Although the 2008 Olympics are still nine months away, China has been entertaining corporate bids to join its coming-out party for over four years. Since September 2003, over 60 companies have signed on to the most comprehensive sponsorship package ever created for an Olympic Games.
The Beijing Organizing Committee for the Olympic Games (BOCOG) has developed a three-tier official sponsorship program. Although the prices paid remain confidential, it is beleived that “partners” buy in at US$40 million and “sponsors” at US$20-30 million, while “suppliers” provide goods or services for the event.
The sponsorship money is spent on upgrading Beijing’s public amenities and contributing to the US$2.6 billion pot set aside for Olympics infrastructure development. In return, global and local sponsors alike are looking to gain brand recognition both in China and on the global stage.
BOCOG assesses potential sponsors on criteria like social responsibility, credibility and marketing budgets. Corporate applicants must also be seen to embody the ideals and concepts of the Olympic movement.
“Corporate credentials and social reputation are major criteria,” said Yuan Bin, director of the BOCOG marketing department.
For local companies chosen as Olympic sponsors, the main goal is to boost their international profiles. “Many local companies such as Yili, Arawana and China Mobile are using [their exposure at the Olympics] as a business-building approach,” said Greg Paull, principal at R3 Asia Pacific, a consultancy that has been conducting Olympic-specific brand studies.
Meanwhile, the international sponsors have their sights set on building their names and their market shares in the domestic market. According to Ruth Ang, managing director of advertising agency TBWA China, the Olympics represents a big opportunity to target China’s third-, fourth- and fifth-tier cities.
A case in point is PC manufacturer Lenovo, one of the few Chinese companies that already have a global presence. Lenovo is using the Olympics as a means of strengthening its hold on the domestic market with a 1,000-town roadshow of China’s lower-tier cities.
“We are building on the Olympic theme to go to tier-five and tier-six cities where PC penetration rates are much lower,” said Jean Cai, Director of Olympic Marketing at Lenovo. “We bring the Olympics to [to these cities] by giving them their first encounter with computers.”
However, the company is not ignoring its international image. Lenovo is the only Chinese corporate sponsor out of a dozen in the The Olympic Partner Programme (TOP) to have the exclusive worldwide marketing rights for both winter and summer games.
Lenovo is also Beijing 2008’s exclusive computing equipment sponsor. It is providing over 14,000 pieces of equipment to power 56 Olympic venues in seven cities. Many applications will run on Lenovo systems from staffing and scheduling to timing, scoring and ticketing. The company has also committed over 400 on-site personnel for next August. The simple aim of all this effort is to get Lenovo’s logo onto the screens of an expected 4 billion viewers worldwide.
The company has devoted a huge amount of money and personnel to its Olympics involvement, from designing the Olympic torch to ongoing CCTV countdown segments. It has even donated hundreds of computers to local schools and brought in Olympic champions to talk to students about the games and the importance of learning computer skills.
Is this overkill? Lenovo doesn’t think so. If all goes to plan, Olympic sponsorship could secure the company’s commercial future. Lenovo has over 90% brand awareness on the mainland and is currently ranked the third-largest PC vendor in the world. However, it has yet to establish global brand awareness.
“Within the host country, the Olympics is one of the most valuable marketing tools any company can look forward to. Lenovo is looking to fully realize the value of the asset,” Cai added.
To protect coporate sponsors’ investments, BOCOG has started an anti-ambush marketing program to prevent non-official sponsors from free-riding on the Olympic name. Yet corporations such as Nike, Pepsi and Nautica have found creative ways to circumvent these barriers while still playing by the rules.
“Non-sponsors want to find ways to ‘ambush’ sponsors – this is more challenging and sometimes may require a budget [with a lot of creativity],” said Debby Cheung, managing director at Ogilvy Public Relations China.
Free-riding brands are building successful campaigns around general sporting themes or affiliations with Olympic athletes – tactics over which BOCOG has no say – to boost their exposure. This comes without the cost of an official sponsorship deal. Nautica is showcasing its brand by sponsoring the Chinese sailing team, and a host of China’s top athletes will be wearing Nike’s “swoosh” logo next summer.
The abundance of sponsors means that, as far as consumers are concerned, the line between official and unofficial is blurred. Studies by R3 show that Coca-Cola, an official partner, has the strongest brand exposure across the mainland for the 2008 games. But rivals Pepsi and Mengniu, a domestic dairy company, follow closely behind. Neither is an Olympic sponsor.
Ultimately, everyone is trying to get a piece of the profits from the Olympic pie. “Maximizing the value of sponsorship is a major challenge for all the major sponsors … there’s a lot of pressure,” Paull added. “Consumers are getting confused. Pepsi, for example, has shown that you can still use sports to leverage your position, and to do that well, even if you are not official.”
But gaining worldwide brand exposure at the games will be money well spent. In the meantime, the sponsors’ competition will remain fierce as opening day draws closer.