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One World, One Dream Five Billion Consumers

With less than a year to go until the Beijing Olympics, the race for marketing gold is already generating intense competition. Eager to profit from the world’s greatest sporting event, increasing numbers of Chinese and overseas corporations are now rushing to associate themselves with the Games, aiming to boost brand awareness, grow market share and build guanxi (relationships).

Income from domestic and overseas corporate sponsorships is vital to the Chinese Government. Though the extensive modernization of Beijing has been planned for a long time, the decision to expend more than US$200 billion to do it sooner rather than later was undoubtedly inspired by Beijing’s winning the right to host the 2008 Olympic Games in July 2001. Among other things, the capital’s pre-Games makeover includes permanent upgrades to the city’s transportation, communications and residential and commercial infrastructures affecting nearly every aspect of modern life in this ancient world city. In an attempt to balance the books, the sponsorship programme developed for Beijing 2008 is the most comprehensive Olympic package ever created.

From a commercial perspective, the appeal of the Beijing Games is obvious. These Olympics constitute the ultimate brand showcase, with a domestic Chinese population of over 1.3 billion people, half a million anticipated foreign spectators, and an estimated television audience of around four billion.

According to Alun James, managing director of London-based agency Four Sports, Arts & Sponsorship, the opportunity to gain exposure in such a well-populated and increasingly affluent country is a major attraction for global brands. “It’s a big tick in the box,” he said.

A record-breaking 54 companies have signed up to sponsor the Games, and as Tian’anmen’s Olympic clock counts down the seconds to August 8, 2008, even more companies are set to jump on the Olympic bandwagon. Analysts predict that as much as US$5 billion will be spent on advertisements and TV show sponsorships before the Games even begin.

Matthias Hanssen, General Electric’s director of global marketing for the Olympics, recently commented that the money his company is spending on sponsorship is a good investment, saying, “It is very much worth it. For us, it is a great business opportunity. The Olympics is the biggest sporting event in the world.”

Sir Martin Sorrell, chief executive of advertising group WPP, agrees that sponsorship money can be cost-effective, pointing out that the biggest live audience ever recorded was the one billion people who watched CCTV’s Chinese New Year celebration gala in 2007. 

Sponsorship income now accounts for 40 percent of the International Olympics Committee’s (IOC) total revenue. Domestic sponsorship within China is separate and is handled by the Beijing Organizing Committee (BOCOG). Overseas brands such as the US delivery company UPS, Volkswagen, adidas and Johnson & Johnson have signed up at this level, together with Chinese brands such as Yanjing and Yili.

“Association with the Olympics is stronger than it has ever been in terms of the levels of interest in the Games. The business world wants to learn more about China, to build a position in a country that is offering growing consumer choice,” Michael Payne, former head of marketing and broadcast at the IOC and the architect of the TOP programme, said.

Fame and Fortune

From the outset, Beijing’s selection as an Olympic host has captured the interest of national and global sponsors––companies with aspirations to leverage the Olympic rings both locally and overseas. According to a recent study, 68 percent of Chinese consumers are more attracted to the brands of Olympic sponsors, and are more likely to embrace corporations who have integrated, insightful, China-centric sponsorship strategies.

Up until the last decade, sports sponsorship in China usually meant erecting an advertising hording and maybe giving out some free samples at a local badminton game. Nowadays, as part of increasingly sophisticated campaigns, corporations are signing up international––and increasingly, Chinese––sports celebrities to endorse their products. However, there are still only a handful of Chinese athletes with enough star power to attract top endorsement deals.

 Greg Paull, principal of Beijing-based consultancy R3, recently commented, “It’s all about building association. The power of a star or sporting hero makes a real impact on brand preference. The problem is that Yao Ming and Liu Xiang are hogging the limelight.”

In the increasingly crowded Chinese market, standing out can certainly be a problem. The fact that Liu Xiang has marketing deals with Visa, Coca-Cola, Yili and Nike, plus several others, underscores both the allure and challenge of advertising at next year’s Games. A recent survey by R3 and research firm TNS found that Chinese consumers associated Liu Xiang with a mind-boggling 19 brands.

