Red Thread

Tokyo 2020: The challenges facing Partners

Organising Committees famously misrepresent the value of Games Partnership. ‘The country needs you to step up.’ ‘It’s a once in a lifetime opportunity.’ ‘The Prime Minister needs your help on this one.’ And the favourite: ‘It will be so good for your business.’

In London, LOCOG employed McKinsey to develop an elegantly simple model to show how modest uplift (not forgetting ‘halo effect’ and ‘legacy uplift’), applied across sales, employee productivity, absenteeism, and even reductions in resignation could easily recoup the Partnership investment. Beautifully seductive, but far from reality.

The truth is that these dials can indeed be moved – and dramatically, but, like shares, the value of Partnership can go up or down. Between 2008 and 2012 we analysed over 30 Partnership campaigns from the Sydney, Beijing and London Games. We interviewed key stakeholders, we reviewed online descriptions, we looked at the numbers. Generally, the passing of time meant that interviewees spoke more candidly about their actual experiences. What was most striking was how some businesses – such as GE, Samsung, Visa, AMP, VW China, EDF (to some extent) – were able to drive real strategic value out of their Partnership, whilst many others – including Cadbury’s, BMW and BT for example in London, struggled to generate sustainable uplift.

The challenge for Partners is that they’re starting from scratch on a journey without parallel or precedent. The power relationship with the Organising Committee is a shock. The landscape of sport is alien. Procurement departments – if they’re even allowed close to the Partnership Agreement – cannot begin to rationalise a rights fee which delivers just one hard asset – a logo. It’s a sponsorship – but it feels more like a merger. The intrinsic challenge of sponsoring the Olympic Games is one of the greatest facing any marketeer – because the impacts of Partnership far exceed the domain and influence of marketing. So every Games Partnership represents an unprecedented organisational challenge, especially for first time Partners.

In the words of Erica Kerner, formerly Global Olympics Games Director for Adidas ‘A lot of first-time Partners spend the first years of Partnership just figuring out the sponsorship. And of course, the Organising Committee has never done it either’. She meant it, of course, literally.

This situation is perennial. But Tokyo 2020 has its own unique set of challenges.

Famously, there’s little distinction between the rights of Tier 1 and Tier 2 Partners: both traditionally secure the full right to run consumer-facing promotions. And with a total of 42 Tier 1 and Tier 2 Partners to date, Tokyo has precisely three times the number of London. In effect, that means three times as many brands competing for attention – not just in consumer-facing activity, but also in more targeted business communications. This is a very real issue because brand equity gains (in particular) require a solid foundation of Partnership awareness. Not only will the presence of so many Partners aggravate that particular challenge, it’s almost certain to increase misattribution.

The answer is clearly not just advertising. BP was the largest spender on media, spending £14.2m to communicate their Partnership to consumers: by 2012, it had achieved just 25% awareness (Hall & Partners, 2012).

The presence of so many Partners presents another dilution of practical value: with three times as many Partners, ticket allocations for Partners of Tokyo 2020 will be proportionally smaller. Ticket numbers sound a mundane issue, but a Partner’s ability to guarantee a ticket to Tokyo 2020 to their oldest, or closest, or most profitable, or largest, or prospective clients is one of the largest direct benefits they receive. Tier 1 Partners at London were on average taking over 10,000 guests to both Games. Tokyo Partners will face some very tough decisions about their invite lists.

Category sharing is another issue which directly affects ten Partners in banking, aviation, security (and, to a lesser extent power supply and toilets). Now category exclusivity is customary in sponsorship for very good reason: it guarantees sponsors competition-free access to a target audience. But for the Olympics, lack of exclusivity is far worse, because a large part of the communications value is based on the notion that the Partner makes a unique and practical contribution to the delivery of the Games. This feeds into showcasing, into credentials, into client conversations, into employee engagement. This facet of Partnership is almost unique to the Games (shared only with ‘Expo’) – and completely impossible to maintain when your competitor is providing exactly the same contribution.

