SBJ/March 10-16, 2014/Opinion

How will Olympic sponsors respond to future host sites?

The Sochi Olympics have ended … and thankfully, they concluded safely.

The XXII Olympic Winter Games were highlighted by a record number of qualified countries (88), heartbreaking losses by the American men’s and women’s hockey teams, and the emergence of skier Mikaela Shiffrin, who probably slalomed right into Lindsey Vonn’s endorsement vacuum. By all accounts, the athletes were treated with great respect and enjoyed their Russian experiences.

But what about the off-the-field marketing battles, the ones involving sponsors and their swarming sports marketing agencies? Who won those slugfests? Were Coke’s “controversial” ads a reason to proclaim them the advertising winner? Did longtime TOP sponsor Visa gain market share with their inspiring, athlete-focused promotional strategy? Or, did P&G’s “Thank you, Mom” campaign carry the day? P&G’s 39 YouTube videos certainly seemed to win the online Olympics, given the millions who watched the branded content via social networks.

And, what did we learn about location? Many were deeply concerned pre-Games about the athletes, the TV ratings, human rights and terrorism. However, as noted, these concerns were not realized. In fact, in most cases, the opposite was true, and given the ever-increasing number of online viewers, NBC must be pleased with television ratings up slightly from 2006, the last European-based Games.

But perhaps even more importantly: How important is location to sponsors of the International Olympic Committee?

Recent studies led by a colleague of ours, John Nadeau, have shown the importance of the host country’s image to sponsorship due to the vast reach and following of the Olympic Games. Image transfer is a well-researched aspect of sponsorship and one that many scholars believe differentiates that specific platform from advertising and other promotional strategies. Conceptually, it refers to sponsorship’s vibrant capacity to associate the images of a property to a sponsor, thereby alternating the perceived images of the sponsor in the minds of targeted consumers. Nadeau’s work (of which O’Reilly is a co-author) finds that the images of the host country also enter into the minds of these consumers.

Practically, beneficial image transfer is understood by sponsors and is generally the reason they align with sports, leagues, teams and players. Now, in the cases of mega-events and national teams, as Nadeau’s results support, country becomes an important source of alignment. Brands want a net positive association or rub-off that will add value and drive recognition and sales. But negative transfer is rarely studied, and in Sochi there was much concern about what was really going on.

Example: Some Sochi sponsors were reportedly forced to develop sympathy advertising in case a horrific terrorist attack took place. Further, numerous sponsors likely developed “go black” plans to ensure their advertising was not linked to terrorism if that story broke. These backup plans are not completely unusual (in and of themselves) but they interest us because of the location of the 2014 Winter Olympics and the host countries of a number of future Games.

For now, the IOC’s global sponsors, TOP partners like McDonald’s, Visa, GE, P&G, Dow and Coca-Cola, are fully invested in the Games and other associated properties including the Youth Olympic Games. In fact, the IOC’s outgoing marketing chief, Gerhard Heiberg, had hoped to bring the TOP sponsorship portfolio up from 10 to 12 but ran into the very real issue of the Russian anti-gay propaganda law during his key selling window. As it was, Heiberg said a number of sponsors around the world, but particularly TOP sponsors, were concerned about Russia’s position on human-rights issues. Location again affects sponsorship.

On the sponsorship front, sophistication has grown so much and permeates far below global levels now. National programs, national sport organizations, state and provincial sport organizations, qualifying events, national championships, athletes — and on and on the list goes of properties or assets related to country or nation.

One thing we learned is that the host country matters and matters a lot. Sochi, Rio (2016) and Pyeongchang (2018) are not dream locations for North American marketers. Tokyo in 2020 looks good, but the list of candidates for 2022 has some options that would be less attractive to a North American marketer, such as Kraków (Poland), Almaty (Kazakhstan) and Lviv (Ukraine) — although a return to Oslo (Norway) or Beijing has some marketing upside. The upcoming FIFA World Cup in Qatar (2022) probably holds similar concerns for global sponsors.

What does this really mean? It suggests that if the IOC takes the Olympics to the wrong places, it can create distressing marketing outcomes (albeit positive societal ones), and the logical first responders to issues like questionable site selections will be the sponsors. They must receive positive image transfer or they won’t re-sign with sports properties that damage their brands or fail to draw sufficient eyeballs to justify massive investments.

Rick Burton (rhburton@syr.edu) is the David B. Falk Professor of Sport Management at Syracuse University and a former CMO of the U.S. Olympic Committee. Norm O’Reilly (oreillyn@ohio.edu) is professor and chair of the Department of Sports Administration at Ohio University.

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