SBD/June 16, 2017/Marketing and Sponsorship

Analysis: TOP Sponsor Turnover May Not Be As Damaging To IOC As It Appears

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The loss of longtime Olympics partner McDonald’s may generate unpleasant headlines for the IOC, but it is not as damaging as it may appear out of context. There’s clearly still demand for the global rights packages offered by the body, which believes globalization and technology has greatly expanded the range of categories that can be sold globally. Since the IOC nearly doubled the price of a sponsorship in ‘14, it has signed four new partners in entirely new categories: Bridgestone (tires), Toyota (mobility), Alibaba (cloud computing and e-commerce) and Intel (unknown, pending a formal announcement Wednesday). The IOC said it is on track to set a new high mark for sponsorship in the current cycle ending in Tokyo. However, the partners whose current relationships predate the price increase (roughly $100-200M per quadrennial, though specific categories vary substantially) must reconsider the value they are receiving as they decide whether to renew, said London-based agency Synergy CEO Tim Crow. McDonald’s was one of six IOC partners whose current contracts pre-date the price hike and expire in ‘20. The others are GE, P&G, Dow Chemical, Visa and Coca-Cola. The other eight TOP members have all renewed or signed since the price hike. “All of these brands are going to be looking at that scenario, and making a decision about whether the additional investment they’re going to require is going to generate a bigger incremental return,” Crow said. “That’s really where the Games are at right now."

QSR HAD LACKED A CLEAR MESSAGE: Crow noted McDonald’s is unlike other brands because it seemed to lack a clear message for its Olympics campaign and did so little to activate in recent years. The IOC’s willingness to break off the relationship three years early was a strong indication of its own ambivalence toward the relationship, he said. “Losing [McDonald’s] is bittersweet, because on the one hand, they weren’t doing anything with it,” Crow said. “But on the other hand, is someone going to market the Games to the young, and young families? Because that’s a big thing they need." Even if financially the portfolio is strong, the Olympics will miss the mass-market, middle-class marketing prowess of the QSR, he said. But the IOC is reconsidering its entire approach to its partnerships. It has been more concerned with signing deals with companies that can power major IOC strategic initiatives as well as market their goods -- like Alibaba and Intel -- indicating food may be sold only at the domestic and individual Games level in the future. It said Friday it will not try to replace McDonald’s in the restaurant category.

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