For a Partner, choice of Category is highly significant for two reasons. Firstly, because it creates a supply right: Partnership Agreements commit the OCOG and incentivise Partners to purchase the Category products and services from within the Partner network. Aggreko reputedly paid £5m for a Tier 3 position at London 2012: and billed LOCOG £15m. Secondly, because it broadly determines the product communications platform for the Partner. Ideally, the Category carries the flag for the entire business. Hence Atos use their role as IT Integrator to promote their ability to deliver the most challenging systems and Deloitte used their role at London 2012 to communicate their ability to handle complex programme management.

But many Partners of Tokyo 2020, in their desire to become a Partner and to support Tokyo 2020, and Japan, have bought Categories which have relatively little value, commercially or communication..ally. A quick look at the list of 2020 Categories reveals a number of Partners who will struggle to tell a story which helps their broader business. The narrow segmentation of IT across six Partners hurts all six.

The impact of all of this is aggravated by Japan’s corporate communications model.

Japanese businesses take a very integrated approach to brand – by which I mean that its primary drivers are seen as business reputation and product quality. (From my culturally bigoted position, reminiscent of the dominant B2B approach of 30 years ago.) There are intrinsic conservatism and formality about Japanese corporate communications. If the general direction in the west is for business communication to move toward the norms of peer to peer, Japan remains, by contrast, very ‘corporate’, with a marked resistance to stepping outside of the established protocols of business behaviour. The concept of brand in the west is generally closer to that of individual identity, with a clearly defined personality and attributes; and a recognition that corporate behaviour and communication needs to be a reflection of that identity.

The upshot is that many Japanese Partners of Tokyo 2020 will find the need to transcend the limitations of their Category culturally challenging. The best way for Partners to improve their corporate reputation is the thing they are most nervous about doing – standing out.

Looking back to 2012, each Partner looked for a unique way to express its identity or its message – for Lloyds Bank, it was taking the spirit of the Games around the UK, for BT, it was bringing the public together in celebration, for McDonald’s, it was supporting and celebrating the unsung heroes who make the Games such a success. Western brand methodology was applied to each distinct positioning to generate and shape each individual campaign – all in the service of achieving cut-through and superior levels of recognition and appreciation of the role played by the Partner.

It’s almost a platitude of Olympic marketing that the value of Partnership doesn’t derive from the six weeks of the Games (Olympic and Paralympic) but from the years before. What that means in practice is that Partners need to develop a campaign which leverages the Games association to increase relevance, and generates repeated touchpoints with key business audiences. But Tokyo 2020 Partners will find this particularly hard without unique, ownable stories. Their default cultural preference will be to adopt the position of ‘proud supporter’ of Tokyo 2020. This generic sponsor positioning no longer works outside of Japan. There is little to suggest it will work within Japan either.

It truly will be an exceptional Games and Partners are applying themselves wholeheartedly to the delivery challenge. I’m confident that Japan will demonstrate levels of innovation during Tokyo 2020 that surpass any Games, anywhere. The challenge I would like to see Partners embrace would be the challenge of communicating effectively outside of Japan.

The challenges facing Partners

Seductive ROI modelling suggests success is guaranteed

  • Modelling suggests that incremental improvements across sales, brand, employee engagement can easily pay the cost of Partnership investment.
  • This is misleading because even marginal incremental gains do not happen easily. There is no simple positive correlation between Olympic Partnership and commercial value.

They have less time than they believe

  • It is a common mistake of first-time Partners to waste two to three years of Partnership because, fundamentally, they believe there is no hurry.
  • The value of Olympic Partnership cannot be generated during the Games but requires four or five years of planned activity before the Games. Without timely planning, many will fail to recoup their investment.

They under-staff

  • Helen Nugent, Westpac Senior Exec, and later Macquarie Group Board member described Sydney 2000 as ‘the hardest challenge of her career’. Games Partnership cannot be ‘managed’ by a lower executive team.
  • Partnership cuts across every aspect of corporate life and requires active leadership with Senior Exec authority.

