s marketing director, Chen Feng, emphasized: “Only those who financially sponsor the games have the right to market their products and maximize their commercial interests.”
From here on in, penetrating the Chinese market is going to become increasingly tough for Olympic sponsors. For “China Inc.”, for brands that are preparing to join the race, and for those that may attempt to crash the party late, August 8, 2008 is a date looming large on the horizon. In the same way that the Beijing Olympics will show what China is really made of, world-class brands now have the opportunity to demonstrate the quality and originality of their promotional strategies. In both cases, failure would be unthinkable, and costly.
Olympic Ticket Snapshot
Demand for the 2008 Olympic tickts has been huge. Some events, including the opening and closing ceremonies, are already way over-subscribed. Rong Jun, head of the Beijing Olympic Ticketing Center, recently commented, “We have already received 360,000 orders for more than 2.2 million tickets. The opening and closing ceremonies were extremely over-subscribed and a random computerized selection process will be used to allocate the tickets.” Tickets to a dozen of sports including badminton, table tennis, swimming, diving, gymnastics and basketball are also very much in demand. The second leg of domestic sales will start in October and run through to December.
Image source: Xinhua