Red Thread

Spinning the TOPs

The IOC’s TOP programme is clearly in rude good health.

With seven out of 11 partners confirmed until 2020, the IOC can congratulate itself on having established itself clearly as the premier global property. The presence of businesses such as GE, P&G and Dow Chemical in the TOP programme further testifies to a value which extends way beyond the traditional appeal of sponsorship – and relegates both the FIFA World Cup and F1 to a new second tier.

On the surface therefore, the IOC’s announcement that TOP is up for review appears surprising – the most successful sponsorship programme of all time, it’s US$1 billion short of being broken, so what’s to fix? But in the coded, diplomatic language of the IOC, ‘up for review’ of course begs interpretation. Whilst the review process will be characteristically thorough – nobody will be expecting radical change.

If I were in Timo’s position, I’m not seriously going to worry about pricing. Although the rights fees for individual Games have been on an upwards trajectory for the last decade, this has been heavily skewed by recent visits to the dominant emerging markets of China, Russia and Brazil. A TOP partnership might seem under-priced at a starting point of US$100 million per quadrennium, but with that comes a minimum eight year commitment, an obligation to activate, however modestly, the Summer, Winter and Youth Games. A total financial investment of over US$200 million – but an even more significant organisational commitment. The issue is not about TOPs paying too little, it’s about revenue expectations of domestic partners becoming unrealistically, unsustainably high (and that can only be addressed through the bid process).

But I am certainly going to look at category re-definition – and creep, because the current situation is squandering commercial opportunities for both the IOC and its OCOGs.

It’s a complex knot to unpick. Partners derive value from their category rights in three ways: they build communications, engagement and promotional platforms on them; they sell products and services off them; and they protect themselves with them. The IOC’s challenge is to reframe the value of each, and in particular to qualify and manage that protection.

Sainsbury’s illustrates the problem. By all accounts, including sotto voce commentary from LOCOG, less so sotto from Igor Stolyarov, the Commercial Director of Sochi 2014, and very evasive commentary from Coca-Cola, Coke has no contractual right to block the supermarket category – and yet it happens, time after time. TOP partners ring-fence their position ever more securely – through amendments to their partnership agreement with each renewal, through their deep relationships with the IOC. Coca-Cola can justifiably exclude Pepsi – and Guaraná Antarctica in Brazil as a direct competitor to Coca-Cola – but all local water, juice, tea and coffee brands? The same question could equally be asked of GE, McDonalds, Panasonic, P&G, Samsung and Visa

Category conversations tend to focus on convergence, but it’s a red herring: for the purpose of sponsorship categories, the iPad’s a computer and the iPhone’s a handset, a smart TV’s a TV and a smartphone is still a handset. In a strange way, Panasonic and Samsung are actually the model. They’re direct competitors in many categories. Both manufacture handsets and TVs. Both are restricted in the activation of their Olympic association to their respective categories. And both brands benefit or stand to benefit equally from the Olympic halo. When the principle becomes the practice, Samsung leaves Panasonic in the blocks, of course, because while Samsung sweat the assets, Panasonic posts generic advertising with washed-out colours that would sell sepia back-catalogues way better than HD TV. But the point stands: there’s enough space beneath the Olympic umbrella for competing brands to co-exist.

For B2C brands hoping to break back their investment via consumer sales, more categories in theory represent greater opportunity – but frankly, it’s difficult to imagine that scale of incremental sales for Acer, Coca-Cola, McDonalds, Panasonic or Samsung. Perhaps, globally, there’s a case to be made – but here sales are actually less dependent on category numbers and more so on when the OCOG finalises its ticketing arrangements. Tickets, not the marques, are the biggest driver of promotional sales and London 2012’s (comparatively) late release of ticketing will have hit partners’ sales far more than a pruning and rationalisation of the categories.

The role of the IOC commercial team has historically been sales-focussed. Without losing sight of the paramount need to embrace its partners and build deep, long-term relationships, the IOC is clearly looking to take back a little control. It’s in a strong enough position to do that – and it’s given itself enough time to do it as gently as possible.

If I were in Timo’s position, I’d be using the review to develop some ideas which are altogether more radical. What if the IOC were to request, for example, that each TOP invest an additional US$25 million into IOTF, the International Olympic Truce Foundation. This additional investment will strengthen the Olympic brand – and the value of their own Olympic association – by allowing it to engage directly with grassroots peace-builders in bringing peace through sport; IOTF offers brands the possibility of a four year citizenship narrative which exists independently of (but altogether aligned with) the Games; and such a collaboration, of some of the world’s most iconic brands, is in itself is a model for the future. And why not?


Red Thread

8 throwaway lines for use over the next three weeks

1 No logo is the secret

UEFA Champions League and FIFA World Cup make great play about limiting partner numbers to reduce clutter and deliver greater value. The Olympic model sidesteps branding clutter by …not offering branding. The lack of media exposure forces Partners to consider more carefully how they create value. Result: 7 of the 11 IOC’s TOP partners are signed up to 2020.

2 Think B2B, not B2C

B2B sponsorship is easier and usually more cost-effective for two simple reasons: business audiences are directly targetable; and revenue potential per customer is greater. B2C brands by contrast generally over-stretch themselves to achieve reach – and ultimately lose relevance. GE billed US$750m in Beijing.

3 By the time the Games arrive, the game’s up

The opportunity for partners is to play a visible and commercial role in the build-up to the Games. Providing the Partner carves out a clear and credible role, its Games status gives it a relevance most brands usually lack. Conversations are easier: when else did EDF’s fleet procurement make national press?

4 The Olympic brand is in a class of its own.

2700 years of heritage, global awareness over 90%, clear association with values like hope, humanity and diversity, the sense of universal myth and symbolism that attaches to the Olympic flame – the Olympic brand offers the best platform there is. From Dow Chemicals through Coca-Cola is quite some brand stretch.

5 Local? Watch out.

First time Partners simply cannot begin to imagine the scale of the challenge they face. Even if they begin by thinking they can isolate the association from the rest of the business, the Games are simply too big to ignore, and create an unprecedented challenge. Helen Nugent, on the Board at Macquarie: ‘My biggest personal career challenge’

6 Think: ideal client

Think of it this way: the Games offer the opportunity to write your ideal case study. You’ve got the world’s best known client – and, to a large extent, you write your own brief. Deloitte’s Heather Hancock: ‘It’s the story we tell our clients.’

7 It’s not a promotion.

Partnership can transform businesses, but if you consider it a promotional investment, you’re going to be sadly disappointed. That’s an awful lot of Curly Wurlys.

8 It’s a change driver

The most successful partnership are used to accelerate organisational change: changing culture post-demutualisation (AMP in Sydney), emerging from the aegis of state protection (VW China), globalising the brand (Visa and Samsung); repositioning (Cisco); facilitating the restructuring of the sales function (GE).