They have to create a five-year programme out of nothing

  • The marketing assets of Tokyo 2020 Partnership are largely limited to a logo, a designation and tickets. From that, Partners need to create an integrated, five-year campaign which touches every part of their business. Many Games Partners have unrealistic expectations of Organising Committee support and fail to take early responsibility for the success of their investment.

It is difficult to stand out

  • Tokyo 2020 has more Gold and Official Partners than any other Olympic Games, ever, many, with non-exclusive or very narrow Categories.
  • This means that achieving salience and cut-through for Tokyo 2020 Partners will be extremely hard; and harder with time.

Image credit: Night View with Tokyo Tower Special Lightup by t-mizo (CC BY 2.0)

Red Thread

The Paralympics come of age

The IOC’s signature on the landmark agreement with the IPC in Sydney 2001, linking the hosting of the Paralympic Games and the Olympics, was both hugely generous and characteristically far-sighted.

In exchange for abnegating their sponsorship rights and accepting a flat capped contribution from each Games, the IPC gained the guarantee of association with the world’s most powerful sports brand. Back in 2000, the agreement looked particularly generous. From the perspective of 2012, it looks particularly far-sighted.

In the mind of Xavier Gonzalez, CEO of the IPC, Beijing marked the coming of age of the Paralympian: ‘It was really in Beijing, to my mind, that Paralympians started to be proud to be Paralympians, and didn’t need to say ‘I’m an Olympian’’. And Sochi perhaps marks the coming of age of the IPC as a force for social change: ‘The changes in legislation to make Sochi as accessible as possible will create a template for the rest of Russia. Not that this is unique to Sochi. The Paralympic Games aren’t an end in themselves – they’re the beginning of the opportunity.’

But could London 2012 mark its coming of age commercially?  London 2012, with the obvious good graces of LOCOG, has seen a number of interesting developments.

The separation of broadcasting rights between BBC and C4 gave the Paralympics a broadcast partner who would be determined to keen to tell their story as powerfully as possible. More importantly, it created a commercial platform for the Paralympic Games which was not open to the Olympics in the UK, supporting the recruitment of Paralympic partners.

From a partnership perspective, the London Paralympic Games also offers powerful precedents for successor OCOGs. While Coke’s continued success in blocking the supermarket category cost LOCOG nearly £40 million, it opened a loophole of happiness which other OCOGs will be keen to copy. As Igor Stolyarov, himself an ex-Coker comments ‘London did brilliantly by acquiring Sainsbury’s as a Paralympic sponsor, a very smart move. The Sainsbury’s deal creates a real precedent.’

The agreement between the IOC and the IPC, extended this May until 2020 effectively incentivises the OCOG to be as commercially creative as possible around the Paralympics – as any funds raised for the Paralympics go directly to the OCOG, not the IPC. On this basis, we would expect future OCOGs to be attentive to the nimble contractual footwork of London 2012 – and use the Paralympic Games as a route to dodge Coke’s TOP firepower.

Sainsbury’s clever procurement clearly saved them roughly the same amount, enabling them to invest seriously in their Active Kids programme. Active Kids has been phenomenally successful, gives Sainsbury’s the right to claim to be the dominant brand playing in school sport – having channelled the equivalent of £115 million of sports equipment into schools since 2005. But like any 7 year old affinity programme, it needs constant reinvention to regain front of mind with consumers, and this was one of the strongest drivers for a 2012 partnership back in 2007, when Sainsbury’s was a Redmandarin client.

Sainsbury’s of course aren’t disclosing their activation budget, but with a platform which includes an ambition to introduce one million schoolchildren to Paralympic sport, David Beckham on film, a respectable C4 partnership – and a £10 million commitment to the UK School Games for the next four years, they’re not saving the change – and demonstrating a commitment to community which is both broader and deeper than any other London 2012 partner.

Weighting sponsorship investment towards activation, not rights is a sensible but still unusual position. In this case, Sainsbury’s judged – correctly in our opinion – that most people wouldn’t differentiate between association with the Olympic and Paralympic Games; and if they did, the differentiation would be positive. Sainsbury’s partnership campaign, which surely deserves any sponsorship award it’s entered for, will be a case study for the textbooks.

