The Olympic marketing games have begun with
Under Armour's release of a commercial featuring Michael Phelps "that made the god of swimming cry," according to Kyle Stock of BLOOMBERG. Dick’s Sporting Goods "put out a tear-jerker of its own, featuring employees who are bound for the Summer Games in Rio de Janeiro." Nike, meanwhile, is gathering dozens of journalists in N.Y. on Wednesday "for a product unveiling expected to be heavily geared toward athletes competing for medals in Brazil."
Nike President of Product & Merchandising Jeanne Jackson said, "The Olympics give us the opportunity to deliver our very best. We get to inspire the consumer, we get to accelerate the business through our product."
"Accelerate" might be "overselling it a bit." When it comes to actually selling sportswear, the Olympics "are downright unimpressive." Compared with the global might of the FIFA World Cup, for example, "the Olympic Games are indeed amateur hour." An analysis of quarterly results from adidas, Dick’s Sporting Goods, Foot Locker, Nike, Puma, and Under Armour revealed that during periods that included the Olympics, "collective sales for this group grew by 10.6 percent on average, barely higher than their average 9.8 percent quarterly gain in the period."
That "heart-rending marketing doesn't come cheap." Operating expenses during Olympic quarters "outpaced sales gains," with an average 12.2% increase. All things considered, the return on Olympic marketing for companies such as Nike "may actually be negative, depending on what kind of expected lifetime value executives put on badminton maniacs."
Morningstar analyst Paul Swinand said, "At the end of the day, what are these companies really going to sell? Are you going to go out and buy a track suit? Maybe a javelin?" Rick Burton, a professor of sports management at Syracuse University, said that even though direct sales may be sluggish, it is "increasingly important for big brands to have a presence at the Games." He said, "The revenue gains by Under Armour have produced a very legitimate third entrant in the race with adidas and Nike. While the ROI is always hard to prove, the risk of not investing is too great" (BLOOMBERG, 3/14).
