Red Thread

Alfred Kelly’s big decision

McDonald’s exit from the top echelon of Olympic sponsorship created a media opening for anti-IOC narrative.

But the sponsorship issue that McDonald’s exit raises is not about the travails of the IOC, it’s about whether or not the sponsorship of both the FIFA World Cup and the Olympic Games can be justified – at a combined annual cost of somewhere between $50 million and $100 million.

McDonald’s, Coca-Cola and Visa were in a highly exclusive subset of sponsors of both. And then there were two.

Steve Easterbrook, McDonald’s chief executive, clearly decided that the company’s energy and investment needed to be focused on its core product. But for Coca-Cola, with its heavy dependence on its main iconic brand and drink (increased by its recent move to a one-brand strategy), departure is simply unthinkable.

Nearly 90 years of Olympic heritage and over 40 with FIFA mean that both properties are completely institutionalised within the ecosystem of bottlers, distributors, major retail partners and brand teams.

Exit is often hard to countenance for any business, because it leaves such a huge gap. Like Brexit. For Coca-Cola it’s particularly unthinkable because of the huge impact it would have on every part of that system, and the immense challenges it would impose – in terms of global and national market budget management, brand and financial governance and operations across all parts of that system – to replace them.

But Visa’s business model and structure is entirely different. In 2016, it had over 54 per cent of global card transactions. The value of 2016 Visa transactions totalled US$8.2 trillion. It has approximately 3.1 billion Visa cards in use and accepted by 44 million merchants. Unlike Coca-Cola, it is not a luxury, a treat or a comfort, it’s integrated within the daily fabric of our lives.

Now the IOC and FIFA are both great for global brand-building, the World Cup in particular, with the global TV exposure it offers. But Visa’s challenge in most markets isn’t awareness, but relevance. And a major quadrennial appearance on the global stage doesn’t deliver.

So the question for Visa has to be: do we need both and what is the opportunity cost?

Beyond the World Cup’s TV exposure, both properties offer promotional and incentive opportunities to drive card spend and recruit merchants and member banks. They both generate revenue from official merchandise and refreshment sales. The World Cup offers an exclusive ticket pre-sales window to Visa card holders, while the IOC contract notoriously allows Visa to impose its exclusive use on all ticket sales. For the London 2012 Olympics, this will have generated between £5 million and £7 million in interchange fees.

More significantly, the structure of the IOC’s bid city criteria offers Visa a direct opportunity to influence the payment infrastructure around the games, and an opportunity to showcase innovation which the FIFA World Cup doesn’t. London 2012 was used to accelerate the uptake of contactless payment technology. Visa used Rio 2016 as a platform for wearables, in the form of ‘the Ring’, a ring worn on the finger that allowed Team Visa athletes to make purchases by tapping their rings at enabled payment terminal.

There are no comparable examples from Visa’s World Cup sponsorship – and its ambassador for both the Olympics and the World Cup since 2012 has been now-retired Olympian Usain Bolt. Of the two, FIFA sponsorship looks by far the most vulnerable.

Interestingly, Visa’s sponsorship portfolio has grown in recent years, in pursuit of diverse objectives. In May 2015 it signed a partnership with motor racing’s Formula E series and in January this year, it launched into eSports with sponsorship of Germany’s SKGaming, before expanding into surfing in May with The Boardmasters Festival, described on Visa’s site as ‘part of Visa’s evolving sponsorship strategy aimed at engaging the millennial audience’.

Despite the millennial characterisation, Visa’s evolving sponsorship strategy looks driven by closer targeting and more regular relevance – where $100 million of rights fees from the IOC or FIFA could usefully be deployed.

When FIFA dumped MasterCard for Visa in 2006, it was hard to imagine what MasterCard could do next – because there was no substitute. Despite the $90-million compensation FIFA was obliged to pay to MasterCard, it looked as though Visa had dealt a major body blow to its rival by occupying the category with both the IOC and FIFA. And indeed, MasterCard has not been able to reassert its global stature on the sponsorship stage.