Curiously, Wolff Olins must also take some credit. The differences between the logos for the Olympic and Paralympic Games are minimal. The colourways obviously diverge, but no more than many Tier 1 Partners who pay for that very privilege. For anyone not versed in Olympic iconography and the ranking implications of a full colour Partner logo – Sainsbury’s is just another sponsor.

Anecdotally, the Paralympics isn’t working so well in London so far as client hospitality is concerned. Although spectators at the Beijing Games were effusive and enthusiastic, there is clearly a lingering perception that the Paralympic Games lack Olympic magic for business clients. Conversely, with respect to employee engagement, engagement with the Paralympics appears to be hugely powerful. In this instance, employee engagement is probably a more reliable indicator of consumer opinion: Sainsbury’s clearly think so.

The IPC’s active role echoes that of the IOC: to oversee the organisation of the Paralympic Games (as well as serving as the International Federation for nine sports). Its symbolic role however is arguably broader than that of the IOC – to represent the rights of athletes with disabilities, and by extension, all people with disabilities. The enormous relevance of the Paralympic metaphor lies of course in the struggle we each share to overcome our limitations. For Allianz, the power of this metaphor, and their ability to integrate it into messaging, more than compensates for having to take a back seat at the Games. In the words of Joseph Gross: ‘I am 100% convinced the IPC has a very positive future. I don’t expect it to be a fast-burner, but each Games, Beijing, London, Sochi, Rio, is going to advance the profile and the impact of the IPC. Managed well, I believe its relevance extends far beyond the disability community. It connects hugely with social values.’

In ‘Working the Olympics’, Xavier likened the IPC to the IOC’s younger brother: ‘You have one son who is already established, and you have the little one who is growing and wants to do things’. We’re led to understand that, with the encouragement of LOCOG, TOP partners will for the first time (unbelievably) maintain their presence throughout the Paralympics. Redmandarin believes the Paralympics are coming of age.

NB We’re assuming Coca-Cola will do some buddying up to the IPC and consider its relationship with the Paralympic Games going forward.

Red Thread

Olympics: what next?

One of the defining attributes of the Games is their life-cycle. The simple fact that each version of the Games only takes place once every four years, in different parts of the world, ensures the experience remains eternally fresh, not stuck in the comfortable but deadening rut of annual fixture.

Each Games spans seven long years, building from Host City announcement through to global celebration, and the Games are as much about this journey – as the event itself, with an unprecedented network of businesses and organisations working towards a single end.

And then Continue reading

Red Thread

sponsorship zen

It tickles us at Redmandarin that the IOC now has 11 TOP partners.

Brands and rights-holders often perpetuate a false correlation between sponsor numbers and clutter, and talk about sponsor clutter as though it’s an issue – and yet the IOC’s elegant solution is simply zen: de-clutter. Certainly, there is a limit to the number of partners that any property will sustain, but the limit itself depends on a number of factors, of which sponsor numbers is but one. What’s ironic is that a principled decision by the IOC to eschew easy commercialisation now looks like the more effective commercial strategy in the long run. Continue reading

Olympic Organizers Turn to $7,280 Tickets to Boost Revenue

March 15 (Bloomberg) — The organizers of next year’s London Olympics are widening access to corporate hospitality tickets for the first time to tap into the market for companies and wealthy individuals.

About 8.8 million tickets go on sale today, with 75 percent sold to the public through a six-week lottery on the London 2012 website. The only way for individuals and non-sponsors to get guaranteed tickets is through the official hospitality programs. On-site hospitality had traditionally been limited to backers and Olympics officials. The Games start July 27.

The London organizing committee, or Locog, is counting on selling packages worth as much as 4,500 pounds ($7,280) a person to companies in London’s financial district and the wealthy at the same time the U.K. government is implementing the deepest spending cuts since World War II. The committee is breaking with Olympic tradition because the market for corporate hospitality is “enormous,” Paul Deighton, chief executive officer of the London organizing committee said in an interview.

