Beijing 2008: The commercial
contest By Daniel Allen
BEIJING - As the Beijing Summer 2008
Olympic Games draw ever nearer, one event that is
already underway is generating fierce competition.
Eager to cash in on next year's sporting
extravaganza, Chinese and overseas corporations
have been rushing to sign sponsorship agreements
they hope will bring increased market access,
brand awareness and monetary gain.
Companies have long traded on the
feel-good spirit and massive viewing figures
associated with the world's most famous sporting
occasion, but the Beijing
Games are shaping up to break all records. For
those who can catch a ride on the Olympic
bandwagon, the exposure and potential financial
rewards are high - more than 1 billion Chinese are
expected to watch, not to mention a half-million
international visitors and a worldwide viewing
audience of 4 billion.
Describing the
marketing frenzy that already surrounds the Games
as an "orgy", Tom Doctoroff, China chief executive
officer of JWT, an international advertising
giant, recently commented, "Every single company
under the sun has, or is preparing, some kind of
Olympic pitch." Beijing's organizing committee has
vowed officially to present the "best-ever"
Olympics - an event bigger, glitzier,
better-organized and more lucrative than any
other. Never before has a global sporting event
been so entwined with commercial opportunity and
profit.
With cheaper labor and fewer
security concerns, Beijing is spending just US$2.6
billion, half of what Athens spent for the 2004
Games, to construct Olympic venues. However, the
Chinese government is also splashing out another
$200 billion to give the capital a major pre-Games
makeover, including permanent upgrades to the
city's transportation and communication
infrastructures.
Much of the financing for
these projects is coming from the pockets of
national and international corporations, recruited
as Olympic partners, sponsors and suppliers. The
sponsorship program developed for Beijing 2008 is
the most comprehensive Games package ever created,
and ad campaigns from Olympic sponsors such as
Visa, Coca-Cola and Lenovo are already in full
flow.
If the Athens 2004 Olympics were
Greece's opportunity to show the world the wonders
of Greek culture, the Beijing Olympics are set to
be China's coming out ball. The Chinese government
has identified three themes - people, technology
and the environment - all designed to show how
progressive and innovative China can be, and how
hard the country is working to fix some of its
biggest problems.
Fifteen years ago,
sports sponsorship in China consisted mostly of
erecting a board with the company's name at a
local table tennis game. It was hit and miss, a
confused, embryonic version of corporate social
responsibility. Today, corporations are snapping
up international and Chinese sports stars to
endorse their products. Chinese consumers can now
see their home-grown superstar hurdler Liu Xiang
with a can of Coke, drinking Yili milk, wearing
Nikes and promoting China Mobile cellphone
services in separate advertisements around the
nation.
On July 13, 2001, the very same
evening Beijing was celebrating being awarded the
2008 Olympic Games, Coca-Cola's Beijing plant ran
off 30,000 bottles, each wrapped in a golden cover
reading "Our Congratulations on the Olympics". Two
years later, Coca-Cola became the first authorized
user of the Beijing Olympic logo, flooding shops
with 1 million special-issue cans on August 3,
2003, the day the logo was officially unveiled.
From the outset, Beijing's selection as
Olympic host has aroused the interest of national
and global sponsors - companies with aspirations
to leverage the Olympic rings in both local and
overseas markets. This time the motivation for
sponsorship is vastly different to that of the
Athens Olympics three years ago. There, sponsors
were principally interested in the global platform
the Games provided, not the slender opportunities
provided by an already saturated and stagnant
Greek economy.
In Beijing, Games
sponsorship will have a double-sided impact. A
company that signs a global deal will be able to
link its name with the Olympics, aligning branding
with such ideals as "excellence", "friendship" and
"victory" in its international marketing efforts.
Second, and more profitably, the company can
strengthen its presence in the Chinese market.
According to a recent study, 68% of
Chinese sports fans are more likely to buy brands
that sponsor the Olympic Games than those that
don't, and Chinese people are sure to embrace
corporations that boast integrated, insightful,
China-centric sponsorship strategies.
So
how can the Beijing Olympics best be leveraged?