Despite all the hype, some companies are doing a good job of staying ahead of the pursuing pack. In April 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 creation, the “Cloud of Promise,” will be seen by a global audience before August 2008. Lenovo has also recently released a special “Sporty Lenovo Olympic ThinkPad Laptop” to commemorate the Games.

Scott Kronick, president of Ogilvy Public Relations Worldwide China, which is working with a number of Olympic sponsors including UPS and adidas, said, “Cutting through the clutter is essentially what our clients have tasked us to do. Two years ago our basic messages were chiefly about putting a stake in the ground and declaring sponsorship credentials. However, Olympic marketing is a marathon, not a sprint, and campaigns have to develop as the big event approaches.”

He continued: “To maximize the effect of our work we meet regularly with our clients to ensure the total integration of marketing disciplines. Of course, these include new media––the online component of our campaigns is more important than ever before, especially when it comes to innovative techniques and targeting the right audience.”

Strategic Sponsorship

To best leverage the Olympic feel-good factor, marketers must tap into the emotional groundswell before and during the Games. They also need to target the consumer demographics who can best afford their company’s products. Spending several hundred million dollars a year advertising the privilege of being an Olympic sponsor is pointless if your message doesn’t reach those with real spending power.

Olympic sponsorship isn’t cheap, regardless of marketing strategy. Beijing-specific partnerships in some categories have cost advertisers as much as the fees for multiple games before. In the fiercely competitive car category, Volkswagen China Group eventually put in an estimated winning bid of US$100 million in cash and kind.

Creating a premium brand through association with the Olympic Games will undoubtedly translate into sales for big-spending corporations like Volkswagen. These multinationals are hoping to not only benefit from heightened brand awareness running up to next August, but in the afterglow period and for years to come. Conversely, domestic Chinese companies such as Lenovo are looking to the Games as a launch pad for their brands onto the global market.

Kronick said, “Olympic sponsorship is double-sided. Domestic companies such as Haier and Great Wall have chosen sponsorship because it puts them in the same league as well-respected, global companies; it is a brand-building exercise. The Beijing Olympics are giving them the opportunity to operate on a global scale.”

He continued: “For multinational sponsors, the objective is different. They want to demonstrate their commitment to China, and are using the Games as a driver for increased presence in the Chinese market.”

In light of the huge financial rewards that Olympic association can have, it is inevitable that some companies will find ingenious ways to cash in on the event without handing over any sponsorship money at all. Although Beijing has vowed to be tough on so-called ambush marketing techniques, there is often nothing illegal about clever exploitation of the Olympic feel-good factor.     

Kronick believes the real test of BOCOG’s ability to protect its “brand,” will come outside of Beijing. “The Chinese Government is highly aware of the potential for ambush marketing in the run-up to the Games, and it will be very difficult for any companies to crash the party uninvited within China’s major urban centres. Outside of these, however, it may be more difficult to control what’s happening.”

Paris-based survey company Ipsos Group recently asked Chinese people which company they thought was the most popular Olympic sponsor for next year’s Games. Not surprisingly Coca-Cola ranked highest, with 22.1 percent of the vote, but two Chinese companies, Mengniu (dairy products) and Li Ning (sports clothing) ranked eighth and ninth. Neither of these companies is actually an Olympic sponsor, though intelligent marketing has enabled them to benefit from the revenue-enhancing effect of the Games.

Final Countdown

If the Athens Olympics in 2004 were Greece’s opportunity to show off that country’s rich cultural heritage, the Beijing Olympics are set to be China’s “coming-out” ball. The Chinese Government has identified three themes for next year’s Games––people, technology and the environment––all designed to illustrate how progressive and innovative China can be, and how hard the country is working to fix some of its biggest problems.

For “China Inc.,” for companies that are now preparing to join the race, and for those that may attempt to ambush proceedings at the last minute, next August is looming large on the horizon. Just as the Beijing Olympics will showcase the Middle Kingdom, ambitious brands now have the opportunity to demonstrate the quality and originality of their promotional strategies. To the victors will go the spoils.