“That’s why we decided it was better to make it an official program,” said Deighton, a former Goldman Sachs Group Inc. banker. “It’s better than corporate hospitality cropping up unofficially.”

Ticket sales are expected to generate 500 million pounds, Locog spokesman Adrian Bassett said in an interview. He declined to say how much of the proceeds would come from public sales and how much by selling luxury hospitality packages.

Empty Seats

To be sure, South Africa hosted 62 World Cup soccer matches last year, and 97 percent of tickets were sold, generating $300 million. Still, many matches were played in stadiums with empty seats. U.K. newspapers including the Daily Mail have criticized Locog for selling “the most expensive ever” tickets in sport amid faltering economic growth.

“We’ve seen criticism in the media about sponsorship since the financial crisis, and corporate hospitality is probably at the cutting edge of that criticism because it can be portrayed as a jolly,” Shaun Whatling, CEO of London-based independent sponsorship adviser Redmandarin Ltd., said in an interview.

Entertaining important contacts is “absolutely” necessary to maintain relationships with clients, said Whatling, whose clients include Bank of Scotland, Credit Suisse and Virgin Media.

Hospitality packages, which are also being sold by the U.K.’s Thomas Cook Group Plc and Far Hills, New Jersey-based Jet Set Sports, will be sold on a “first come, first served” basis, and account for less than 5 percent of the 8.8 million total.

Ballot

The majority of Olympics tickets will be sold in a ballot, giving every applicant an equal chance of attending an Olympic event. Prices range from 20 pounds a seat for preliminary rounds to 2,012 pounds for the opening and closing ceremonies. Both sets go on sale today.

A ticket will be guaranteed in the luxury on-site hospitality packages sold by Prestige Ticketing Ltd., which has been allocated less than 1 percent of the seats. Its prices range from 225 pounds for the Olympic soccer tournament at London’s Wembley Stadium to 4,500 pounds for the opening and closing ceremonies, athletics, track cycling or swimming.

Some 5,000 companies have already approached Prestige about buying the top-end packages, the company said. Wealthy individuals from the U.S. have expressed an interest in the basketball event, while affluent Chinese have made enquiries about the table tennis, Prestige said.

In order to ensure the London organizing committee that there won’t be any empty seats at less-attractive sessions, Prestige is selling its top events in combination with other sessions. That means buyers won’t be able to cherry-pick high-profile events, Prestige marketing director Tony Barnard said.

Package Deal

For example, anyone who wants to buy a table for a minimum of ten people for the opening ceremony also has to purchase two tables of ten for a cheaper category sport such as the handball, hockey or water polo that averages at around 500 pounds. So the total cost of entertaining 30 guests over three days would come 55,000 pounds, or 1,833 pounds a guest.

“We want to make sure we sell out the hospitality program, we don’t want any empty seats,” Barnard said.

Yet, that’s exactly what may happen, Joe Cohen, founder and CEO of fan-to-fan ticket exchange website Seatwave said in an interview.

Cohen said there is a “a real risk” of empty stands at some of the stadiums because holders of a ticket won’t be able to sell any unwanted tickets on a floating-price exchange. Instead, Locog allows ticket holders to sell back unwanted tickets at face value.

A fixed price isn’t an “accurate reflection of the market and therefore there will be very little liquidity and very little trading on that exchange,” Cohen said.

“So if anyone has a 100 meter final ticket to sell, they are going to sell it on the black market,” Cohen said. “They are not going to sell it for 750 pounds if it’s worth 5,000 pounds. The tickets will find a buyer who is willing to pay the market price, regardless of what Locog wishes to do.”

EBay Inc., the owner of the largest e-commerce market, is cooperating with the London organizing committee to prevent the unauthorized resale of tickets.

“The resale of Olympic tickets is illegal and we are working closely with the organizers of the games to ensure tough and effective filters are in place to identify and remove such tickets if anyone attempts to sell them,” EBay said in an e-mailed statement today.

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