19 Jul 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.