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SBJ/July 22-28, 2013/Marketing and Sponsorship
Unrest in Brazil heightens concerns for marketers
Published July 22, 2013, Page 1
Weil wasn’t surprised. The company was the second of three Momentum clients to postpone promotions, and while he declined to name the clients because the agency promises them anonymity, he said all three are re-evaluating when they will go to market with World Cup promotions.
|Protesters want spending for schools and health care rather than soccer stadiums.
Momentum’s clients aren’t the only ones re-evaluating the Brazilian market after last month’s jarring protests.
The protests began June 11 when students and workers in several cities took to the street to protest a 20-cent increase in bus fares. Within weeks, the demonstrations extended to more than 100 cities and featured more than 2 million people demanding education and health care reform and questioning the Brazilian government’s decision to spend money on soccer stadiums for the World Cup. Protestors tried to reach Maracanã Stadium in Rio de Janeiro prior to a Confederations Cup match between Mexico and Italy, and they clashed with police outside the same stadium two weeks later before the tournament’s final game. Many carried signs that said, “Lower the bus fare and put it in FIFA’s check.”
The size and duration of the protests, which spanned more than two weeks, caught government and FIFA officials by surprise. FIFA boss Sepp Blatter was so unsettled by them that he recently said the organization may have made a mistake awarding Brazil the World Cup, which begins next June.
The demonstrations also rattled sponsors and sports executives. Many had seen the World Cup as the perfect marketing opportunity. It was soccer’s greatest event coming to the nation that loves the sport the most. But the popular uprisings jeopardized their long-planned hopes for capitalizing on the World Cup and 2016 Olympics.
The protests have led several brands and sports marketing agencies to make adjustments on everything from increasing staff and adding security to reviewing transportation plans and evaluating marketing programs ahead of next year’s World Cup. But brands and agencies alike remain optimistic about the value and potential for sports marketing in Brazil during next summer’s World Cup, the 2016 Rio Olympics and the years that follow.
Coca-Cola CEO Muhtar Kent captured the sentiment of many brands when he spoke at the Cannes Debate during the Brazilian protests last month. Kent said that when FIFA and the International Olympic Committee selected Brazil and Rio to host the World Cup and the Olympics, respectively, companies knew there were risks, according to The Drum, a European marketing magazine. But Kent added, “Where there’s no risk there is no reward, and the opportunities are so much greater that I am sure they are going to be very memorable, fantastic events.”
Coke stuck with its marketing plans in Brazil during the Confederations Cup despite the protests and continues to use FIFA-related branding in the marketplace. Scott McCune, Coca-Cola vice president of global partnerships and experiential marketing, said the company continues to monitor what’s happening in Brazil but hasn’t shifted its strategy to date.
Similarly, McDonald’s and Visa continued to run World Cup marketing and promotions in Brazil during and after the Confederations Cup, and McDonald’s and Visa spokespeople said the protests won’t affect their future promotional plans there.
But Visa, like most sponsors and agencies, reported that hospitality programs during the Confederations Cup were affected by the protests. The company adjusted its transportation schedule to provide early arrivals and late departures from stadiums, and it changed travel routes to avoid crowds and demonstrations.
The company wasn’t the only one to have its hospitality program affected. Hospitality organizers reported incidents where some guests of FIFA’s official hospitality program, MATCH, had to get out of their cars and walk a mile to stadiums because protestors had blocked roads, and a bus loaded with Johnson & Johnson executives wound up getting stuck in a demonstration. (Johnson & Johnson did not return calls regarding the incident.) But organizers said that the problems that arose were transportation issues, not safety issues, and the former is much easier to address.
“It’s forced us to take a closer look at some of the things we were planning to do next year,” said Jan Katzoff, head of global sports at GMR Marketing, which works with World Cup and Olympic sponsor Visa and 14 other companies in Brazil. “Our contingency planning is always at a high level, but after watching what took place down there, we’re going to step it up a couple of levels.”
Katzoff said GMR plans to increase the number of local staff it hires for the World Cup by as much as 15 percent to help the agency monitor social media, identify if and where protestors are aggregating and identify alternate transportation routes.
Similarly, Octagon Worldwide, which is working with six World Cup sponsors including Budweiser and Castrol, plans to increase its 40-person staff across two offices in Rio and São Paulo by as much as 20 percent in response to the issues and spend time over the next year analyzing its transportation plans for sponsor hospitality programs.
“It’s as important as ever to make sure you have people with local understanding of the market and Portuguese language skills to help with communication,” said Derek Aframe, senior vice president at Octagon Worldwide.
Those types of hospitality-related adjustments were expected following the Confederations Cup, which was as much a trial run for Brazilian organizers of the World Cup as it was for hospitality organizers. But it’s far more unusual for sponsors to postpone scheduled marketing initiatives as a result of marketplace changes.
Weil, who had three clients make that decision, said he’d never seen a pullback like that before ahead of a major sporting event. Even global protests of Chinese human rights before the 2008 Beijing Games didn’t disrupt marketers’ plans.
“From a multinational and Brazilian perspective, there’s a wait-and-see attitude, a ‘Let’s not be out shouting about the Olympics or the World Cup right now,’” Weil said.
IMG Head of Global Consulting David Abrutyn said no IMG client had postponed its marketing programs in Brazil, in part because they’re slated to run later this year, but he said weighing the benefits of running a program now was prudent.
“It’s a little early from a cycling standpoint [to be promoting the World Cup],” Abrutyn said, “but if you did have a program slated to run, you’d be smart to think if now was the time to do it.”
Despite the political unrest in Brazil, agency and sponsor executives alike remain optimistic about the opportunities there. Neither the protests nor Brazil’s declining GDP growth rate, which has fallen from 7.5 percent in 2010 to less than 3 percent this year, has tempered their enthusiasm for the market, and most see potential for sports marketing growth through the 2016 Rio Games and well into the future.
“We all remain, long term, bullish on Brazil as a market as it remains a center for a lot of things, including sports the next three years,” Aframe said.