Close-Up: Live Issue - Is the Olympics still commercial gold?

As Kodak and General Motors pull out as sponsors, are the Games still worth it, Kate Nettleton asks.

The Olympic Games have long been synonymous with the core values of excellence and global unity. Little wonder, then, that they have attracted scores of brands keen to bask in the Games' reflected glory. But in the past month, two high-profile sponsors, Kodak and General Motors, have passed on the sponsorship baton. So, is commercial interest in the Olympic Games waning?

Karen Earl, the chairman of the European Sponsorship Association, argues that after a century of Olympic partnership, Kodak's departure was inevitable. "Every sponsorship has its life, and it comes back to what Kodak was trying to achieve in the first place," she says. "If Kodak feels its sponsorship has achieved its objectives, then it's time to focus on other things."

The International Olympic Committee remains confident of the Games' commercial pull, having secured eight brands for the next Olympic cycle, including Visa, Coca-Cola, McDonald's and Panasonic, as well as confirmed sponsors for London 2012 in Lloyds TSB, Adidas and EDF Energy.

Many argue the Olympics now represents a better commercial opportunity than it did ten years ago due to a clearer understanding of how sponsorship works.

Mark Roalfe, the Rainey Kelly Campbell Roalfe/Y&R chairman, argues that an official association with the Games can be hugely beneficial. "For Lloyds, it gives the bank a great chance to promote its 'for the journey idea' by talking about the athletes' journey and London's journey to the Olympics," he says. "The brand proposition marries very well with the Olympics because it's all about rejuvenation."

An appropriately matched sponsorship can be an effective advertising tool. "Sponsorship connects to consumers through their passions and emotions and can enhance a consumer's brand experience and preference," Earl argues.

Those who have partnered with the IOC also point out that the body itself has developed into a much slicker operation, capable of cultivating and maintaining long- term commercial agreements with brands. Chris Townsend, the commercial director at London 2012, asserts: "We are already two years ahead of any other summer games in terms of securing commercial sponsorship and our new brand strategy has been very successful in attracting partners."

Brands should beware that an Olympic sponsorship deal comes with a significant price tag. Lloyds TSB and EDF Energy are paying £80 million and £50 million respectively, and the cost doesn't end there. As Rune Gustafson, the chief executive of Interbrand, points out, that is just the "ticket for entry". To make the most of the sponsorship deal, brands will need to channel copious amounts of money and time into producing an effective "Olympified" campaign.

Companies that can't afford this price tag will often try to piggyback on the Games' popularity through ambush marketing techniques. And with 30 per cent of the Games' revenues coming from sponsorship, these exercises in subterfuge pose a real threat.

And with the mounting criticism of the human rights abuses in China in the run-up to the Beijing Olympics, the organisers behind London 2012 are going to have to work even harder to persuade potential commercial partners that sponsorship will be a beneficial venture.

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CREATIVE DIRECTOR - Jonathan Burley, executive creative director, Leo Burnett

"The Olympics is a truly democratic international event; it stands for participation and inclusion, and if it's the right brand, then it's an incredibly beneficial thing to sponsor.

"It's easy to forget the purpose of sponsorship, though; the Olympics needs brands to sponsor it. But when a brand forces itself upon the Olympics, it doesn't work, and that forced connection becomes an ugly thing to see.

"If the sponsorship is appropriate, then that positive expression of shared values is always going to benefit a brand and will allow it to have a proper conversation with its consumers."

LONDON 2012 EXECUTIVE - Chris Townsend, commercial director, London 2012

"The Olympics is still one of the most powerful and recognised brands in the world and also a huge sporting event in terms of spectator participation and viewing figures. One in three people watch the opening ceremony and more than four million watched the last Games in Athens, so it still has huge commercial value.

"The evidence doesn't support any negative perception of the Games, and our new brand strategy has been very successful in attracting partners and potential new partners."

BRAND CONSULTANT - Rune Gustafson, chief executive, Interbrand

"It's one of those worldwide events that exposes brands to billions of viewers and has a very strong global franchise with both non-sports enthusiasts and sports fans.

"However, the cost of the Olympics is very high and you've got to be aware of and focus on what you're going to do to utilise that sponsorship. Paying for entry is just the ticket price, you've then got to tie activities and marketing around that, which involves even more money.

"It's the investment around the event that will reap the true benefits, but you also have to be aware of the potential risk that the Olympics could be marred by a scandal."

OLYMPIC SPONSOR - Nigel Gilbert, marketing director, Lloyds TSB

"Sponsoring the 2012 Games makes perfect sense for Lloyds TSB. The brand can only benefit from such a close association with this incredible event.

"At Lloyds TSB, we're here to help our customers as they travel through life. Who better to partner with the incredible journey that the whole country will be on to 2012 than us?

"The values associated with the Olympic Movement - excellence, respect and friendship - fit perfectly with our brand.

"We are convinced the Lloyds TSB brand will grow in stature from being so closely linked to such an iconic event."

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