Red Thread

McDonalds and the IOC: fake news from the FT?

McDonald’s departure from the IOC TOP programme has provoked much commentary. Of course, big sponsorship news always attracts its fair share of clichéd reflection and the departure of McDonald’s from TOP is very big news in the sponsorship industry. But it’s been particularly interesting to observe, especially in the context of fake news.

The worst culprit, surprisingly, is the Financial Times, in their 16 June article ‘McDonald’s ends Olympic Games sponsorship 3 years early’.

According to Leisure Correspondent Murad Ahmed, ‘McDonald’s has ended its decades-long sponsorship of the Olympic Games, becoming the latest US company to pull support and marking the latest financial blow to the body that runs the world’s biggest sporting event’.

He refers to Budweiser, Citi, Hilton and AT&T, all of whom indeed terminated relationships in recent years – with the United States Olympic Committee, of course, not the IOC. In fact, the last USA TOPs to withdraw were actually KodakJohn Hancock (after fairly respectable terms of 22 and 16 years, respectively) and Johnson & Johnson (after four years) in 2008. P&G has since more than occupied the temporary space created by J&J of course. The IOC’s TOP programme is in rude good health.

The article continues: ‘In response, the IOC has looked elsewhere for major sponsorship deals, particularly Asia’, citing the case of Alibaba – but ignores the advent of GE, P&G and Dow to the TOP programme since 2000. And today, 21 June 2017, Santa Clara based Intel is being announced as TOP number 13.

The article’s real destination, however, appears in paragraph six: ‘the departure of another big-name sponsor comes at a difficult time for the IOC, which is struggling to convince cities to take on the multibillion-dollar costs of staging.’

The FT’s article looks as though it was largely subbed down from Reuters. In which case, we’re potentially in classic fake news territory here. Were the facts deliberately misrepresented in order to feed the popular media narrative about the challenge the IOC faces in attracting bid cities?

Reuters, who looks to have led the story, provided far more insightful commentary. They looked beyond the cliché into McDonald’s current business position, citing McDonald’s CMO Silvia Lagnado and their investment in improving food quality, restaurant service and online ordering to refresh and revive McDonald’s. Their very publicly stated change of focus, in other words.

(Bizarrely, the FT article – and not Reuters’ feed – was picked up and replayed virtually verbatim by Sports Business Daily, who, of all people, should know better.)

To our certain knowledge, McDonald’s IOC relationship has been under repeated review since 2010 – definitely since before London 2012, and possibly longer. The reasons are fairly obvious, but worth exploring, because of the light it shines on sponsorship – and McDonald’s as a sponsor.

The issue of obesity is certainly high on the list of reasons. Media and public concern about obesity have shone a bright spotlight on McDonald’s, making corporate comms and public affairs a higher order need in many markets than pro-active sales promotion.

And sales promotion is one area where the Olympics historically do not perform for McDonald’s. The simple question is: what Olympic sales promotion is more cost-effective than a tie-up with Universal & Dreamworks, for example? Without an answer to that question, Olympic Partnership struggles to address the very real needs of the 80% of restaurants globally which are franchised.

Images of Olympians queueing for burgers in Rio must have been very gratifying for McDonald’s. In many ways, it offered an ideal positioning for McDonald’s – as a dietary treat, not a staple. But as a public affairs ‘defender’, it’s a blip and doesn’t work nearly as well as, for example, McDonald’s collaboration with the Association of French Regions to create 2,000 new jobs for young people in France. Or McDonald’s grassroots sport investments.

For some categories and brands, the IOC offers the most powerful sponsorship opportunity in the world. Like any sponsorship property, of course, it has its limitations. The Tokyo 2020 line-up appears to be dealing with its ageing audience profile and the IOC clearly recognises that its bidding process has become a victim of its own success. Harder to deal with is the intrinsic challenge facing all IOC Partners of maintaining relevance during the three fallow years between Summer Games. Yes, the Winter Games exist but they’re far from global in terms of reach or relevance. It works better for some categories than others.

But, according to various sources, including Kantar Media and Statista, McDonald’s has been spending between US$600 million and US$1 billion annually on advertising in the USA alone. Which puts the IOC’s rights fees into perspective, even if the IOC are seeking to double the rights fee for TOP to US$200 million. The most likely explanation is in fact not cost-saving, but simply that the IOC Partnership was no longer relevant for McDonald’s.

Steve Easterbrook was appointed global CEO in 2015, tasked with repeating his turnaround of McDonald’s GB – the mammoth task of bringing McDonald’s sustainability and service into the 21st century. Three months later, and two new global comms functions were occupied: the position of Global CMO was taken by Silvia Lagnado, with responsibility for the global brand, menu and consumer insights); and former White House Press Secretary Robert Gibbs was appointed Global Chief Communications Officer. ‘Returning excitement to our business proposition’ was how Easterbrook described the challenge to Fortune magazine.

Sponsorship excels at creating an exciting platform for some businesses, and some entire categories (banking for example). But as Apple always reminds us, the optimum creative platform is a product that is relevant, timely, alive and valued. Sponsorship is no substitute for product development. And when your sponsorship is the most interesting thing about your business, frankly, it’s time to hire your own Easterbrook.

As for the FT, it’s worrying. On this one, Potato Business did a much better job.