National pride, legacy lead to $3B sponsorship bonanza

When it comes to selling the Olympics, Tokyo 2020 defies historical comparison.

The world took notice when Beijing 2008 and London 2012 became the first two Olympic host committees to clear $1 billion in domestic sponsorship sales. But Tokyo has tripled that with $3.1 billion in confirmed revenue with a year left to sell.

Sixty-four companies have acquired Japan-only rights to the Games across an extraordinary and inventive range of categories, including narrow carve-outs like the “building components and bathroom and kitchen fixtures” space and “sauces (including soy), vinegar, mirin and cooking sake.”

In one arrangement inconceivable to most western brands and sports marketers, Mizuho Financial Group and Sumitomo Mitsui Financial Group are sharing the banking category at the top domestic tier. They sit alongside Nomura, which has the securities category.

These are $100 million-plus deals, done by executives fully cognizant of Visa’s ability to step into retail banking, too, through pass-through rights included at the global tier. Including the International Olympic Committee’s global partners, 77 companies can use the 2020 Tokyo Olympic marks.

Outside of Japan, amazement at the $3 billion mark is shared in tandem with questions: What about clutter? How are they going to service all those companies? How can you possibly be sure of a return?

But those are the wrong questions. At least for 2020, Japanese sponsorship is driven as much by obligation, pride, the fear of missing out and fond memories as it is tangible business metrics.

“Basically, the people who were young and witnessed the [1964 Tokyo] Games are the ones who are CEOs of Japanese companies now,” said Masahiko Sakamaki, Tokyo 2020 executive director of marketing, speaking with TOP Partner Services Director Kei Torii as a translator. “We do believe people know the impact of the Games and the legacy it can leave afterwards. And those people now having important roles in their companies wish to do the same for the next generation.”

Another factor in the bonanza is Dentsu, which has the unusual (by Western standards) dual role of being both a sales agency for Tokyo 2020 and a dominant media buying and consulting agency for brands. The sheer number of partners, combined with the agency sharing, makes many foreign advisers concerned about information protection. Sakamaki says Dentsu is accustomed to handling conflicting clients and can be trusted.

“They are basically built to handle high confidentiality information, so we do believe their corporate structure,” Sakamaki said. “The corporate culture within Dentsu is to handle information with care. We trust that no information leak would happen from there.”

Japanese companies understand the virtues of exclusivity, Sakamaki said, and the organizing committee also understands that, generally, one exclusive deal can generate more value than a split category. But, he said, the fear of missing out changed that.

With high enthusiasm and approval of the Games in Japan, some executives believed they risked too much to enter an all-or-nothing bidding war for sponsorship rights.

“You have some cases where you have companies that do not wish to risk not being chosen, and in that case, just like [Japan Airways] and [All Nippon Airways], there is discussion that they would like to be both part of it, and they would accept sharing the category,” Sakamaki said. The IOC had to approve any deals to share categories.

The 2011 Great East Japan Earthquake is a big driver of this collective approach, said Ken Maki, head of business development at Octagon’s Tokyo office. When the Games were awarded to Tokyo in 2013, recovery was still underway, and the Olympics became a symbol of rebirth and a return to normalcy.

Every company wanted to be part of that, Maki said.

“In a sense, we should start doing the business and differentiate each other, but the starting point was different: We want to make the event special,” Maki said. “That’s why as Japanese we don’t care so much if there’s two in a category. We just want to make the event special.”