MasterCard’s post-FIFA strategy has predictably been to use sponsorship assets to deliver loyalty benefits and drive usage. And, although this delivers far less reach – it offers enviably more frequent relevance.

Visa’s memory, on the other hand of replacing Amex as an IOC partner in the late ‘80s, will underscore the value that FIFA could hold for its challengers. Amex’s decision not to renew its IOC partnership unquestionably created a different trajectory for both Amex and Visa.

Fast forward to 2017: AliPay and PayPal are both growing aggressively. China’s UnionPay – larger than Visa already in cards issued and as of 2016 the largest provider by global transaction volume – still has a far smaller global network, which a FIFA partnership could build.

McDonalds decision to exit TOP was so momentous that only the CEO could ultimately confront it. Visa CEO Alfred F Kelly Jr will inevitably be faced with a similar challenge. Ironically, Alfred spent 23 years of his career at American Express, joining in 1987. As such, he will have personal memory of the notorious 1988 Calgary dogfight between both businesses that is now part of sponsorship ambush legend.

Despite the huge cost of FIFA sponsorship, and its relative inability to fulfil a useful marketing function for three years out of four, Mr Kelly will be a brave man indeed if he follows the sign marked exit.

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.

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)

World Athletics Championship and Sponsorship

The applause from the Bird’s Nest has barely died down, confirming the status of the World Athletics Championship as the third largest sporting event worldwide after the Olympics and the FIFA World Cup. Despite this, athletics is estimated to attract merely 1-2% of global sports sponsorship revenue this year – estimated by PwC at a whopping $45 billion[1]. Why this disparity?

An examination of the structure of athletics sheds some light on the challenges it faces. While interest in athletics focuses on the biennial World Athletics Championships and the quadrennial Olympic & Paralympic Games, sports like golf and tennis have at least four major tournaments per year. The appeal of global sport to sponsors arises from its exposure, and it is no surprise that sports which regularly feature in our calendars are the sports with high revenues from sponsorship.

For athletics, the problem is compounded by the distribution of elite athletes across a variety of events. When we tune into Wimbledon or the U.S. Open, we are guaranteed multiple clashes of the sport’s titans – but at the World Athletics Championships, the highest-profile athletes will rarely compete against each other. Usain Bolt and Mo Farah will never go head-to-head in the same way that Leo Messi and Bastian Schweinsteiger will in a cup final, and will consequently never draw in the same high level audience figures. With sponsors looking for partnerships that offer such large-scale, regular exposure, the disadvantage of athletics is clear.

Given the range of countries top athletes come from, athletics events ought to be able to attract more sponsors. But once again, structure leads to complications. The representation of each country by its national team leads to broadcast coverage focusing each country’s own athletes. The UK hears about the achievements of heptathlete Jessica Ennis-Hill, but she is comparatively unknown in other countries, where home-grown athletes take prominence. Only a few stand-out athletes (Usain Bolt, for example) have a truly global reach. The complexities of global presentation poses a threat to the coherence of the unitary message which sponsors generally wish to convey.

Sponsors who wish to associate themselves with Olympian qualities of ‘Faster, Higher, Stronger’ have perceived that it is more effective to achieve this with specific athletes, rather than with the event as a whole. The tactical choice to sponsor individuals rather than teams or events creates a system whereby the best athletes gain endorsement funding with which to enhance their already-glittering careers. Meanwhile, sponsorship is draining away from official governing bodies, and support for new athletes is no longer present. This cycle is indicative of the problems which athletics faces.

So what does all this mean for athletics? The recent news that Sainsbury’s has chosen to exercise a break clause in their sponsorship of British Athletics halfway through their contract and less than a year before Rio 2016 seems to illustrate the problem. For athletics to become more sustainable as a sport, steps must be taken to address the unique challenges which it faces.

Redmandarin’s David Powell talks to BBC World News about this topic…

 

[1] PwC Changing the Game; Outlook for the Global Sports Markets 2011–2015 

The Olympic Baby

We were a little surprised when we saw the IOC was planning on reforming its Rule 40.

