Close-Up: Is sponsoring the Olympics worth it?
By Matt Williams, campaignlive.co.uk, Friday, 08 May 2009 12:00AM
McCann Erickson believes in the positive effect of winning the Games account.
When it was announced in January that the London Organising Committee of the Olympic Games and Paralympic Games was on the hunt for an ad agency to provide all of the advertising, public relations, sales promotion and digital communications for the 2012 Olympics, a wave of excitement spread across the industry.
But as more details about the brief emerged, some groups started to feel a little uneasy, baulking at the notion that the committee required its successful agency to provide some of its services "in kind".
Last week, after much speculation and more than a little scepticism, it was finally announced that McCann Erickson had won the business, and would offer around £10 million in services-in-kind for the privilege. The entire account is estimated to be worth between £30 million and £40 million.
In return, the agency would become a third-tier sponsor, and be responsible for all of the advertising for the Games during its three-year contract.
It was a deal questioned by many in the industry. Some asked just how McCann could have the gall to do the deal it did considering its parent company, Interpublic Group, has been laying staff off in recent months in an attempt to balance the books.
But according to the president of McCann Worldgroup EMEA, Brett Gosper, the account offered so much to the agency that it was simply impossible to turn it down.
"There's a spotlight shone on the Olympics like no other, and if you're involved then you share that spotlight," he says.
But is that spotlight worth giving up £10 million for? That's a lot of money to pay if all you're getting in return is the chance to see your name up in lights.
"There's a range of rational reasons for doing this deal," Gosper argues. "For instance, there's a lot of high-profile brands involved in the Games, so being involved will connect us with boardrooms across the world."
Then, of course, there's the boost that working on the account will provide internally. "We saw, while working on the pitch, the unity and excitement it brought to the agency," Gosper says. "How could anybody not feel motivated about working on what is going to be the biggest and best event that has come to this country in decades?"
Such is the scale of the business, LOCOG predicts that McCann's work will be seen by around three billion people across the world. Providing the work's good, then that's not a bad statistic to boast about when meeting prospective clients.
"And of course we will be shouting at every opportunity about the fact that we're involved with the Games," Gosper says. "We will literally be given the chance to 'dress' London, and that's an incredibly exciting opportunity."
But even Gosper admits that these factors all just contribute to being "a lot of very nice icing on the cake".
So what about the cake itself? In this climate, and with Interpublic reporting a fall in organic revenue for the first quarter of 2009 of 5.6 per cent, isn't it irresponsible to work on accounts "in kind"?
Gosper is keen to quash this notion: "There's an awful lot of 'non-value in kind' work that will be going on too," he says.
"We do not believe that we will lose money on this deal. We weren't negotiating to get a figure down from free to even more free. So because of this, and the value that holding the account brings, we feel it makes good business sense. Sir Martin (Sorrell) would not have gone for it if he believed it did not make business sense, would he?"
- The London 2012 Organising Committee for the Olympic and Paralympic Games has a £2 billion budget, with almost all of it being raised from the private sector.
- The Games will attract more than 10,000 athletes from 205 nations, competing in almost 300 events.
- In a poll conducted by the Department for Culture Media and Sport, it was found that 78 per cent of Brits are interested in the 2012 London Games, believing that the event will have a positive impact on their own lives and local communities.
- A total of 36.6 million people in the UK, about 65 per cent of the population, watched at least 15 minutes of the 2008 Beijing Games. The most watched event in the UK was the men's 100 metre final, attracting 5.8 million viewers. The rowing and cycling finals also attracted more than five million viewers.
VALUE FOR MONEY?
The Games has seven top-tier sponsors - Adidas, BP, British Airways, BT, EDF Energy, Nortel and Lloyds TSB - that have paid between £40 million and £80 million each for the privilege.
According to Chris Townsend, the commercial director of London 2012, brands can use their sponsorship of the Games as a way to increase consumer and staff engagement.
"Olympic Games staged in the past have shown us that if two brands are seen as fairly similar by a customer or potential employee, a brand's association with the Games can be an important differentiator," he says.
But do consumers really make a distinction between the brands that sponsor the Olympics, and the brands that don't?
An independent research group found that when it asked the public whether Coca-Cola or Pepsi sponsored the 2008 Beijing Games, 60 per cent thought it was Pepsi. In fact, it was Coke.
Townsend says that the sponsoring brands can combat this fear this time around through the implementation of a legacy scheme, which LOCOG requires all partnered brands to introduce.
"Partners do not simply buy the right to use the mark," he says. "They use their relationship with us and their exclusivity with the Games to deliver a legacy that can benefit everybody, therefore ensuring that their partnership lasts for far longer than the duration of the two events in the summer of 2012."
Already, all of the top-tier sponsors have initiatives in place. Adidas, for example, has created five multi-sport outdoor venues called "adiZones", to encourage youngsters to enjoy sport.
THE BRITISH AIRWAYS STORY
British Airways became the fourth top-tier sponsor of the 2012 Olympic Games when it signed a £40 million deal with LOCOG in February last year.
- The company plans to use the event as a key pillar for its marketing communications strategy in the UK over the coming years.
- It will be able to use the Games logo of the interlocking rings on its carriers.
- As part of the partnership, the airline will also be the sole provider of flights for Britain's Olympic and Paralympic athletes for the Vancouver 2010 Winter Olympics.
- It plans to use its position as a sponsor of the event to launch a number of initiatives focusing on community investment, education and sports programmes, to help promote the brand's British heritage.
- BA has also launched its legacy initiative - "the Great Britons programme" - that offers free flights to help budding talents realise their dreams. The £500,000 scheme was launched by Sir Chris Hoy and Denise Lewis, and is open to anyone who wants to develop their talent abroad.
THE LLOYDS TSB STORY
Lloyds TSB nabbed its place as the first official partner of the London 2012 Olympic Games in March 2007, in an effort to "make a good and clear statement that we believe in ourselves as an organisation".
- The bank wants to use the run-up to the Games to link to its "there for the journey" proposition, and will use its sponsorship to help differentiate itself from other banks.
- Through its "Local Heroes" initiative, Lloyds plans to support Britain's genuine young sporting hopefuls before the event.
- It will also launch the "Lloyds TSB National School Sport Week", to help motivate pupils to get more involved in PE and school sport using the Olympics as a source of inspiration.
- The bank will launch products and services to champion its partnership with the Games, like the "Lloyds TSB Official Business Guide for London 2012", designed to help companies of all sizes take advantage of the commercial opportunities being created by the event.
- Lloyds is also keen to use the Games as a way of engaging and motivating its employees, as well as its customers.
This article was first published on campaignlive.co.uk
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