Marketers must tap into the emotions that will
swell before and during the Games. The Olympics
are usually an expensive opportunity for marketing
departments to increase their advertising spend,
and for corporate hospitality departments to break
out the bubbly in cozy, trackside, logo-plastered
corporate boxes. Leading companies, however,
approach sports sponsorship with more imagination
than money - and get a lot more in return.
Getting started isn't cheap, regardless of
marketing strategy. Beijing-specific partnerships
in some categories have cost advertisers as much
as the fees for multiple Games before. In the
hotly contested car category, Volkswagen China
Group eventually put in an estimated winning bid
of $100 million in cash and kind. The group's
director of Olympic marketing, Anthony Laver,
estimates that in the 12 months before the Games
begin, official sponsors will spend as much as $2
billion on advertising, and that's just in China.
However, spending several hundred million dollars
a year advertising the privilege of being an
Olympic sponsor is a waste if it doesn't reach the
consumers likely to afford your product.
"Target" is the watchword of smart sports
sponsorship. Keen to be seen as a global company
coming out of China, Lenovo used the two weeks at
the 2006 Turin Winter Olympics to unveil its new
image. However, Lenovo didn't swamp Italy with
expensive billboards. Instead, it had its name
displayed in strategic locations, promoting its
right to supply the communications technology
driving the Games, and laid on Internet cafes for
athletes.
Creating a premium brand through
intelligent association with the Olympic Games
will undoubtedly translate into sales for
corporations like Lenovo. Yet many corporations
who don't have the cash or the good fortune to be
an official sponsor may end up with the same
effect.
Again, the trick is doing more
with less. By creating the 2005 Nautica Urban
Regatta with a flotilla of miniature boats at
Shanghai's Xintiandi, sports goods maker Nautica
got the company noticed in a novel and relatively
cheap manner. It then followed up the event with a
sponsorship deal with China's sailing team,
thereby ensuring its name appears at the Beijing
Olympics without the cost of being an official
sponsor.
Donald Chan, the China national
managing director of Publicis Groupe's Leo Burnett
advertising agency, is advising some of his
clients, which include McDonald's, to start
planning their Olympic campaigns, but to wait on
delivering ads until the second half of 2007.
"Local brands are now trying to build a
competitive presence against multinationals," he
says. "But in terms of Olympic experiences, there
is nothing going on right now. A lot of
multinationals used the 2006 World Cup to stay
engaged instead."
Multinationals and
Chinese brands may be on different schedules
because they are looking for very different
results from their expensive marketing rights.
"The message for the multinationals is that we are
here in China, and we are going to be part of this
transformation that is taking place," says Scott
Kronick, the president of WPP Group's Ogilvy
public relations agency in Beijing. "The message
for local companies is that we are a famous
Chinese company that has the potential to be a
global brand."
Over the past decade,
Chinese consumers have become far more
sophisticated and brand-savvy. They are looking to
get useful information from the products they
purchase, and are critical of brands that don't
meet their expectations. They want brands to do
right by the consumer - instead of dropping in and
running away with the money, they want overseas
companies to become part of, and contribute to,
the community.
To truly succeed in the
Chinese market, both local and multinational
companies must find ways to engage the 100 million
young affluent Chinese consumers who have the
money for premium brands. In a crowded market,
standing out can be a problem. The fact that Liu
Xiang already has marketing deals with Visa,
Coca-Cola, Yili Group and Nike, plus several
others, underscores both the allure and challenge
of advertising at next year's Games. A recent
survey by Chinese marketing consultancy R3 and
research firm TNS found that Chinese consumers
associated Liu Xiang with a head-spinning 19
brands.
From here on in, penetrating the
Chinese market is going to become increasingly
tough for Olympic sponsors. For "China Inc", for
brands that are preparing to join the race, and
for those that may attempt to crash the party
late, August 8, 2008, is a date looming large on
the horizon.
In the same way that the
Beijing Olympics will show what China is really
made of, world-class brands now have the
opportunity to demonstrate the quality and
originality of their promotional strategies. In
both cases, failure would be unthinkable, and
costly. Daniel Allen is a freelance
writer and photographer from London who has lived
in China for the past three years.
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