Rule 40 currently imposes commercial purdah on Olympians for nearly a month around the Games, preventing any use of name or likeness in association with non-Games partners. Penalties for contravention include disqualification and stripping of medals (although the reality is closer to a rapped knuckle for the superstar breaches that are the legends of ambush: Johnson, Christie, Phelps)

There’s a popular case for change. Dozens of athletes launched a Twitter campaign – #WeDemandChange2012 – during the London Games, to urge an end to the rule. Rule 40 limits the commercial potential of athletes at the greatest moments in their season or even their careers. Only the very top athletes, sponsored by official Games partners, would make real money in Olympic years.

But a change is still surprising. Not only because the IOC is a conservative beast…but because this reform is potentially … radical.

The premise is to allow pre-existing marketing campaigns based on Olympians to continue, providing they are ‘generic’ ie non Olympic. But as we saw clearly in the controversies about Scotiabank’s 2010 and Honda’s 2012 campaigns, it can be extremely difficult to differentiate between ‘generic’ and Olympic marketing. The strict IP of the IOC and Games are well-protected: the marques and designations. But … mood, colours, words even.: Champion, heroic, pride… The Olympic brand is way too big to be reduced to a few protected terms.

So it’s difficult to see how ambush marketing would not be encouraged by this move. And while simple cease and desist letters are effective in blocking flagrant breaches of Olympic legislation, rights protection teams would struggle to cope with multiple negotiations of the protracted sort required by the more subtle approach of a Honda or Scotiabank.

Although LOCOG successfully restricted the ability of non Partners to use outdoor or field marketing in ambush, Games-time clutter across multiple channels is also a real risk, with the threat of Atlanta-style backlash against excessive commercialism.

But it will be the NOCs around the world who are most likely to suffer, with the dilution of their main asset. Brands will have the option to steer clear of bulky rights packages and head, instead, straight to the athletes.

And the potential is for so many brands to develop ‘non-Olympic’ campaigns that official sponsors will have to reassess the value of official Olympic turf. Or for undesirable or controversial brands to tarnish the halo of the Rings. How much did Bodog offer Tiger? Any ISFs who already accept gambling partners will be hard-pushed to take a stand when the same brands turn to athletes…

The change surely has the potential to shift the entire Olympic sponsorship landscape. Sponsors in the Olympic family will be faced with the need to develop stronger, more differentiated sponsorship propositions. The marketing landscape would be shaken up, there’s no question about that.

An apocalyptic picture. Life rarely pans out exactly as predicted, but here at Redmandarin, we’re left asking ourselves: which is the baby and which is the bathwater?

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

West meets East

The classic modern Olympic case study and one that gets more than its fair share of praise in ‘Working the Olympics’, is Samsung. The story of a faceless OEM turned global brand superstar on the back of a quality product portfolio, a sponsorship portfolio bordering on lavish, and a single-minded attitude to brand marketing. Yet so much has changed, even since we began writing ‘Working the Olympics’, that instinctively that story feels like it belongs to a bygone era; an era when it was Western markets and Western consumers that were the prime audience and emerging brands were desperate for the riches that could be unlocked with a mass consumer profile and a hefty marketing spend. Now the world is very different. 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

the right rights: The hidden value of Dow’s Olympic partnership

In July, Dow Chemical Co., the world’s second-largest chemical maker, agreed to become a worldwide sponsor of the Olympics through 2020 to gain construction sales in host cities and boost brand awareness in emerging markets.

The deal requires Olympic hosts to give Dow products preference as long as they meet a project’s technical requirements and are price competitive in the region

CEO Andrew Liveris said at an IOC event in New York that Dow’s board approved the sponsorship after Heinz Haller, an executive vice president, pitched it as a $1 billion sales opportunity through to 2020. Earnings before interest, taxes, depreciation and amortization may reach $180 million which makes the average $72-90m rights fee a good investment without even considering the value the sponsorship brings Dow outside of the Host Cities market.

When it comes to Olympic sponsorship, supply rights are often overlooked by the wider world. For b2b sponsors, the Dow/IOC partnership may just prove a well-thumbed case-study.