Beijing Olympics

Associated Press

Advertisers, Sponsors Look to Pocket Gold from Beijing Olympics

August 18, 2008 05:20 PM
by Anne Szustek
High ratings and an Olympic-size marketing frenzy has official sponsors and unaffiliated brands alike shilling out millions in Beijing and on NBC to snare market share.

Ratings Setting Records, Too

Spectators may be focused on the Olympic athletes, but businesses are looking at a different kind of Olympic performance: Nielsen ratings. And so far they’ve been just as impressed as the sports fans who have watched record after record being smashed in Beijing.

U.S. viewership during the first three days of the Games averaged 30.41 million—up 26.7 percent from the first three days of the 2004 Athens Summer Games. So far the Opening Ceremonies were the most-watched event of this year’s Games, with 34.89 million viewers tuning in—making it the highest-rated kickoff ever for an Olympics held outside the United States.

Ratings for the Olympics were down slightly for Aug. 13, wrote The Hollywood Reporter. “The Summer Games averaged 27.2 million viewers … down 13% from NBC’s previous five-night average.” But the Olympics are a prime advertising vehicle nonetheless, as evidenced by the extra $10 million in ad revenue NBC was able to sell because of the high ratings. Previously the network was holding back a bank of commercial time slots to offer advertisers as consolation in case ratings were poor. This is in addition to some $1 billion NBC Universal brought in before the 2008 Olympics were underway. More than 100 individual advertisers are running commercials during NBC’s coverage.

NBC’s decision to release additional airtime for ads was fortuitous. After Saturday night’s telecast of the 4x100 men’s medley relay, in which swimmer Michael Phelps won his eighth 2008 Olympic gold medal, NBC Universal’s total viewership for the first nine days of the 2008 Beijing Games reached 191 million, according to MediaWeek. This tops the full 17-day viewership for both the 2002 Salt Lake City Winter Games, with 187 million, and the 2000 Sydney Games, with 185 million.

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Background: Brands aim for the podium

In this sluggish economy, brands are embracing any chance to wield official sponsorships to stretch their Olympic branding that much further—and in effect, get Americans to consume the Games themselves. U.S. sponsors of the Olympic Games include General Electric, UPS, Coca Cola, BHP Billiton, Budweiser, Johnson & Johnson, Kodak, Visa and McDonald’s.

McDonald’s declined to tell suburban Chicago paper Daily Herald how much it was putting into advertising for the Olympics. But the company is quick to outline its Olympic marketing drives, including “The Lost Ring,” an online alternative reality game jointly hosted by the fast food chain and the Beijing Olympics with some 2 million players as of July 3.
But American companies who are not direct sponsors of the international Olympics are elbowing their way into Olympic branding.

Adidas is the official footwear sponsor of the 2008 Games. But Nike is making inroads in Beijing as well. Among its new footwear released for all 28 sports featured during the competition is the Ippeas, a new riding boot for equestrian competition. It features Air Zoom cushioning in the sole, titanium screw-in spurs, and a wrap-around zipper, rather than the traditional vertical style.

“If nobody tries to push the envelope, nothing changes,” said Amy Tryon, equestrian 2004 bronze medalist, who plans to wear the boot at this year’s Games.

On American soil, Home Depot offers elite athletes full-time jobs with flexible hours so they can continue to train as part of the U.S. Olympic Committee’s Olympic Job Opportunities Program. It also built the Home Depot Center as a home and training facility.

China’s position as an emerging market is also appealing to multinationals looking to make further inroads into the country’s tiger economy.

Coca Cola partnered with Chinese marketing company Pioco to provide Bluetooth content at several designated hotspots throughout Beijing. Reports Marketing Daily, “Anyone with a Bluetooth phone in of one of Pioco’s hotspots will be prompted if they want to receive content from Coke. If they accept, their phone will begin downloading the beverage giant's ads.” 

Official sponsor Lenovo, a computer company with headquarters in North Carolina and Beijing, played a key role in getting the Games to the latter city. Technology emblazoned with the Lenovo logo has featured prominently in NBC’s coverage. Lenovo, partially owned by the Chinese government, is providing “more than 10,000 pieces of computing equipment and 500 engineers to help distribute real-time data and results of more than 300 events to the media and audiences worldwide” as part of its sponsorship deal, according to the company’s Web site.

South Korea’s Samsung, another official sponsor, is betting big on the development potential of China. Government figures project 2008 computer sales to reach $1.8 billion. Its ads are plastered throughout the Chinese capital at subway stations, on buses and on billboards. It shelled out to sponsor the torch relay and gave eye exams to Chinese villagers.

Chinese companies unaffiliated with the Games are hip to the Olympic advertising craze as well, creating confusion in the country as to who is an actual sponsor. “Everyone thinks everyone is an Olympic sponsor, Paul French, the founder of market research firm Access Asia told the Los Angeles Times. 

Also adding to the woes of advertisers is the devastating injury to China’s star hurdler Liu Xiang. Last year he earned some $23 million to endorse Cadillacs, Visa credit cards, Coca-Cola, Nike as well as a Chinese tobacco company. He won an Olympic gold in the 110-meter hurdles as an underdog in the 2004 Athens Games. But now that he’s dropping out of the 2008 Olympics after getting injured during a false start at the 110-meter hurdle prelims, “A lot of celebration ads will be dropped into the garbage can,” Terry Rhoads, the managing director of Beijing sports marketing firm Zou Marketing, told The New York Times. But international brands such as Nike, Coca-Cola and Visa are sticking by him. “Liu Xiang is an inspiration to the country. So he’ll continue to be featured on all our platforms,” said Nike spokesperson Derek Kent.

Analysis: Olympic fever; building upon the Games

Why the high ratings?

Analysts are giving credit to the soft economy and the impressive performance of several athletes in Beijing. “I think [swimmer Michael] Phelps has been really important,  the drama and the results of the event he has been involved in have been extraordinary,” an unnamed television source told Agence-France Presse.

Another source told the French wire service, “We’re living with four dollar gas, high food prices and families unable to afford summer vacations—Americans need something to cheer for and this Olympics and this US Team is filling that need.”

“Americans are consuming our Olympic coverage in record numbers and in every way,” Seth Winter, NBC Olympics’ senior vice president of sales and marketing told The Hollywood Reporter.
The Olympics as a business opportunity

China’s rapidly developing economy, in addition to tapping into the growing consumer market, lends multinationals the opportunity to make an imprint on China in terms of branded infrastructure. Pilson Communications CEO Neil Pilson, the former president of CBS Sports, told Wired, “During negotiations, we basically argue that GE or FOX News or CBS Inc. would generate a huge amount of business from the games. This year, the Olympics are being held in a country with enormous potential for new business."

GE has raked in over $700 million in sales from infrastructure projects in and around Beijing. GE’s global director of digital media, Jennifer Walsh, said of China’s emerging economy, “As they expand, there is a need for basic infrastructure—water treatment, transportation, roads.” Along with subsidiary NBC’s ad revenue, the company has earned more than $1.7 billion from the 2008 Games.

Advertising Age dispels the myth that sponsorship deals represent major outlays for corporations. “For a company such as Coke with $30 billion in sales, a $100 million investment in Olympic sponsorship, along with three times that amount in supporting activities, represents just a tiny fraction of its global sales in a single year, as well as a small part of its annual marketing budget.”

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